Follow Eight Rules to Avoid 'Familial Status' Discrimination

Tax credit sites are required to abide by the nondiscrimination provisions of the federal Fair Housing Act (FHA) and their state or local fair housing laws. It's imperative that site owners and managers know the rules. The IRS has stated that a finding of discrimination by the Justice Department or HUD could result in the loss (or recapture) of tax credits.

One sometimes misunderstood aspect of the FHA is its ban on housing discrimination based on “familial status.” This ban covers more people than you think. It’s common to refer to the rules as protecting families with children, but the ban on discrimination based on familial status extends well beyond that to cover applicants and residents based on the presence of a child 18 and under in the household. It also protects pregnant women and those in the process of obtaining legal custody of a child under the age of 18.

In the most basic terms, the law bans sites from denying housing to families with children. But you’ll have to do more than that to avoid fair housing trouble based on familial status since discrimination claims may arise from the way you advertise vacancies, show apartments, apply occupancy standards, and enforce site rules, to name a few aspects of day-to-day site management.

We'll give you eight rules for what not to do when dealing with families with children—that is, potential trouble spots and how to handle them.

Rule #1: Don’t Deny Housing to Households with Children

Though it has been unlawful for 25 years, sites continue to run afoul of fair housing provisions by refusing to rent to applicants because they have one or more children living with them. Unless the site qualifies as senior housing, it’s unlawful to screen out or deny housing to families with children.

Some housing providers have strong reservations against renting to households with children because of concerns about potential noise complaints from crying babies or boisterous youngsters, damage to the unit or common areas from playing children, or liability for falls or other accidents involving young children. Though you may believe your concerns are justified, you can’t refuse to rent to an applicant simply because there are children living within the household. In fact, simply expressing a preference against families with children can lead to a fair housing complaint.

Rule #2: Don’t Claim Senior Housing Exemption Unless You Qualify

The familial status provisions are aimed at preventing discrimination based on the presence of a child or children under 18 in the household. The FHA defines “familial status” as one or more children under the age of 18 “being domiciled with” any of the following individuals:

• A parent or another person having legal custody of the child or children; or
• The designee of such parent or other person having such custody, with the written permission of such parent or other person.

The familial status provisions also apply to pregnant women and anyone in the process of securing legal custody of a child under 18.

It's important to note, however, that fair housing law recognizes an exception to the familial status provisions that allow age-restricted sites to lawfully exclude children. But it’s a limited exception—it applies only if the site satisfies strict legal requirements to qualify as “housing for older persons.” Unless they do so, sites may not simply declare themselves as “adult sites” or exclude families with children under 18 from living there.

Housing that meets the FHA definition of housing for older persons is exempt from the law's familial status requirements, provided that:

• HUD has determined that the dwelling is specifically designed for and occupied by elderly persons under a federal, state, or local government program; or
• It is occupied solely by persons who are 62 or older; or
• It houses at least one person who is 55 or older in at least 80 percent of the occupied units, and adheres to a policy that demonstrates intent to house persons who are 55 or older.

Rule #3: Don’t Treat Prospects Differently Because They Have Children

Treat all prospects consistently, regardless of whether there are children in the household. It’s unlawful to impose different terms and conditions of a tenancy on households based on familial status, so you can’t make the leasing process more cumbersome, or quote varying rental terms, in an effort to discourage applicants with children from renting at your site.

Rule #4: Don’t Apply Unreasonable Occupancy Standards

Fair housing law doesn’t prevent sites from maintaining reasonable occupancy policies as long as they apply them consistently, but it’s illegal to set overly restrictive occupancy standards that have the effect of excluding families with children. If a site’s occupancy policy keeps the number of occupants unreasonably low, it’s likely to discourage families with children from living there unless they’re willing to pay for a larger unit.

To ensure your site’s occupancy standards pass muster, the first step is to check applicable state and local laws, which may limit occupancy based on the number of people, square footage, and other factors. In general, federal fair housing law defers to reasonable state and local restrictions on occupancy, so you have to be familiar with those laws before you set or enforce your occupancy standards.

HUD suggests a two-person/per-bedroom standard, but that isn’t written in stone. In a recent statement, HUD pointed to language in its 1991 guidance, which states that although an occupancy policy of two persons in a bedroom is generally reasonable under the FHA, such a policy might in some circumstances unfairly exclude families with children and violate federal fair housing law.

In one case, a national management company agreed to pay $15,000 to settle a HUD complaint alleging discrimination against a Connecticut family with children. The couple claimed that the company refused to renew their lease after concluding that the family of five was too large for the two-bedroom unit, where they had lived for nearly a decade. Allegedly, the company maintained an unwritten policy restricting occupancy to two persons per bedroom regardless of size, claiming that Connecticut state law required the restriction. But HUD maintained that neither state law nor city ordinances impose a blanket restriction [Secretary, HUD v. Hamilton Point Property Management, LLC, August 2013].

Rule #5: Don’t Express Unlawful Preferences in Statements or Ads

Fair housing law makes it unlawful to make any statements, orally and in writing, expressing a preference against families with children under 18. Advertisements may not contain limitations on the number or ages of children, or state a preference for adults, couples, or singles, according to HUD guidelines. The law doesn’t require proof of discriminatory intent to establish a violation.

Increasingly, fair housing organizations have been monitoring Craigslist and other online media to check for discriminatory advertisements. All too often, they find blatantly discriminatory ads—such as “No kids”—but even ambiguously worded ads can lead to a fair housing complaint if the language suggests a preference for singles or against families with children.

Rule #6: Don’t Engage in Unlawful Steering

Unless you’re exempt as a senior housing site, it’s unlawful to discourage families with children under 18 from living at your site—or in certain parts of your site.

When showing units to prospects, tell them about all available units that meet their stated requirements. Limiting a prospect’s housing choices because she has children under 18 in the household is a fair housing violation, commonly known as “steering.” In general, steering means guiding, directing, or encouraging prospects to live in—or not live in—certain sections of your site based on any characteristic protected under federal, state, or local law. Even if you believe it’s better to keep children out of harm’s way, you may face liability for unlawful steering if you don’t tell families with children about available units on upper floors or near water features, such as a pond or pool.

Rule #7: Don’t Unfairly Target Children in Site Rules

Disputes over the site’s rules—or the way the rules are enforced—can lead to fair housing trouble based on familial status. Rules governing residents’ behavior in common areas, such as hallways, parking lots, and outside spaces serve a legitimate purpose—to safeguard property and ensure safety. But you may face a discrimination claim if your rules unreasonably target children or limit their behavior.

As much as possible, avoid adopting rules that specifically target children’s behavior. Rules banning children from playing in common areas—or requiring adult supervision on all children under 18—could lead to accusations that you’re treating families with children less favorably than adult households living at the site.

In one case, a court addressed whether a California site’s rules amounted to discriminatory statements based on familial status. Among other things, the rules allegedly stated, “Please keep children under control at all times. It is not the responsibility of the Manager or other tenants to babysit them.” The court agreed that the rule explicitly treated families different than adults-only households: Members of adults-only households were not required to be “under control” at all times, nor did the rule require tenants to keep adult guests “under control.” The court found that the rule targeted only families with children, but that further proceedings were needed to consider the owners’ alleged reasons for adopting the rule: to inform tenants that they were responsible for their child’s safety, and to avoid potential liability that could arise when tenants’ children, who were unsupervised, were injured or caused property damage [Blackington v. Quiogue Family Trust, April 2013].

Even if you adopt rules that govern all residents—not just children—you could still face a discrimination claim if you enforce the rules only against children. Singling out children for breaking the rules against noisy behavior in common areas, but ignoring similar transgressions by adults, could lead to a fair housing claim based on familial status.

Rule #8: Don’t Discriminate Against Residents for Adding a Child to the Household

Think twice before taking steps against residents for adding one or more children under 18 to the household. Fair housing rules banning discrimination based on familial status apply not only to families with children under 18, but also to pregnant women and others who have or are in the process of adopting or obtaining custody of a child.

Consequently, it’s unlawful to discriminate against a resident who has a baby, adopts a child, or takes custody of grandchildren. As long as the unit is large enough for the family under applicable occupancy limits, you could face fair housing liability if you evict them, refuse to renew their lease, or insist that they move to a larger unit.

In general, a new household’s composition should not be changed within the first six months of its initial lease without recertifying the household, unless the change was unforeseen at the time of move-in or was due to an extenuating circumstance. Intentionally understating or overstating the number of household members in order to meet a particular income limit is an act of fraud that will result in a finding of noncompliance.

However, a recalculation is not required for the move-in or move-out of a dependent child, dependent student, or unborn child, who can be added or subtracted from the household at any time.