As we have discussed in several of our firm articles, tenant protection laws have changed drastically in California over the years. Along with the changes brought on by the Tenant Protection Act of 2019, California also altered fair housing laws that went into effect beginning January 1, 2020. Specifically, Senate Bill 329 changed the definition of “source of income” under the Fair Employment and Housing Act (“FEHA”). Beginning January 1, 2020, Section 8 voucher holders are explicitly included within the definition of “source of income” and owners cannot discriminate against voucher holders. This change has brought on a slew of discrimination claims from prospective tenants, amongst other things. Here, we will review the common disputes we see at our firm related to the changes brought on by SB 329, tips to help avoid them, and what to look out for in the future concerning your rental.
Background
First, before we get into the specifics concerning these disputes, it’s important to provide a brief overview of the law surrounding these claims. The tenants’ claims arise both from the Unruh Civil Rights Act (“Unruh”) and FEHA. Both enacted in 1959, Unruh and FEHA provide protection to consumers from discrimination by businesses related to protected characteristics. These include race, religion, ancestry, familial status, source of income, etc. While both provide protection, FEHA’s protections are broader as it relates to entities involved in real estate including mortgage providers, Realtors, property managers, etc.
As it relates to rentals, owners or managers of residential property are prohibited from discriminating against renters based on the protected characteristics when they apply and/or while they’re renting their unit. This includes refusal to rent based on source of income, familial status, etc., as well as unnecessarily penalizing or providing alternate terms based on the tenants’ protected characteristic(s). This can include higher rent rates, more restrictive terms, and stricter background checks based on the tenants’ particular status.
Types of Claims
Prospective Tenant(s)
- This situation involves a legitimate tenant that reaches out to the owner/manager to inquire about the vacancy. During communications, the tenant’s source of income inevitably comes up and the owner/manager is tasked with responding appropriately.
- Common communications include the following: Tenant- “Hello is the unit available?” Owner/Manager- “Yes, would you like to come see it?” Tenant- “Yes, but do you accept Section 8” Owner/Manager- “No, sorry not at this time” (or something similar)
- Based on the owner/manager’s response, the tenant would likely have a viable claim under both Unruh and FEHA for discrimination based on source of income.
“Testers”
- Various tenant rights organizations have formed to perform ‘tests’ on listed rentals all over California.
- The owner/manager engages in similar communications as with a legitimate tenant, but instead the person is a ‘tester’ hired by the organization. The owner/manager cannot tell the person contact them is a tester.
- Once the owner/manager responds as above, the organization would likely have a claim under Unruh and FEHA.
Tester Standing Overview
Organizations claim standing under Cal. Gov. Code Section 12927(g) as they are an ‘aggrieved person’ under FEHA which includes any person OR organization “who claims to have been injured by a discriminatory housing practice.” (Havens Realty Corp. v. Coleman (1982) 455 US 363).
Alleged injuries in Tester claims would include the following:
- Diversion of Resources: expended resources to conduct testing and investigate the housing provider’s practices, diverting resources from other program activities.
- Frustration of Mission: as an organization dedicated to promoting fair housing, the organization claims housing provider’s discrimination frustrated its mission to ensure equal access to housing.
- Interference with Programmatic Activities: the need to address this discrimination disrupted the organization’s regular activities.
Enforcement and Remedies
For FEHA claims, the tenant or tester organization would likely file a claim with the California Civil Rights Department (“CRD”). If a tenant makes a complaint to the CRD, CRD investigates. Owners/Managers typically must respond to the CRD investigation within 20 days. Unruh claims are typically filed in civil court as the CRD only hears FEHA claims.
Damages
- Monetary damages: emotional distress, diverted resources, higher rent, etc.
- Unruh Claims:
- Unruh provides statutory damages: Nonviolent discrimination: $4k minimum per violation (Civil Code 52(a)). Multiple violations means multiple charges.
- Increase in housing costs (rent differential), moving expenses, temp. housing costs, etc.
- Attorney fees and costs are available under Civil Code.
- FEHA Claims:
- Economic losses and distress (like above)
- CRD claims: Up to $10k for first violation; $25k for subsequent violations (paid to the State)
- Attorney fees and costs like with the Unruh Act
- No minimum statutory amounts like with Unruh– looks at ACTUAL damages
- Unruh Claims:
Tips to Help Avoid Getting Trapped
Education is crucial when managing rental properties in California. Make sure that anyone managing the property is informed of not only fair housing laws, but all tenant protection laws to help avoid costly lawsuits. Lack of intent is typically not relevant in these cases. The CRD offers free educational courses for this purpose. Further, have universal and systematic processes that you can fall back on when a claim arises. Showing that you do the same thing for every tenant will be helpful in managing damage/liability.
There is a common misconception we see with owners/managers in this situation. While owners/managers must accept Section 8 applicants, there is no obligation or requirement to select that tenant. However, any denial of that tenant cannot be arbitrary and would need to be based on characteristics not protected by Unruh and FEHA. In other words, if you have some other cause to reject them, you are permitted to do so. This can include a negative background check, previous eviction, etc.
We highly recommend speaking with counsel if a situation arises due to all the pitfalls associated with these claims. If in doubt, please do not hesitate to reach out for advice/information as the damage is extremely costly and we handle these issues on a daily basis.