Received Discrimination Complaint! Now what?!

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Received Discrimination Complaint! Now what?!

Rob Lehmann
Investor · Newport, RI · Member since 2012 · 24 posts · 13 votes

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.

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Charlie MacPherson
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
8y

@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.

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  • Ihe O.
    Investor · Laurel, MD · Member since 2016 · 395 posts · 191 votes
    8y
    Originally posted by @Cathie Kovacs:

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

    Not in my experience @Ihe O.  That was my point. No one here (CT) asks for your side of the story. Since you make money being a landlord, you are assumed to be guilty. In “he said, she said” the landlord loses and the claimant isn’t even required to provide proof. 

    In this case, there is audio evidence so somebody is going to pay here, it’s just a matter of who (owner, PM or PM’s insurance company). 

    You were not obliged to acquiesce.  Mediation is never binding or obligatory. The process you describe is not how the law works so you could have gone to court. Nobody can force you to agree to a mediation.

    0Reply
  • Cathie Kovacs
    Rental Property Investor · Stamford, CT · Member since 2017 · 153 posts · 75 votes
    8y
    Originally posted by @Ihe O.:
    Originally posted by @Cathie Kovacs:

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

    Not in my experience @Ihe O.  That was my point. No one here (CT) asks for your side of the story. Since you make money being a landlord, you are assumed to be guilty. In “he said, she said” the landlord loses and the claimant isn’t even required to provide proof. 

    In this case, there is audio evidence so somebody is going to pay here, it’s just a matter of who (owner, PM or PM’s insurance company). 

    You were not obliged to acquiesce.  Mediation is never binding or obligatory. The process you describe is not how the law works so you could have gone to court. Nobody can force you to agree to a mediation.

    Of course not but you’ll pay more in legal fees to go to court. 

    0Reply
  • Ihe O.
    Investor · Laurel, MD · Member since 2016 · 395 posts · 191 votes
    8y
    Originally posted by @Cathie Kovacs:
    Originally posted by @Ihe O.:
    Originally posted by @Cathie Kovacs:

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

    Not in my experience @Ihe O.  That was my point. No one here (CT) asks for your side of the story. Since you make money being a landlord, you are assumed to be guilty. In “he said, she said” the landlord loses and the claimant isn’t even required to provide proof. 

    In this case, there is audio evidence so somebody is going to pay here, it’s just a matter of who (owner, PM or PM’s insurance company). 

    You were not obliged to acquiesce.  Mediation is never binding or obligatory. The process you describe is not how the law works so you could have gone to court. Nobody can force you to agree to a mediation.

    Of course not but you’ll pay more in legal fees to go to court. 

     Ok then that is choosing to settle rather than going to court  - guilt and innocence has nothing to do with that.

    0Reply
  • Amy Beth
    Rental Property Investor · Edison, NJ · Member since 2016 · 753 posts · 565 votes
    8y
    I would consult with a lawyer yourself at least once. I would not count on the property manager’s lawyer since they are hired to protect the PM and not you. You need to protect your own interests.
    0Reply
  • Chris Masons
    Investor · Union, NJ · Member since 2011 · 838 posts · 295 votes
    8y

    This thread has really got me wondering how the Laws are in NJ with regard to being allowed to deny a  section 8 tenant.

    Does anyone in NJ happen to know this?

    I have actually told people I do not accept section 8 but something in back on my head tells me that in NJ the landlord has the right  to accept or reject a tenant based on this.

    Typically a prospective  tenant will ask me over the phone " do you accept section 8"

    Can anyone clarify? Guess I will do some research in the meantime...   As far as OP goes, I would at least have a consultation with an attorney and see where it goes..

    Keep us posted as we are at least I am very curious of the outcome of this.  In the end at the very least I hope we can all learn something from this...

    best,

    Chris

    0Reply
  • Odie Ayaga
    Specialist · Delran, NJ · Member since 2016 · 2k+ posts · 951 votes
    8y

    @Ihe O. as this could hopefully serve as a learning opportunity for other landlords, outside of ensuring that a PM has insurance that would cover the landlord in a case like this is there anything the landlord might be able to do to defend their stance that a PM was not operating as per their instructions thereby indemnifying them of blame? For instance, if he provided an SOP that the PM had signed off on that specifically stated the only applicants they are to reject out of hand and that all other applicants would be considered?

    0Reply
  • Scott Weaner
    Rental Property Investor · Yardley, PA · Member since 2008 · 1k+ posts · 561 votes
    8y

    @Chris Masons, I too am in NJ. When I am asked about accepting S8 I mention that I haven't before but would consider it. I mention that the unit in question has not yet been approved, however. 

    If they apply and are accepted I would go through the process. 

    I wonder what would happen if the inspector demanded certain repairs that I did not think were necessary? Could I simply not do those, or could I be forced to do them? I truly don't see how we are forced into this.

    0Reply
  • Amy Beth
    Rental Property Investor · Edison, NJ · Member since 2016 · 753 posts · 565 votes
    8y
    I would not suggest that you say that you do not accept section 8 vouchers in New Jersey. https://www.google.com/amp/s/articles.nj.com/politics/index.ssf/2017/04/nj_ag_warns_landlords_over_no_section_8_housing_ad.amp
    1Reply
  • Ihe O.
    Investor · Laurel, MD · Member since 2016 · 395 posts · 191 votes
    8y
    Originally posted by @Odie Ayaga:

    @Ihe O. as this could hopefully serve as a learning opportunity for other landlords, outside of ensuring that a PM has insurance that would cover the landlord in a case like this is there anything the landlord might be able to do to defend their stance that a PM was not operating as per their instructions thereby indemnifying them of blame? For instance, if he provided an SOP that the PM had signed off on that specifically stated the only applicants they are to reject out of hand and that all other applicants would be considered?

    That will not stop the complaint being pursued against the Landlord, it only helps the landlord pursue the PM for his liability.

    Think about it - you go to a store and get punched by an employee the store produces a document showing that the employee was not acting in accordance with their instructions. Is that going to absolve their liability - of course not.

    0Reply
  • Odie Ayaga
    Specialist · Delran, NJ · Member since 2016 · 2k+ posts · 951 votes
    8y

    @Ihe O. I hear you on that which is why I said I see the other side too, but I would think in that case the store owner wouldn't be found to have broken the law. They might face civil liability, but not legal I would think.

    0Reply
  • Ihe O.
    Investor · Laurel, MD · Member since 2016 · 395 posts · 191 votes
    8y
    Originally posted by @Odie Ayaga:

    @Ihe O. I hear you on that which is why I said I see the other side too, but I would think in that case the store owner wouldn't be found to have broken the law. They might face civil liability, but not legal I would think.

     Right.

    Back to original example it is open to the Complainant to go after either the Landlord or the PM. The Landlord cannot say I'm not going to pay because it's the PM's fault. No they would have to pay and then to try and recover from the PM.

    In fact as I see it I don't think the SOP is that relevant because the Landlord could say the PM had a professional obligation to not act unlawfully and should have refused such an instruction.

    But at the end of the day the person you are pursuing must be capable of paying (or have insurance that can pay).

    1Reply
  • Odie Ayaga
    Specialist · Delran, NJ · Member since 2016 · 2k+ posts · 951 votes
    8y

    Thanks for the info @Ihe O. very informative!

    0Reply
  • Thomas Hickey
    Real Estate Investor · Peabody, MA · Member since 2013 · 304 posts · 91 votes
    8y
    Scott Weaner Scott I would think that you are required to make any repairs necessary to bring the apartment up to their standards. Much like failing to rent an apartment that contains lead to families with children holds you liable for discrimination.
    0Reply
  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    8y

    With Section 8 in Texas at least, you are not required to make the repairs necessary to qualify for the program 

    You are not required to remedy lead paint either. You must however disclose any knowledge of

    1Reply
  • Thomas Hickey
    Real Estate Investor · Peabody, MA · Member since 2013 · 304 posts · 91 votes
    8y
    Greg H. Every state is different. In blue states you likely are required
    0Reply
  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    8y
    Originally posted by @Thomas Hickey:

    Greg H.

    Every state is different. In blue states you likely are required

     The answer is no in all 50 states.  The inspection is to see if the property meets the criteria to qualify for the program.  Even in blue states you are not forced to do any and all repairs required.  As mentioned in other threads, you cannot deny an applicant from applying due to their voucher.  From a realistic standpoint, some properties could require $10,000+ in repairs.  How could an owner be forced to complete them and what would be the penalty if the owner fails/is unable to satisfactorily complete?

    0Reply
  • Bart H.
    Dallas, TX · Member since 2016 · 1k+ posts · 745 votes
    8y
    Originally posted by @Greg H.:

    With Section 8 in Texas at least, you are not required to make the repairs necessary to qualify for the program 

    You are not required to remedy lead paint either. You must however disclose any knowledge of

     You don't have to accept section 8 housing in Texas, at all.

    Its so bizarre to me that the government can force you to take a tenant who doesn't qualify on income.  The marketplace is telling you that there is a difference in the net value based on source of income.

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