How To Comply With Fair Housing Law In Senior Communities

This month's issue focuses on the rules that senior communities must follow to qualify as housing for “older persons” under federal fair housing law. Senior communities that comply with strict technical requirements are exempt from the general rules that protect families with children. It's essential for senior communities to understand and comply with the rules to preserve their ability to exclude or otherwise treat families with children differently than they treat other applicants.

It's also a good idea for everyone, even those who do not operate senior housing communities, to have a basic understanding of the federal rules governing housing for older persons. An understanding of the rules will enable communities to prepare to meet the pressing demand for senior housing as the U.S. population ages in the coming decades.

A commission created by Congress sounded a warning a few years ago, when it declared that the nation faces a “quiet crisis” in meeting the housing and health needs of the rapidly aging population. The aging of the post-World War II baby boom generation will cause the United States to face critical shortages in housing and supportive health services for seniors by 2012, according to the Commission on Affordable Housing and Health Facility Needs for Seniors in the 21st Century.

Based on its analysis of the housing and health needs for the next generation of older Americans, the commission's 2002 report called for intensified government, private sector, nonprofit, and faith-based efforts to improve, streamline, extend, and unify services for seniors.

Recently released projections from the U.S. Census Bureau reinforce the commission's findings. In 2030, when all of the baby boomers will be age 65 or older, nearly one in five U.S. residents is expected to be 65 or older. This age group is expected to increase to 88.5 million in 2050, more than doubling the number in 2008 (38.7 million). Similarly, the 85-and-older population will more than triple, from 5.4 million to 19 million, between 2008 and 2050.

In this month's lesson, we'll give you six rules for complying with fair housing law in senior communities, to provide an overview of what's involved to qualify for and maintain the senior housing exemption. Then, you can take the Coach's Quiz to see how much you have learned.

WHAT DOES THE LAW SAY?

The Fair Housing Act (FHA) protects applicants and residents of housing communities from discrimination on the basis of race, color, national origin, religion, sex, disability, and familial status.

Congress added the protection based on familial status when it amended the FHA in 1988. In general, this protection prohibits communities from excluding or otherwise discriminating against families with children under the age of 18.

Nevertheless, Congress recognized the need to preserve housing specifically designed to meet the needs of senior citizens. Consequently, the 1988 amendment created an exemption from the FHA's familial status requirements for communities that qualify as “housing for older persons.” After a wave of litigation generated by the original legislation, Congress amended the law in the Housing for Older Persons Act of 1995 (HOPA), resulting in the current version of the federal exemption for senior housing.

The exemption allows senior-housing communities that meet specific requirements to legally exclude families with children. The senior-housing exemption applies only to the FHA's familial status provisions; communities must still abide by the law's protections based on race, color, national origin, religion, sex, and disability.

The exemption applies to housing communities or facilities, which are governed by a common set of rules, regulations, or restrictions. A portion of a single building is not considered a housing facility or community, according to HUD. The law describes three types of communities that are eligible for the senior-housing exemption:

55-and-older communities: Communities that house at least one person who is 55 or older in at least 80 percent of the occupied units, and adhere to a policy that demonstrates intent to house persons who are 55 or older;

62-and-older communities: Communities intended for and occupied solely by persons who are 62 or older; and

Publicly funded senior housing communities: Housing communities where HUD has determined that the dwelling is specifically designed for and occupied by elderly persons under a federal, state, or local government program.

It's important to remember that the senior housing exemption is an exception to the general rules protecting families with children. In most cases, a dispute concerning a community's ability to qualify for the exemption follows a fair housing complaint filed by a family with children, according to Atlanta-based fair housing attorney Robin Hein.

The law treats the exemption as a defense to the claim, which requires the community to prove its compliance with all of the law's requirements on the date of the alleged discriminatory act. Unless the community has the documents needed to prove that it qualified for the senior housing exemption, Hein warns, it will be liable for discrimination based on familial status.

Example: A Tennessee community recently was found liable for violating the FHA's ban on discrimination based upon familial status, because it failed to comply with the requirements to qualify for the 55-and-older exemption.

The community's owner adopted a policy to make the community an “adults-only” facility by denying residency by anyone under age 21 or by families with children. He admitted that the community did not advertise itself as being restricted to persons age 55 and over.

A sign in the office indicated that the community was for “The Settled Set,” which the owner allegedly interpreted to mean that “we don't rent to swingers and party people,” according to the government's investigation. The resident manager reportedly was unaware of any documents showing that the community published procedures or policies indicating an intent to house persons age 55 or over.

Although the resident manager created resident profiles for two years using rental applications, she was accused of guessing the ages of those who did not list an age or a date of birth on the application. She also admitted that she did not use any other resources to determine the ages of residents or follow any procedures to verify the information in the applications by photocopying driver's licenses or immigration identification.

In fact, the resident profiles contained mistakes in the ages of several residents, according to the court. When recalculated and verified, the evidence showed that fewer than 80 percent of the units were rented to individuals age 55 and over during those two years.

The court ruled that the community failed to meet the three requirements for the 55-and-older exemption, so it was liable for discriminating against families with children. The only requirement the community tried to meet was that 80 percent of its residents were 55 or older, but the court said that the resident profiles were rife with errors and failed to show that the community had, in fact, met that requirement.

Furthermore, according to the court, the community did not demonstrate sufficient procedures to verify the ages of the residents, nor did it have any written policies, procedures, advertisements, lease provisions, rules, explicit declarations of age restrictions, or other evidence of an intent to provide housing only to older persons. The sign indicating that the community was intended for the “settled set” was not enough to meet the requirements of the exemption [United States v. Fountainbleau Apts. L.P., June 2008].

6 RULES FOR COMPLYING WITH FAIR HOUSING LAW IN SENIOR COMMUNITIES

Rule #1: Ensure Compliance with State and Local Laws

It's critical for senior communities to review applicable state and local fair housing laws, because the laws affecting senior housing may vary substantially, depending on your location. For example, HUD notes, federal fair housing law does not cover age discrimination, which is a protected characteristic under some state and local fair housing laws.

Moreover, HUD notes that some state and local governments with fair housing laws that have been determined to be substantially similar to the federal law can't include an exemption from the familial status discrimination for housing for older persons.

Alternatively, some state or local laws impose different standards for the senior housing exemption. In California, for example, the legislature adopted more stringent requirements on senior housing than is required under the FHA “in recognition of the acute shortage of housing for families with children” in that state. The law imposes specific requirements related to accessibility, common areas, and refuse collection.

Still other state and local laws apply an older version of the federal exemption. Under the original 1988 legislation, 55-and-older communities had to have “significant facilities and services specifically designed to meet the physical or social needs of older persons” to qualify for the exemption. In the wake of controversy and litigation generated by that requirement, however, Congress eliminated the “significant services and facilities” requirement when it passed HOPA in 1995.

Nevertheless, Georgia is among the states with substantially similar versions of the older (or original) version of the fair housing law that did not adopt HOPA after its passage in 1995, according to Hein. The result: In such states, communities are still required to furnish “significant facilities and services specifically designed to meet the physical or social needs of older persons” to qualify for the senior housing exemption.

COACH'S TIP: HUD urges communities to check all relevant state, local, and federal laws, as well as any requirements imposed as a term of government financial assistance before implementing policies and procedures that limit residents' eligibility. Because of the complexity of the issues involved, you should get legal advice from an attorney well-versed in the legal requirements for senior-housing issues in your jurisdiction.

Rule #2: Comply with Technical Requirements for Senior Housing Exemption

Senior communities must adopt policies and procedures to ensure strict compliance with the technical requirements of the senior-housing exemption. If a senior community fails to comply with the law's requirements, it loses the exemption, which in essence makes it automatically liable for housing discrimination against families with children.

Complying with the law governing the 62-and-older exemption is relatively straightforward. To qualify for the exemption, the community must be intended for and occupied solely by persons age 62 or older. For example, as noted in HUD regulations, a 62-and-older community would have to refuse the application of a 62-year-old man whose wife is 59. In the same vein, a community would lose its exemption if it allowed continued residency by a current resident who married someone under the age of 62.

To qualify under the 55-and-older exemption, a senior community must meet three key requirements under federal law:

1) Intent to operate as senior housing. A community must publish and adhere to policies and procedures that demonstrate its intent to operate as housing for persons 55 years of age or older. HUD offers some examples of the types of policies and procedures to satisfy this requirement, including:

• The written rules, regulations, lease provisions, or other restrictions;

• The actual practices of the community used to enforce the rules;

• The kind of advertising used to attract prospective residents to the community, and the manner in which the community is described to prospective residents; and

• The community's age-verification procedures and its ability to produce, in response to a familial status complaint, verification of required occupancy.

2) 80 percent rule. To meet this requirement, a community must ensure that at least one person 55 or older lives in 80 percent of its occupied units. The law does not restrict the ages of the other occupants in those units. Furthermore, there are no age limits for the occupants of the other 20 percent, so communities can accept families with children, although they do not have to do so.

The 80 percent rule applies to the percentage of “occupied units,” which includes temporarily vacant units if the primary occupant has resided in the unit during the past year and intends to return on a periodic basis. That means that a unit would count toward the 80 percent requirement if its 55-year-old occupant resided in the unit for only part of each year.

To maintain eligibility for the exemption, Hein says, it's a good idea to ensure that more than 80 percent of your occupied units are occupied by at least one person age 55 or older. If you skate too close to the line, your community could be forced into a difficult situation—for example, if a 60-year-old resident dies, leaving a 54-year-old surviving spouse.

To prevent such a problem, HUD advises communities to plan with care when renting the 20 percent portion of the remaining units to incoming households under age 55. Such planning should address notice to incoming households under the age of 55 regarding how the community will proceed in the event that the 80 percent requirement is threatened.

As a safety net, Hein recommends that senior communities consider adding a lease term or addendum that allows management to take corrective action, including transfers inside or outside the community, or early termination of the lease, if the leasing of the unit leads to loss of compliance with senior housing requirements. Ask your attorney to review your lease forms, because standardized lease forms may not include provisions needed to ensure compliance.

3) Verification of occupancy. To qualify under the 55-and-older exemption, communities must able to produce verification of compliance with the 80 percent rule through reliable surveys and affidavits.

Under HUD regulations, communities must develop procedures to routinely determine the occupancy of each unit, including whether at least one occupant is 55 or older. The procedures may be part of the normal leasing arrangement. And every two years, communities must update, through surveys or other means, the initial information to verify that the unit is occupied by at least one resident age 55 or older.

In addition, communities must establish procedures to verify the age of the occupants in units occupied by persons 55 and older through reliable documentation, such as birth certificates, driver's licenses, passports, immigration cards, military identification, or other official documents that show a birth date. HUD regulations also allow a certification signed by any member of the household age 18 or older asserting that at least one person in the unit is 55 or older.

COACH'S TIP: In general, you don't have to count units occupied by employees and their families under the senior housing exception. Under HUD regulations, all residents in 62-and-older communities must be 62 or older, except units occupied by employees of the community (and family members residing in the same unit) who are under 62 years of age, provided that the employee performs substantial duties directly related to the management or maintenance of the housing.

In 55-and older communities, the regulations provide for a similar exclusion. Communities may subtract the number of employee-occupied units from the total number of occupied units to calculate the 80/20 split. The calculation also excludes units occupied by aides or others who are necessary to provide a reasonable accommodation to disabled residents.

Rule #3: Market Your Community as Senior Housing

How your community portrays itself in marketing and advertising directly affects whether the senior housing exemption will protect your community from a discrimination claim based on familial status.

To qualify for the senior exemption, the law requires communities to demonstrate an intent to provide housing for older persons, Hein says. Using the wrong words to describe yourself not only may trigger a fair housing complaint or investigation but also may compromise your ability to prove that your community is intended as senior housing.

The manner in which your community is described to potential residents is among the relevant factors listed in HUD regulations to determine whether a community has complied with the intent requirement. It's a best practice to use terms such as “senior housing,” “retirement community,” or “a 55-and-older community” when referring to housing intended for older persons, according to HUD.

COACH'S TIP: Take care when using certain words, such as “adult living,” “adult community,” or similar statements in your advertising and marketing, because those terms are not consistent with the intent to operate as housing for persons 55 and older, according to HUD regulations.

Using the term “adult” to describe a community does not, by itself, destroy the community's ability to meet the intent requirement, according to HUD. But it leaves the community vulnerable to complaints about its eligibility for the exemption, which could result in an investigation or a lawsuit to determine whether the community in fact qualifies for the exemption.

Rule #4: Don't Discriminate Based on Race or Other Protected Characteristic

The FHA's senior housing exemption is limited: It offers protection from federal fair housing claims based upon familial status, as long as your community meets the FHA's requirements to qualify as housing for older persons. It does not exempt senior housing communities from any claims based on race, color, national origin, religion, sex, or disability, or any other characteristic protected under state or local law.

That means that senior communities must take steps not only to qualify under the senior housing exemption but also to ensure that they do not exclude or otherwise discriminate against applicants or residents based on race or other protected characteristics. For example, senior communities must adopt nondiscriminatory policies and procedures governing the application process and treatment of residents, in addition to complying with the age-verification and other requirements, to qualify for the senior housing exemption.

Furthermore, you must ensure that your staff members apply those policies consistently to all applicants and residents, regardless of race, color, national origin, religion, sex, disability, or other characteristics protected under state or local law. For example, senior communities must train staff members to treat applicants consistently during the application process.

Rule #5: Watch for Potential Disability Discrimination Claims

Senior housing communities must pay particular attention to fair housing protections for people with disabilities. The FHA prohibits communities from excluding people with disabilities or discriminating against them in the terms, conditions, and privileges of the tenancy.

Sometimes, disability discrimination claims arise from the community's admissions. For example, it is not permissible to require residents to live independently as a condition of the lease, according to Hein. Courts have found that a policy requiring applicants to demonstrate an ability to live independently violates fair housing laws protecting people with disabilities [Cason v. Rochester Housing Authority, August 1990].

Example: The owners of a Chicago retirement community agreed to pay $220,000 in damages and penalties to settle a disability discrimination complaint filed by the U.S. Department of Justice (DOJ). The 500-unit community, which did not admit liability, was accused of discriminating against the disabled by discouraging applicants who use wheelchairs from renting units, and unnecessarily steering them to assisted-living facilities.

The complaint also alleged that the community illegally inquired about the severity of applicants' disabilities by questioning whether they were “healthy and independent,” and that it required certain applicants to submit to a medical assessment as a term or condition of tenancy [United States v. Resurrection Retirement Community, Inc., October 2002].

Keep disability protections in mind—such as policies on the use of mobility aids—when adopting and applying rules for resident safety. Generally, communities may not adopt policies that restrict the use of a mobility device by a resident with a disability without evidence that the resident operated it in a way that directly threatened the health or safety of others, or resulted in substantial physical damage to the property of others.

Example: A continuing-care retirement community in Pennsylvania was accused of disability discrimination under the FHA for restricting residents' use of motorized chairs and scooters in its dining rooms and other public and common-use areas. The community, which did not admit liability, agreed to pay $92,500 in damages and penalties and to permit residents with physical disabilities to use mobility aids throughout the complex.

The settlement also required the community to drop policies requiring residents who used scooters to indemnify the community against injuries or damage resulting from the use of such aids and to submit to an evaluation and training program annually, regardless of their “driving record” [United States v. Twining Services Corp., October 2005].

Hein says that senior communities must be prepared to comply with the full array of disability protections. For example, the FHA requires communities to make reasonable accommodations to rules, policies, practices, or services to enable disabled residents to fully enjoy use of the property. The law also requires owners to permit disabled residents, at their own expense, to make reasonable modifications to the housing if necessary to afford them full enjoyment of the premises.

Rule #6: Maintain Good Records to Document Compliance

It's critical for senior communities to keep good records, Hein says, because the law requires senior communities to document compliance to qualify for the exemption.

Courts have required strict compliance with the law's requirements to maintain eligibility for the senior exemption. That means that communities must be able to produce, when called upon, the documents required under the statute.

The typical event triggering the community's obligation to produce the documents is a housing discrimination complaint filed by a family with children, to which the community asserts the senior exemption as its defense. Among the first things HUD will do, according to Hein, is to ask for the community's records related to occupancy and age-verification procedures. To protect your community, you must be prepared to respond with all the required documents.

• Fair Housing Act: 42 USC §3601 et seq.

• Final Rule Implementing the Housing for Older Persons Act of 1995 (HOPA), issued April 2, 1999; www.hud.gov/offices/fheo/library/hopa_final.pdf.

• Housing for Older Persons Act of 1995: P.L. 104-76.

• HUD regulations on Housing for Older Persons: 24 CFR 300 et seq.

• Questions and Answers Concerning the Final Rule Implementing the Housing for Older Persons Act of 1995 (HOPA); www.hud.gov/offices/fheo/library/hopa95.pdf.

Coach Source

Robin Hein, Esq.: Attorney at Law, Fowler, Hein, Cheatwood and Williams, P.A., 2970 Claremont Rd., Ste. 220, Atlanta, GA 30329; (404) 633-5114; RobinHein@ApartmentLaw.com

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TIME OUT!

Can an Existing Community Convert to Senior Housing?

An existing community can convert to housing for older persons if 80 percent of its occupied units become occupied by at least one person 55 or older, according to HUD. The caveat is that a community can't discriminate against families with children to get 80 percent of its units filled by at least one person 55 or older. That means that communities can't reserve unoccupied units for persons 55 or older, advertise itself as housing for older persons, or evict families with children to achieve the 80 percent threshold.

Nevertheless, HUD says, nothing prevents communities from “offering positive incentives that might lead some families with children to seek housing elsewhere.” If a community achieves the 80 percent threshold—without discriminating against families with children—it may then publish and adhere to policies and procedures that demonstrate an intent to provide housing for persons 55 years or older and comply with verification of occupancy rules.

The only other option is with new construction, which includes a community that has been entirely unoccupied for at least 90 days due to renovation or rehabilitation before re-occupancy. To qualify for the 55-and-older exemption, new senior housing communities must market themselves at the outset as housing intended for older persons, but they do not have to comply with the law's 80 percent requirement until at least 25 percent of the units are occupied. During that time, HUD says that new senior communities are not required to meet all of the regulations pertaining to housing for older persons.

Once you hit that magic number, the community will lose the exemption unless it has at least one person 55 or older living in at least 80 percent of its occupied units, says Hein. If that happens, then the community can't turn away families with children without violating federal fair housing law.