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Be Flexible or Beware: Potential Liability for Failure to Modify Rental Due Dates for SSDI Recipients

February 12, 2019

Companies in the practice of denying requests from recipients of Social Security Disability Insurance to modify their rent due date to accommodate their payment schedule risk potentially costly liability under the Fair Housing Act according to a recently issued opinion.  

An opinion in the Eastern District of Pennsylvania may signal a need for companies to closely scrutinize their policies and practices related to adjustments of rental due dates to avoid running afoul of the Fair Housing Amendment Act (“FHAA”).[1]  Plaintiffs in Fair Housing Rights Center in Southeastern Pennsylvania v. Morgan Properties Management Company, LLC alleged that a policy of refusing to permanently adjust the rental due dates for tenants receiving Social Security Disability Insurance (“SSDI”) violated the FHAA’s reasonable accommodation requirement and had a disparate impact on the disabled.  In denying the defendant’s motion for summary judgment, Judge Surrick held that a property management company’s policy of denying these requests could constitute discrimination in violation of the FHAA.

There are two relevant ways in which discrimination is prohibited by the FHAA—failure to accommodate and disparate impact. 

Failure to Accommodate

It is unlawful “[t]o discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection with such dwelling, because of a handicap.”  42 U.S.C. §3604(f)(2).  The FHAA defines “discrimination” as “a refusal to make reasonable accommodations in rules, policies, practices, or services, when such accommodation may be necessary to afford such person equal opportunity to use and enjoy a dwelling.”  42 U.S.C. §3604(f)(3)(B).  Plaintiffs alleging discrimination must show that the requested accommodation is necessary to afford handicapped individuals an equal opportunity to use and enjoy a dwelling.  This burden is satisfied by a showing that the proposed accommodation is, “(1) reasonable and (2) necessary (3) to afford handicapped persons equal opportunity to use and enjoy housing.” Scoggins v. Lee’s Crossing Homeowners Ass’n, 718 F.3d 262, 272 (4th Cir. 2013).  Once this showing has been made, the burden shifts to the defendant to establish that the requested accommodation cannot be accommodated without: 1) imposing undue financial and administrative burdens; 2) imposing an undue financial hardship on the defendant; or 3) requiring a fundamental alteration in the nature of the defendant’s business.  Hovsons, Inv. v. Township of Brick, 89 F.3d 1104 (3d Cir. 1996). 

Disparate Impact

The FHAA also outlaws, “discriminat[ing] in the sale or rental, or otherwise mak[ing] unavailable or deny[ing] a dwelling to any buyer or renter because of a handicap of (A) that buyer or renter, (B) a person residing in or intending to reside in that dwelling after it is so sold, rented, or made available; or (C) any person associated with that buyer or renter.”  42 U.S.C. §3604(f)(1).  One way of making housing “otherwise unavailable” is through the implementation of facially neutral regulations, practices or policies that have a disparate impact on people with disabilities. Bryant Woods Inn, Inc. v. Howard County, Maryland, 911 F. Supp. 918, 929 (D. Md. 1996). With disparate impact allegations, “effect, not motivation, is the touchstone because a thoughtless housing practice can be as unfair to minority rights as a willful scheme.” Reyes v. Waples Mobile Home Park Limited Partnership, 903 F.3d 415, 430 (4th Cir. 2018).  These claims are also subject to a burden shifting framework, whereby plaintiff must first make a prima facie showing that the challenged action disproportionately burdened a particular protected group so as to cause a disparate impact.  The accused must then show that the challenged practice is necessary to achieve a substantial, legitimate and non-discriminatory interest. The plaintiff must then show that these interests could be similarly advanced by another practice with a less discriminatory effect.

Undue Burden Must be More than Speculative

The argument that the requested accommodation related to financial hardship, not disability, was unavailing, with the court citing precedent that the FHAA permits consideration of a disabled person’s financial circumstances in determining whether a reasonable accommodation is required.  Finding a nexus between the tenants’ disabilities and their inability to rent at the defendant’s property due to the policy in question, the court noted the inability of SSDI recipients to work, that most rely on SSDI as their primary source of income, living check-to-check, and the staggered payment system used to distribute payments over which recipients have no control.  Where the defendant claimed the requested accommodation would cause them to suffer an undue financial hardship and make fundamental changes to their business practices, plaintiffs were able to counter with evidence that, at the properties in question, modified rental due dates were already granted to other non-disabled tenants (albeit against written policy) and employees.  Summary judgment was denied where a genuine issue of material fact existed as to the reasonableness of the accommodation.  The court found the increased administrative burdens related to manual reversal of late fees, required changes to the Yardi system, additional court time and the outside billing schedules the properties were subject to cited by the defendant were insufficiently supported with specific evidence of the actual additional cost.

The court reached the same conclusion for similar reasons with respect to the disparate impact claim. The proffered expert report noted that despite the facial neutrality of the policy, where many if not most SSDI recipient recipients live check to check and are tied to the disbursal schedule, they are unable to rent apartments they would otherwise be able to afford exclusively because of the due date policy.  As such, the policy was found to effect disabled and non-disabled tenants at extremely disproportionate rates.  Once again, the court found the defendant failed to adequately support their claimed undue hardship where they offered, “no real calculation of the cost of changing this policy, and … their fundamentally altered business practices arguments are contradicted” by evidence that Defendants already make similar accommodations for many of their tenants. 

Recommendations

Companies with policies against modifying due dates would be well served to take steps to ensure that the policy is being uniformly enforced including with respect to special accommodations granted to employees living on site.  In light of this holding that these requested accommodations fall squarely within the purview of the FHAA, defending these policies will likely come at increased costs, where defendants will be required to provide detailed (and costly) cost analysis to have any hope of prevailing, and any inconsistency in application will undermine a defense.


[1] The Fair Housing Amendments Act of 1988 amended the Fair Housing Act of 1968 to extend protection to people with disabilities.

About the Author

Courtney B. Schaefer is an experienced trial lawyer representing individual and commercial clients in a broad range of complex civil, administrative and criminal matters. As part of the Shulman Rogers Landlord-Tenant team, Courtney’s proactive advice, particularly with respect to Fair Housing matters, often helps residential and commercial property owners avoid costly litigation, state and federal fines and potential damage to their reputation. She writes frequently on legal issues and has been published by The Daily Record.