Received Discrimination Complaint! Now what?!

42 Replies

I own a 3-family property in Massachusetts and use a property manager to handle nearly everything since I am currently out of the country. I've used this particular manager for 2+ years now and haven't received any complaints until now, but this one sounds like it could go poorly for me.

I received a letteryesterday from the MA Commission Against Discrimination. The letter is addressed to both myself and the property management company and alleges that the management company refused to rent the apartment to the complainant based on the fact that she wanted to use a Section 8 voucher. She made a complaint to South Coast Fair Housing, and they arranged independent testing to phone up and pretend to want to rent the property, and allegedly my management company told them that he is not accepting Section 8 vouchers as well. 

I've received the mail as if I am the one discriminating against these potential tenants. I've never told the manager I wouldn't be happy to accept section 8 vouchers, I have no knowledge of any of these tenants, and I haven't even been in touch with management concerning the property's vacancy. Now I am required to write and sign a formal position statement to be submitted to the MA Commission Against Discrimintation. Ugh....

My immediate questions are:

  1. How much potential trouble am I personally in here? I didn't have anything to do with any alleged discrimination so can it really come back to me with a penalty?
  2. Should I get a lawyer to craft my position statement?
  3. Has anyone been through something similar and can provide a bit of insight into the process/procedures?

Beyond those questions, I was under the impression that to rent to Section 8 tenants my property had to qualify for Section 8. I've never gone through any Section 8 vetting, nor have I rented to a Section 8 tenant before. I really don't have any knowledge of housing vouchers or Section 8 tenants because this is my only property that would be considered by someone using a housing voucher so maybe I am just a bit misinformed. 

Any help you guys and gals can give would be much appreciated. I'm just a bit taken aback by this and am not sure the best course of action.

I would not be overly concerned. Coordinate with your PM to make sure you are both on the same page and wait to see what happens. Too early for a lawyer although your PM most likely has one he can contact. Let your PM manage it.

If you are not qualified for section 8 it's just a nuisance complaint. The majority of discrimination complaints are BS.

After reading the literature on section 8 it appears as though landlords do not have the option of not accepting section 8 in your state although that dosn't seem right.

@Rob Lehmann This is (or could be) a very big deal. You need to get an attorney involved ASAP.

Look for someone through the Mass Bar Association who has a track record in defending these kinds of cases. 

https://www.massbar.org/public/lawyer-referral-ser...

My understanding is the same as yours - if a property is not inspected and approved by the local housing administration (the local authority that administers Section 8), then Section 8 renters are not able to rent there.

It's just a guess, but if your PM said something like "we don't rent to section 8", that could be the basis of the complaint.  It could have been that he meant to say "our units are not approved by Section 8", which would probably have been ok.

People who receive any kind of public assistance (Sec. 8, TANF, SSI, AFDC, etc), are a protected class in Mass.  You MUST not discriminate on that basis.

The following is from a handout I prepared for the Boston South REIA that met two nights ago:

**********************************************************************

Quick Primer on Mass. Fair Housing Laws

As an investor, fair housing violations are one of the easiest ways to get yourself sued.

You need not even commit an actual violation. Just asking a question about a “protected class” is enough for a complaint to be filed.

For example, “Where are you from?” “Are you a veteran?” “How old are you?” are all lawsuit bait.

BE AWARE - the state employs “testers” who actively try to trap landlords, lenders and others into making discriminatory statements or taking discriminatory actions. 

The courts have already held that this does not constitute entrapment.

The best course of action is to treat all comers exactly the same. The same rental application, the same criteria for selection, the same rents, the same amenities included.

At the federal level there are 7 protected classes:

Race, Color, Religion, Sex, Handicap status, National Origin, Familial Status

Massachusetts has 15 protected classes. In addition to the 7 federal classes, this state adds:

Public Assistance (Sec. 8, welfare, SSI, TANF, etc), Sexual Orientation, Gender Identity and Expression (including transgender), Marital Status, Military or Veteran Status, Age (except 55+ communities) and Ancestry

You can discriminate against non-protected classes, like illegal drug users - but if it has a disparate impact on a protected class, it still may be subject to challenge.

If your unit is not de-leaded, you can still not refuse to rent to a family with kids under 6 years of age. You are required by both state and federal law to remediate any lead-containing products (paint, putty, etc) and obtain a de-leading certificate.

If you have a handicapped tenant or applicant, you may not refuse to rent a unit to him or her. You must also make reasonable accommodations for them. That would include things like wheelchair ramps, grab bars, hand rails, etc. 

The Related Companies, a property management company in Worcester were recently ordered to pay $75,000 in damages for exactly this kind of violation.

The bottom line is this - treat every single individual the same. Assume that every applicant is a “tester”, who is out to trick you into saying something lawsuit-worthy. 

Know the laws and be careful what you say, and you’ll be fine!

**********************************************************************

I would ask your PM if they carry E&O. If they do, your attorney needs to talk with the E&O provider immediately.

I hope that's useful.

Charlie MacPherson, Real Estate Agent in MA (#9532146)
781-412-4151

Thanks for your reply Thomas. Indeed, I read the literature and I agree it seems like there is no option in MA. I do hope the PM sorts this out himself, but it is worrying when I receive a letter addressed to me that is directly accusing me of discriminatory practices.

@Charlie MacPherson

"This is (or could be) a very big deal."


Oh boy... That's not what I was hoping to hear of course! I'm was going to ask my PM how he is responding anyway, but now I wonder if it would be okay to have his attorney write my response or if I should consult my own attorney now as well. I'm thinking it would be good to use his on the basis that two attorneys then don't have to collaborate, but then again maybe I want my own representation.

Charlie, I've never been in this situation so not sure how much trouble it could cause. However, If I think way back to my leasing agent days, it is illegal not to accept Section 8. I'd recommend contacting Inessa at Shur Law Group, I've used her in the past and she's great. She handles tenant/landlord issues so she should be able to help. You can check out her website at http://thebostonevictionlawyer.com/

@Rob Lehmann first and foremost, it looks like your PM is guilty (if the claim is true). They are not allowed to say they do not accept Section 8 in your state.

The letter was sent to you and the PM but that doesn't mean you are necessarily in trouble. If you directed or allowed the PM to reject Section 8, then you should be worried. If you had nothing to do with it then the punishment (if any) will likely be limited to the PM. You just received a copy of the letter because you are the Owner.

The PM should be filing a claim with his insurance carrier. Contact the PM and see what steps you need to take, if any. You may want to contact an attorney on your own just to be sure. Personally, I wouldn't be worried about it because you didn't do anything wrong.

Rob, I'm sorry, but this can be a very big deal.  

First, as well meaning as their advice may be, any one who is not in MA is likely unaware of the seriousness of the problem.  So do not listen to out of state advice.

Second, get an attorney immediately.

Jamie Williamson was Chairwoman of the Commission and spoke twice at Black Diamond.  While she is a landlord herself, and so has a great perspective on the issues, she was very clear on how seriously MA takes this.  My understanding from Jamie (this is not legal advice) is that while your property may not qualify for Section 8, you still are not allowed to decline tenants because they are using a section 8 voucher.  

Do a google search for Inessa Shur, she is a well regarded landlord attorney, and ask her if she handles dicrimination complaints.  Don't wait.  Or another good attorney.  

Consult with an attorney who is experienced in these matters. They’ll be able to either reassure you or prepare you. This isn’t an issue I’d make any assumptions about. It’s worth a couple hundred to know your protected. 

In the future remember you cannot tell people you do not accept anyone based on disqualifiers, even dogs. You have to accept all applications and then make your decision for the best qualified candidate, just like hiring an employee

@Rob Lehmann call an attorney. We can all state our opinions as to whether you have any fault here, but ultimately it isn't what happened, it is what you can prove happened. They think you are guilty or they wouldn't be contacting you.

"They think you are guilty or they wouldn't be contacting you."

That is rarely the case. The sending of notification to any and all possible entities is standard in all legal notifications. The motivation is not based on assumed guilt as opposed to simply covering all their bases.

Do not panic, proceed with caution.

Sorry you are going through this - I have, and it's a PITA. As @Thomas S. noted, most of these complaints are frivolous, but your state board has to investigate every one - and this is one case where the accused is presumed guilty until proven innocent. In our case, the complaint was 100% frivolous - we evicted a tenant for non-payment of rent, but since she was in multiple protected classes, she claimed discrimination.

Here is how the process went for us (we're in OH, so YMMV):

We contacted the attorney who'd filed for eviction, as we self-manage. In your case, your PM should do this since they're really the one the complaint has been lodged against. We had to provide the Civil Rights Commission with a copy of each tenant's lease and application, for all of our 24 units, along with contact info. Then there was a mediation hearing. We realized we were dealing with a serial scammer when the tenant first asked for $85,000 in damages, and kept lowering the amount, until she got to $500 and said, "everyone gives something!" Most people/companies will pay them off at this point, just to stop running up attorney fees. Our lawyer is a friend and barters services with us, so that wasn't an issue for us, and my husband refused to give her one cent. So nothing came out of the mediation.

After that, the Civil Rights Commission conducted its investigation. They contacted several of our tenants over the next several months. In our state, they have one year from the time of the complaint to close out the case, and they took right up until the deadline. Ultimately they dismissed the case as being "completely without merit."

Hope that helps, and good luck!

Originally posted by @J Heikes :

Sorry you are going through this - I have, and it's a PITA. As @Thomas S. noted, most of these complaints are frivolous, but your state board has to investigate every one - and this is one case where the accused is presumed guilty until proven innocent. In our case, the complaint was 100% frivolous - we evicted a tenant for non-payment of rent, but since she was in multiple protected classes, she claimed discrimination.

Here is how the process went for us (we're in OH, so YMMV):

We contacted the attorney who'd filed for eviction, as we self-manage. In your case, your PM should do this since they're really the one the complaint has been lodged against. We had to provide the Civil Rights Commission with a copy of each tenant's lease and application, for all of our 24 units, along with contact info. Then there was a mediation hearing. We realized we were dealing with a serial scammer when the tenant first asked for $85,000 in damages, and kept lowering the amount, until she got to $500 and said, "everyone gives something!" Most people/companies will pay them off at this point, just to stop running up attorney fees. Our lawyer is a friend and barters services with us, so that wasn't an issue for us, and my husband refused to give her one cent. So nothing came out of the mediation.

After that, the Civil Rights Commission conducted its investigation. They contacted several of our tenants over the next several months. In our state, they have one year from the time of the complaint to close out the case, and they took right up until the deadline. Ultimately they dismissed the case as being "completely without merit."

Hope that helps, and good luck!

 So just because the complaint made against you was frivolous you think that this one is too? The Civil Rights Commission will assign an investigator to see if there is cause for a charge - they do not operate on a "guilty until proven innocent" basis.

Too me you are absolutely on the hook for what your property management company did - they are acting as your agent.

I would be looking to find a way to put this on their professional indemnity insurer. 

That may be predicated on your ability to prove that they acted on their own initiative and that directive did not come from you - good luck with that because it's not credible. You may find it better to  argue  that he had a professional obligation not to follow any such directive because it is unlawful.

Originally posted by @Nathan G. :

@Rob Lehmann first and foremost, it looks like your PM is guilty (if the claim is true). They are not allowed to say they do not accept Section 8 in your state.

The letter was sent to you and the PM but that doesn't mean you are necessarily in trouble. If you directed or allowed the PM to reject Section 8, then you should be worried. If you had nothing to do with it then the punishment (if any) will likely be limited to the PM. You just received a copy of the letter because you are the Owner.

The PM should be filing a claim with his insurance carrier. Contact the PM and see what steps you need to take, if any. You may want to contact an attorney on your own just to be sure. Personally, I wouldn't be worried about it because you didn't do anything wrong.

If someone he hired to work on his behalf did something wrong then he did something wrong.

It’s a common misunderstanding that properties need to go through some sort of pre-inspection in order for a landlord to be able to accept Section 8 applicants. Section 8 doesn’t inspect the property before you select a tenant to determine if your “property qualifies” or not. 

You should simply screen a Section 8 applicant like any other applicant, not turn them away based solely on the fact that they have a Section 8 voucher. If the Section 8 applicant meets your qualifications and you end up selecting them, you’ll fill out a lease with them like you do with everyone else, plus a few other forms, and submit it all to the Housing Authority. 

The Housing Authority will then inspect the property to make sure it passes some BASIC habilitablity and safety standards, and that’s it. 

The problem most landlords run into, and which has been described in this case, is the applicant is being turned away at the outset based soley on the fact that they have a voucher. In many cities, counties, and states across the country that is a prohibited form of discrimination based on source of income. And it’s just a bad idea.  After all, what’s the harm in letting them fill out an application and screening them like any other applicant? They’ll either meet your qualifications or they won’t. 

Thanks for the responses everyone.

Just to clear things up, I have never directed my PM to not accept Section 8 vouchers and didn't even know that he was advertising for a vacant unit yet. It just went vacant and I had no knowledge of any of it really. It IS definitely illegal to tell tenants that we won't accept vouchers, and it sounds like the PM did do that. 

This could be a big problem.... Especially in Massachusetts. 

I've received my PM's lawyer's info and will be giving them a call plus possibly seeking out my own representation. 

I have to say, it seems ridiculous that I personally would be responsible when I've never directed my PM to do anything like what he has (allegedly) done. I've hired a PM because I don't know all of the laws, don't want to deal with the details, and trusted a professional to do a professional job. However, there's no sense in getting angry about what I think is right, at this point I just need to make sure that I am properly represented by ANOTHER professional that I am trusting to do a professional job. If my lawyer breaks the law after I hire him am I responsible for that too?

Like @Kyle J. said the best thing to do is to tell all prospects to apply and then the decision is made based off of your selection criteria. Even better if you keep track and can prove you adhered to your criteria and that it's consistent. 

One of the benefits of investing in such a tenant-friendly state (sarcasm) 

@Rob Lehmann   I would immediately hire a lawyer.  It sounds like there is absolutely ZERO chance this will not be a huge problem for your PM.  You should expect your lawyer to draft the papers firing your PM and suggest you file a complaint against them at the state licensing authority.

He might also request a copy of the audio tape they will have of your PM.

Oh boy! This sounds awfully familiar to me. I went through something similar in Connecticut, but without a property manager and all I can say is get your checkbook ready.  

Definitely guilty until proven innocent and in my case at “mediation” I was not even asked for my side of the story  so there was no opportunity for me to prove my innocence . The “mediation” opened with the claimant’s financial demands of $65,000.  In my opinion, this process is legalized extortion. 

I’m not aware of any insurance that covers discrimination but I hope for your sake that your property manager has some.  Here in Connecticut ( you can Google the same for your state ) payouts are huge on discrimination cases so claimants are definitely incentivized to make claims. 

 You may want to consult with an attorney just to understand the process and what will likely occur.  Again, I’m not in Massachusetts, but if I had to deal with this again I wouldn’t bother with the attorney. You’re going to want to settle at mediation because a court case will cost you more in legal fees than the mediation settlement, even if you are exonerated. For the mediation process, my attorney was largely useless and definitely not worth the money since, as I said, it just became a financial negotiation. There was no opportunity to present a defense. 

 Just typing this brings back the bad taste in my mouth about my case and the process. I’ve never felt so helpless. As the landlord, it was all about my balance sheet (the first question on the response form from CHRO was what did I own & how much did I owe on each property), not intent or guilt. Nobody cared if I did or didn’t do what the claimant said (same claim as yours). As I said, legalized extortion. 

I certainly hope you fare better. And in case it’s not obvious, fire your PM, immediately and in writing (with your attorney’s help) citing the reason for termination. Include a copy of the termination letter with your response forms to indicate your “no tolerance “policy for this type of behavior. 

Good luck. Keep us posted. 

Originally posted by @Cathie Kovacs :

Oh boy! This sounds awfully familiar to me. I went through something similar in Connecticut, but without a property manager and all I can say is get your checkbook ready.  

Definitely guilty until proven innocent and in my case at “mediation” I was not even asked for my side of the story  so there was no opportunity for me to prove my innocence . The “mediation” opened with the claimant’s financial demands of $65,000.  In my opinion, this process is legalized extortion. 

I’m not aware of any insurance that covers discrimination but I hope for your sake that your property manager has some.  Here in Connecticut ( you can Google the same for your state ) payouts are huge on discrimination cases so claimants are definitely incentivized to make claims. 

 You may want to consult with an attorney just to understand the process and what will likely occur.  Again, I’m not in Massachusetts, but if I had to deal with this again I wouldn’t bother with the attorney. You’re going to want to settle at mediation because a court case will cost you more in legal fees than the mediation settlement, even if you are exonerated. For the mediation process, my attorney was largely useless and definitely not worth the money since, as I said, it just became a financial negotiation. There was no opportunity to present a defense. 

 Just typing this brings back the bad taste in my mouth about my case and the process. I’ve never felt so helpless. As the landlord, it was all about my balance sheet (the first question on the response form from CHRO was what did I own & how much did I owe on each property), not intent or guilt. Nobody cared if I did or didn’t do what the claimant said (same claim as yours). As I said, legalized extortion. 

I certainly hope you fare better. And in case it’s not obvious, fire your PM, immediately and in writing (with your attorney’s help) citing the reason for termination. Include a copy of the termination letter with your response forms to indicate your “no tolerance “policy for this type of behavior. 

Good luck. Keep us posted. 

This "guilty until proven innocent" theme   is based on a misunderstanding of how the burden of proof operates in discrimination cases.

You can read about it here if you don't care for my explanation

http://corporate.findlaw.com/human-resources/race-...

otherwise 

The way the law works is that once the complainant has established a prima facie case that discrimination has occurred - the burden of proof shifts to the Defendant to provide a non-discriminatory explanation for what happened.

So all you have to do is come up with a non-discriminatory explanation for what happened. 

If a person has been told we don't accept Section 8 - that is sufficient to establish a prima facie case. An example of a defence that may work might be a foreign landlord who was unable to provide the documentation that the Section 8 authorities require (e.g SSN perhaps) before they can pay rent to that landlord. To be honest - I can't think of many others in this instance.

The reason it is that way is because the legislation is meant to eradicate discrimination in society. 

Originally posted by @Rob Lehmann :

Thanks for the responses everyone.

Just to clear things up, I have never directed my PM to not accept Section 8 vouchers and didn't even know that he was advertising for a vacant unit yet. It just went vacant and I had no knowledge of any of it really. It IS definitely illegal to tell tenants that we won't accept vouchers, and it sounds like the PM did do that. 

This could be a big problem.... Especially in Massachusetts. 

I've received my PM's lawyer's info and will be giving them a call plus possibly seeking out my own representation. 

I have to say, it seems ridiculous that I personally would be responsible when I've never directed my PM to do anything like what he has (allegedly) done. I've hired a PM because I don't know all of the laws, don't want to deal with the details, and trusted a professional to do a professional job. However, there's no sense in getting angry about what I think is right, at this point I just need to make sure that I am properly represented by ANOTHER professional that I am trusting to do a professional job. If my lawyer breaks the law after I hire him am I responsible for that too?

I would say the opposite. It would be ridiculous if you were not responsible for what someone you hired did. If you didn't know what they were doing was unlawful then that is negligence on your part - that's not a defence.

A professional should have indemnity insurance - that's the route I would try, to transfer liability to their insurer, that's the only scenario I can see where the PM doesn't escape by saying he was just following your instructions - in that case  he had a professional obligation not to.

If he does not have indemnity insurance - well that is more negligence on your part for expecting  a professional service for someone who lacked professional credentials. In that case you hired them, you are responsible for what they did.

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