D.C. Doles Out Landmark $10M Penalty for Voucher Discrimination

Washington, D.C., Attorney General Karl Racine recently announced a settlement requiring three real estate firms and its executives to pay a landmark $10 million in penalties for illegally discriminating against renters in the District who use Section 8 housing vouchers and other forms of housing assistance. This is the largest civil penalty in a housing discrimination case in U.S. history.

The context: Washington, D.C.’s Human Rights Act specifically outlaws housing discrimination based on source of income. This means that it is illegal for landlords to refuse prospective tenants or treat tenants differently simply because they rely on vouchers or other forms of housing assistance. Nineteen states and the District expressly ban source-of-income discrimination.

Whistleblower gets attention: Allegations of illegal practices against the companies were first brought to the attention of the D.C. Office of the Tenant Advocate by a whistleblower, and later the case was passed on to the attorney general’s office. The office initially filed a lawsuit in 2020. The complaint alleged that the companies illegally charged Section 8 voucher recipients extra fees and posted discriminatory housing advertisements.

Emails prove case: During the litigation, the allegations were eventually confirmed by emails between the company’s executives showing how they pushed to have voucher holders excluded from their properties. In one email, an investment director wrote, “No voucher/sec-8 – find ways to reject, applicant must meet every requirement (credit, security deposit, income, etc), in the case that we have to lease to them which we should find every way out of, don’t put in renovated units. No transfers.” In another email, an executive wrote that she was “doing everything I can to reduce if not eliminate the section 8 program from our communities. We have tightened our screening criteria as much as humanly possible.”

The bottom line: Under the terms of a settlement agreement, the three real estate companies and its principals will be required to:

• Pay $10,000,000 in civil penalties for illegal housing discrimination;
• Permanently stop managing residential property in D.C. The settlement requires the companies to dissolve the property management arm of their business and to transition management of all of their properties to a third-party company within 18 months. It also permanently bars all defendants, including the companies and named executives, from owning any interest in a property management company in the District;
• Forfeit a professional license. An executive will be required to surrender her District of Columbia real estate licenses and not seek reinstatement or seek to apply for a new license for 15 years.