Landlords to Pay $74,000 in Dispute Over Occupancy Limits

by | Mar 11, 2019 | Rental Property Management Tips

The landlords of  a single-family rental home in Minnesota have agreed to pay $74,000 in damages and penalties to resolve allegations of housing discrimination.

The charges stem from a refusal to rent a large property to an extended family, and allegations of race discrimination.

According to HUD’s allegations, the owner and manager of a 7,000 square foot home on eight acres refused to rent to an extended family of eleven. The applicants claim they were steered away with disincentives including a requirement that they pay an additional $1,000 per month in rent.

The property is a six-bedroom, five-bathroom home with two kitchens. Although the applicants say they agreed to the additional rent payment and were otherwise qualified for the property, they still were rejected. HUD alleges the rejection was based in part on ethnicity.

The landlords claim that the decision to reject the family was based on functionality of the home, and that the septic system was designed for ten people. They also deny that the applicants were told they would have to pay a higher rent.

However, to avoid further litigation, the landlords agreed to pay damages. In addition to the $74,000 in payments, the landlords agreed to run a $500 anti-discrimination advertisement in a local newspaper and undergo fair housing and multicultural-sensitivity training.

In recent years, HUD has taken the position that occupancy limits may be discriminatory when applied to large families. While the standards are fluid, HUD has offered some guidance on occupancy limits. These factors play into the decision:

The overall square footage of the unit and common areas;
The layout of the rental property, including whether  bonus rooms, offices, lofts or dens are suitable for sleeping;
The age of the children;
Local fire, building safety and zoning ordinances. This can include septic or sewer, plumbing and other building system issues. However, these standards are persuasive only, and do not provide landlords with justification to reject families; and
State statutes, city ordinances, and HOA bylaws, also persuasive only, and can be challenged if the overall impact is to limit families.

Landlords should not adopt a blanket policy for determining occupancy limits like counting the number of bedrooms or applying gender rules for children sharing bedrooms.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

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Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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