Be Prepared for Fair Housing Testers

In this month’s lesson, we’re going to discuss fair housing testing, a tool used by enforcement officials and private fair housing organizations to ferret out unlawful housing discrimination.

Fair housing testing involves paired testers—individuals with similar qualifications but of different protected classes—who may contact your property by email, phone, your website, or in person to check for differences in how they’re treated based on their race, national origin, or any other characteristics protected under federal, state, or local law.

Should you be worried that you could be targeted for fair housing testing? Not if you’re prepared, by ensuring your policies comply with fair housing law, treating all prospects consistently, thoroughly training your employees, and monitoring compliance on your own. Since it’s unlikely that you’ll know when an email, phone call, or a visit from a prospect is really from a fair housing tester, your best bet is to treat everyone contacting your property as if they’re a tester.

In this issue, we’ll explain how fair housing testing works and suggest seven rules for avoiding problems if your property is ever subjected to fair housing testing. Then, you can take the Coach’s Quiz to see how much you’ve learned.

WHAT DOES THE LAW SAY?

The Fair Housing Act (FHA) prohibits discrimination in housing because of race, color, religion, sex, national origin, familial status, or disability. In addition, many state and local fair housing laws ban discrimination based on source of income, sexual orientation and gender identity, and other characteristics.

HUD and the Justice Department are the federal agencies charged with enforcing the FHA; in states and local governments with fair housing laws substantially equivalent to the FHA, officials in those jurisdictions handle federal as well as state and local discrimination complaints. The law also allows individuals and private advocacy organizations to file a HUD complaint or file a lawsuit directly in federal court.

While HUD isn’t providing the levels of funding for fair housing enforcement that it used to, the Justice Department has its own fair housing testing program to identify and challenge cases involving a pattern or practice of housing discrimination. State agencies and nonprofit organizations also undertake routine testing of compliance with not only the FHA but also state and local fair housing laws.

WHAT TRIGGERS A FAIR HOUSING TEST?

Fair housing testing may be triggered by:

• A complaint that a prospect or applicant makes to an enforcement agency or nonprofit fair housing organization; or
• Routine investigations fair housing organizations undertake to gauge compliance in a geographic area.

Complaint-based testing is used to verify whether an individual who claims a particular property discriminated against her based on her race or other characteristic has a legitimate complaint. If the results of testing support the individual’s claim, then the evidence gathered may be used in court or enforcement proceedings.

Example: A leasing agent at an Illinois property told a woman looking for a two-bedroom unit that such units were available. But then, upon learning that that the woman would be living there with her spouse and three children, the leasing agent said that a family of five couldn’t live in a two-bedroom unit and refused to even schedule an appointment for a viewing.

The woman contacted HOPE Fair Housing Center, a private fair housing organization, which sent a tester posed as a married woman seeking a two-bedroom apartment for her family of two adults and three children to the property. An employee told her that the property couldn’t rent a two-bedroom unit to more than four people because of “fair housing laws.” That led to a broader investigation involving fair housing testing at four other properties managed by the company in Illinois, yielding similar results.

During the course of its investigation, HOPE contacted the Fair Housing Center of Central Indiana (FHCCI) to similarly investigate the company’s properties in Indiana. FHCCI’s testing indicated that the company enforced the same two-person-per-bedroom policy in Indiana as the woman and HOPE encountered in Illinois.

The advocacy groups then filed a HUD complaint, accusing the company of systemic discrimination against families with children by enforcing an occupancy policy of no more than two people per bedroom in each apartment, regardless of the unit’s square footage or whether that unit has a den, office, loft, or other feature that could provide an additional bedroom or living area for a child.

The company denied any wrongdoing but agreed to settle the case. Under the settlement, the company agreed to pay $60,000 in costs and damages, change their occupancy policy so that the policy is no more restrictive than the applicable local occupancy code, and train their employees and agents on fair housing laws and responsibilities [FHCCI v. Marquette Management, Inc., HUD-approved Conciliation Agreement].

In routine fair housing investigations, testing may be initiated by a fair housing organization on its own or at the behest of federal, state, or local enforcement officials to check whether discriminatory policies or practices are a problem at one or more properties within a geographical area.

Example: In 2017, Housing Opportunities Made Equal of Virginia, Inc. (HOME) conducted a series of tests to assess the types and severity of the barriers individuals with criminal histories face when seeking housing in Virginia. As part of this effort, HOME investigated the criminal records policy maintained at various properties by reviewing application materials and conducting testing.

At one property, HOME conducted a series of tests, including phone calls and site visits involving HOME workers who posed as potential tenants with a felony convictions applying for housing at the property. In each instance, an agent allegedly told the tester that because of the felony conviction, the tester’s application would automatically be rejected.

The ACLU of Virginia joined HOME in suing the property, alleging that its criminal background screening policy discriminated against people on the basis of race.

The property decided to settle the case, agreeing to change its criminal record screening policy. The revised policy considers only specific categories of offenses, excludes misdemeanor convictions, and doesn’t treat people differently based on whether the applicant is on probation or parole. The policy also ensures individualized consideration for every applicant, allowing a prospect to share information as part of the application review process, including the facts or circumstances surrounding their criminal conduct, proof of rehabilitation efforts, and evidence of a good tenant or employment history before or after the conviction or conduct.

Also, as part of the settlement, the property agreed to train employees in fair housing and make a $15,000 donation to HOME to continue its systemic work to uncover and address housing discrimination. The property also had to pay damages and attorney’s fees related to the matter [Housing Opportunities Made Equal of Virginia, Inc. v. Wisely Properties, LLC and Multifamily Management Services, Inc., No. 3:19-cv-413 (E.D. Va.)].

7 RULES FOR BEING PREPARED FOR FAIR HOUSING TESTERS

Rule #1: Treat Everyone as a Possible Fair Housing Tester

On any given day, you’re likely to have many interactions with prospects, including phone calls, email inquiries, or visits to your property. They may be inquiries about advertised vacancies or the availability of certain types of units at the property.

Our fair housing experts warn that you may never know when one of these encounters is part of a fair housing test. That’s because enforcement agencies and fair housing organizations generally exercise caution in selecting and training fair housing testers.

In any given geographical area, local fair housing organizations may maintain a pool of trained fair housing testers, who are called upon infrequently to preserve their anonymity. In general, they’re volunteers who may receive a stipend for their time and travel. Because of the potential that they may be a party or witness in any resulting litigation, they’re likely to be screened for any conflicts of interest. In fact, HUD enforcement officials go to great pains to safeguard the confidentiality of a tester’s identity.

So even if you have an inkling that a particular prospect is a tester—because of the type of questions being asked, the way he carries himself, or the timing of similar contacts—you really can’t be sure if a given encounter is part of a fair housing test. Testers posing as prospects may call or email your office or visit the property to check for differences in treatment based on race, national origin, disability, familial status, or other characteristics protected under state or local laws.

So why take chances? Your best bet is to treat everyone contacting or visiting your property as if they were part of a fair housing test. Keep personal biases out of the leasing office and treat all prospects with professional courtesy, starting with the initial contact—whether online, in an email, on the phone, or during visits to your property.

Rule #2: Incorporate Fair Housing into Your Property’s SOP

Make compliance with fair housing an integral part of your property’s standard operating procedures. No doubt, you have numerous policies, practices, and procedures governing the marketing, leasing, maintenance, and other critical operations within your property. Many are based on business decisions, while others reflect legal requirements, such as landlord-tenant laws, health and safety codes, and other regulatory obligations.

Incorporating fair housing requirements serves both: It’s not only a legal requirement, but it’s a good business decision. Making your property available to any prospect who meets objective criteria to rent meets your legal obligations under fair housing laws. And by distinguishing your reputation as an equal housing provider, you’ll decrease the risk of being targeted for fair housing testing based on suspicions about discriminatory policies or practices.

Maintain a formal written fair housing policy, affirmatively stating that your property does not discriminate on the basis of race, color, religion, national origin, sex, disability, or familial status. Be sure to include any characteristics protected under state and local laws, such as sexual orientation, marital status, or source of income. Review your policies periodically, and revise them as necessary, to reflect changing rules or trends likely to be the subject of fair housing testing. Include your fair housing policy in your rental applications and leasing agreements, and post it in your office, alongside the fair housing poster required under HUD regulations.

Coach’s Tip: HUD’s fair housing poster affirms that your property does business in accordance with the federal fair housing law. The poster is available at https://www.hud.gov/sites/documents/928.1.pdf.

Rule #3: Watch What You Say in Your Advertising

Pay particular attention to your advertising and marketing policies to avoid triggering a fair housing investigation. Fair housing law bans discriminatory statements, including advertising, whether online or in other forms of media, so you should make sure your website, ads, brochures, and other media reflect your fair housing policy.

Fair housing organizations are actively monitoring online advertising for discriminatory statements, so you should avoid questionable phrases or buzzwords that suggest a preference for or against prospective renters based on characteristics protected under federal, state, or local law. For example, you shouldn’t use words or phrases that express a preference against members of protected groups—such as “no kids”—or a preference for others—such as “perfect for singles.” Federal fair housing law prohibits housing providers from denying or limiting housing to families with children under age 18, including refusing to negotiate, making discriminatory statements, and publishing discriminatory advertisements based on familial status.

Example: In 2019 the Denver Metro Fair Housing Center filed a complaint with HUD alleging that the owners of a condominium complex discriminated against families with children when they posted ads in a local newspaper that described the complex as a “private, restricted adult … community” where renters must be 35 years or older. The complaint further alleged that the condo management team refused to rent a unit to a fair housing tester who claimed to have a 4-year-old child. HUD charged the owners and manager with violating the FHA by discriminating based on familial status [HUD v. Welch, FHEO No. 08-19-9091-8].

Rule #4: Ensure Consistency in the Leasing Office

Focusing attention on the initial stages of the leasing process may also help you pass muster if your property is ever the subject of fair housing testing. That’s because testing is often focused on differences in the information provided to prospects about the availability of units. So it’s important to ensure that leasing agents have accurate, up-to-date information about vacancies. The FHA makes it unlawful to discriminate against applicants for housing because of their protected class, including by providing different and false information about terms, conditions, and availability of rental units.

Example: A domestic violence survivor who was staying at a shelter with her child had no current income but had a New York City housing voucher that would pay 100 percent of her rent. She applied for an apartment, but the landlord denied having any available units. Suspecting discrimination, she sought assistance from the nonprofit Fair Housing Justice Center (FHJC). Having received similar complaints from other individuals, FHJC used trained testers to investigate. It then sued the landlord for source of income discrimination, which is barred by state and city laws.

The landlords asked the court to dismiss the case, claiming that any rejections of prospective tenants were properly based on unsatisfactory credit reports. But FHJC argued that where the city housing voucher would pay a tenant’s entire rent, it was discriminatory and unlawful for the landlord to refuse to rent to the tenant on the basis of claimed credit issues.

The court ruled against the landlord. A trial was necessary to determine how the landlord processed applications of voucher applicants and whether it participated in management schemes to deny applications [Fair Hous. Justice Center, Inc. v. Fairstead Mgmt. LLC: Index No. 952363/2023, 2024 NY Slip Op 33325(U)(Sup. Ct. NY; 9/19/24)].

Rule #5: Provide Fair Housing Training to All Employees

All your employees, from your leasing staff to service workers in your maintenance, housekeeping, and landscaping operations, should receive periodic fair housing training. Although most testing efforts are addressed to your leasing office, interactions with any employee who interacts with the public could lead to a discrimination complaint, which in turn could trigger a fair housing test.

The training should cover the fundamentals of fair housing, including who is protected under federal law as well as any applicable state and local laws. It should also explain your property’s policies and what employees can and can’t do under fair housing law. Emphasize the importance of keeping personal biases out of the workplace and treating everyone at the property with courtesy and professionalism. Make sure employees understand the chain of command so they know where to go for help or to report any fair housing concerns or observations.

Managers should monitor how the leasing staff, particularly new employees, interact with prospects on the phone, in site visits, and online. Consider an open-door policy for management staff, so managers can hear what’s going on in the office, and encourage managers to periodically sit in on phone calls or meetings with prospects and to tag along on tours.

It’s a good idea to have all employees sign an acknowledgement saying that they agree to abide by fair housing laws and that they understand that they may be monitored and recorded for training and compliance purposes.

Coach’s Tip: Our experts warn that you shouldn’t allow new hires to interact with the public without at least a basic understanding of fair housing law. Otherwise, they may inadvertently make well-intentioned, but inappropriate comments when answering the phone or meeting prospects. For example, an inexperienced employee could be overly curious about the nature of a prospect’s disability or cultural differences reflected in the prospect’s accent or appearance—just the type of conduct that could draw the attention of fair housing testers.

Rule #6: Shop Your Property

Shopping yourself—either by internal means or by hiring an outside shopping service—is one of the best ways to ensure that you won’t be caught off-guard from the results of a fair housing test. It’s an effective tool to monitor whether your employees are complying with fair housing laws and to identify any weaknesses, either in an employee’s performance or in the effectiveness of your training program.

You can do it informally, by asking people you know to pose as rental prospects, but many properties hire outside shopping services to contact the leasing office to monitor sales and marketing as well as fair housing issues.

Whatever means you use, it’s important to follow up to determine the root cause of any deficiencies detected during the shop. There could be a number of reasons why a leasing consultant may respond inappropriately to a shopper’s question. If it’s because the employee truly acted improperly, you should respond with disciplinary action. If the employee simply misunderstood fair housing requirements, you’ll know that the employee needs additional training.

Alternatively, the results of a shopping test may reveal a larger problem, for example, that your policy or training on a particular issue is unclear or incorrect. If that’s the case, you’ll have an opportunity to rectify the problem on your own, rather than having to address it after the fact if it surfaces for the first time during a fair housing test.

Rule #7: Keep Good Records

Good recordkeeping is important so you can respond accurately to complaints if, despite your best efforts, fair housing testing raises questions about seemingly discriminatory behavior. Retain records of all contacts, even if they don’t result in the rental of a unit or follow-up on initial inquiries. Keep copies of phone logs, guest cards, unit availability records, application forms and supporting documents, screening results, and any other document related to the application process.

It’s also important to keep good records to document when and how your property keeps track of available units. There’s a risk of a discrimination claim any time a prospect is told that there are no units available at a property. And it’s hard to defend against such claims if it turns out that the information was faulty, or if a prospect is turned away on the same day as another prospect was told that a unit was available. To ensure accurate, consistent responses to inquiries about available units, establish a process to document when units become available, and make sure everyone on your staff has up-to-date information.

Coach’s Tip: Keep your written records for as long as possible, so you can use them to defend yourself if you’re sued. Fair housing complainants have up to two years after the discrimination occurs to file in federal court or up to one year to file with HUD. And some prospects or testers may have up to six years to file a civil rights lawsuit. So it’s a good idea to check with your attorney before discarding old records.