Occupancy Standards - Time to Review Your Policy
by Charles Brown
If you have not reviewed and modified your occupancy standards in the last year,
you may be in violation of the fair housing laws.
What do occupancy standards have to do with fair housing laws? Occupancy
standards may be a violation of the fair housing laws if they unfairly limit the
housing options because of familial status . The fair housing laws make it
unlawful to discriminate against persons based on race, color, religion, sex,
familial status or national origin. Of these "protected classes," "familial
status" is the class to be concerned with in establishing your occupancy
standards. Any policy that directly or indirectly excludes families could be a
violation of the fair housing laws. If your occupancy standards unreasonably
limit the ability of families with children to obtain housing in your apartment
community, you could have to defend yourself against a claim made under the fair
housing laws.
The law in Texas regarding occupancy standards has changed recently. From May 1,
1995 until May 23, 2001, it was easy to know what your occupancy policy should
be in Texas. On May 1, 1995 the Texas Commission on Human Rights (TCHR) put into
effect a policy concerning occupancy standards. If an apartment owner followed
the TCHR policy, they could rest assured that they would not be accused by TCHR
of violating the fair housing laws.
This was the policy: TCHR Policy Before May 23, 2001:
TCHR "Maximum-Persons-Per-Bedroom" Occupancy Policy For Families
The following policy regarding maximum persons per bedroom for families was
presumed reasonable by the TCHR:
A family may occupy an owner's dwelling if the family does not exceed two
persons per bedroom plus a child who is less than 6 months old and who sleeps in
the same bedroom with the child's parent, guardian, legal custodian, or person
applying for that status. A more liberal occupancy policy may be adopted by a
rental housing owner. A more restrictive occupancy policy will be presumed
unreasonable and a violation of fair housing laws.
TCHR "Newborn Policy"
The following policy regarding newborns was presumed reasonable by TCHR:
If an owner makes timely written disclosures of the owner's newborn policy and
maximum-persons-per-bedroom policy for families, the owner may adopt a newborn
policy as follows: Residents who have a newborn less than 6 months old at the
time of rental application or lease renewal and residents whose newborn has
reached 6 months of age during the lease term may be required, at that time, to
either (1) move into another available dwelling of the owner which has more
bedrooms or (2) move out. Rent for the larger dwelling may be the rental rate at
the time the lease or rental agreement is entered into for the larger dwelling.
TCHR Policy After May 23, 2001
On May 23, 2001, the TCHR abandoned the above policy and adopted the standards
set out in the "Keating Memorandum." The Keating Memorandum was written by Frank
Keating, the General Counsel of the Department of Housing and Urban Development
("HUD"). HUD has adopted the Keating Memorandum as its policy on occupancy
standards. The Keating Memorandum sets out guidelines rental housing owners
should use for establishing their occupancy policy. You may access the Keating
Memorandum at the Texas Apartment Association website (www.taa.org).
Consider the Keating guidelines as the law now.
The problem is the Keating guidelines are just that - guidelines, not a
definitive test. The Keating guidelines are not specific rules that are easy to
apply in every case.
Keating says "an occupancy policy of two persons in a bedroom, as a general
rule, is reasonable under the Fair Housing Act." However, the reasonableness of
the two persons per bedroom policy may be disputed and you may not be in
compliance based on this policy alone. Other factors must be considered in
determining whether a policy of two persons per bedroom is reasonable. Factors
such as the size of the bedrooms and unit, age of the children living in the
apartment under some circumstances, configuration of the unit, physical
limitations of the housing, state or local government occupancy standards and
other relevant factors may be considered in determining what is a reasonable
occupancy policy.
For example, if your two bedroom units have large bedrooms and a spacious living
area or study, your policy of two people per bedroom may be unreasonably
restrictive. In light of the size of the bedrooms and configuration of the unit,
a more reasonable policy may be to allow five people to occupy this two bedroom
unit.
Consider the following portion of the Keating Memorandum regarding the factor of
the age of children:
"The following hypothetical involving two housing providers who refused to
permit three people to share a bedroom illustrate this principal. In the first,
the complainants are two adult parents who applied to rent a one-bedroom
apartment with their infant child, and both the bedroom and the apartment were
large. In the second, the complainants are a family of two adult parents and one
teenager who applied to rent a one-bedroom apartment. Depending on the other
facts, issuance of a charge might be warranted in the first hypothetical, but
not in the second."
Your challenge is to read the Keating guidelines, examine the size and
configuration of your apartment units and come up with a reasonable occupancy
policy that does not unfairly discriminate against families with children. As a
starting point, if your units are of an average size with an average
configuration and not particularly spacious, two people per bedroom would be
presumed reasonable per Keating. However, if the bedrooms of the units are
unusually large or the configuration of the unit includes additional space, (ie
a study and/or a living room), then a two people per bedroom limit may be
unfairly restrictive and your policy should allow more than 2 people per
bedroom.
But what if these two people have a child living with them? Should you allow
these three people (two adults and child) to occupy a one bedroom that is
average size? It may depend on the age of the child. But, the Keating guidelines
do not expressly state that a child's age is a factor. But, Keating implies that
infancy may be a factor by indicating in the above-quoted portion of the
memorandum that an infant child be allowed to stay in a large bedroom in a large
apartment.
The old TCHR policy did not include the characteristics of the unit as a factor
but it did include the age of the children as a factor. Keating does not define
what bedroom size would be considered unusually large or what would be a
"spacious" living area. Some experts say that a bedroom in a unit above 350
square feet in size would be unusually large. I think you would have to consider
the unit sizes in your city or even your neighborhood. What is unusually large
in New York City is probably not considered unusually large in Austin, Texas.
Can two reasonable people look at the same apartment and have a different
opinion on how many people should be allowed to live there? Absolutely.
One Tenant Attorney's View of "Reasonableness"
I asked an attorney who has been an advocate for tenant's rights for many years
for his view on how Keating guidelines should be applied when counting children
in the number or persons per bedroom calculation. This experienced attorney
believes that the age of the child should be at least 5 or 6 years old before
you count them in making your persons per bedroom calculation. His reasoning is
that prior to reaching the age of 5, a child does not have a significant impact
on the amount of wear and tear on the unit. Therefore, a landlord does not have
a legitimate business reason to include a child under 5 years old in calculating
the number of persons per bedroom. He concludes that a policy that precludes
families with children under 5 is unreasonable because children that young do
not make a difference to the landlord's bottom line.
In other words, he contends that a landlord does not have a legitimate business
reason for having a policy that discriminates against families with children
under 5 years old. A "legitimate business reason" has been used as a defense to
fair housing claims in some cases. A "legitimate business reason" may excuse a
policy that is otherwise discriminatory and a violation of the fair housing law.
Don't count on it. The Keating guidelines do not specify at what age to count
children in your persons-per-bedroom calculation nor does Keating cite that
business reasons are a factor in judging the fairness of an occupancy policy.
One Landlord Attorney's View of "Reasonableness"
Another experienced fair housing attorney I consulted believes that the old TCHR
guidelines were and still are "reasonable" and that a family occupancy policy
following the old guidelines is not discriminatory under federal law, subject to
one clarification: He advises that a more liberal occupancy policy should be
expressly stated whenever a particular dwelling or floor plan type contains: (1)
an above-average-size bedroom that is large enough to accommodate three children
or one adult and two children, or (2) a den, family room, or loft that could be
used as an extra bedroom. In other words, you can have more than one occupancy
policy in an apartment complex if differing sizes and configurations of the
units and/or children's ages justify it.
For example: In a two-bedroom unit, you could have a limit of two adults and
three children; or in a one-bedroom unit with a very small loft, you could limit
occupancy to a three-person family when the child or children are over 6 months
old. In same one-bedroom-loft unit, you should allow an extra child if the child
is an infant less than 6 months old.
In the opinion of that expert, you can still lawfully adopt a policy of not
renting an average or larger-than-average one-bedroom dwelling to a couple with
a child older than 6 months-for two reasons: (1) the typical child begins to
crawl at six months and a crawling child causes more wear and tear on a dwelling
than an infant (because the child is more mobile and is more likely to urinate
on or soil carpets, mar walls, etc.), and (2) a child more than 6 months old
sleeping in the same bedroom as the parents is more likely to hear and observe
what should be private parental conversations and sexual activities in the
parent's bedroom.
For practical considerations, that expert believes that you should go ahead and
allow residents whose infant child is born or reaches 6 months of age during the
lease term to stay in the dwelling until the end of their current lease
term-even though the parents would not qualify under your policy to initially
move into the one bedroom unit with a child older than 6 months. It is
significant that Keating does not state that it would be unreasonable for a
landlord to refuse to rent an average-size one-bedroom unit to a couple with an
infant. Similarly, Keating does not state that it would be unreasonable to
refuse to rent a larger-than-average-size one bedroom unit to a couple with a
non-infant child. The emphasis of the hypothetical exception in the Keating
guideline is on infancy.
Are landlords limited to purely "landlord business reasons" in setting a family
occupancy policy? Are landlords excluded from taking into consideration factors
that can adversely affect the physical safety or health of the child? The answer
is "no" to both, according to that fair housing attorney. For example, if a
landlord allows an infant to stay in the same bedroom as the parent, the
landlord can lawfully insist that the child be in a crib to lessen the chance of
an adult in the same bed rolling on top of the infant and hurting or smothering
the infant accidentally. It is quite "reasonable" for a landlord's occupancy
policy to reflect what is commonly considered by the general populace as being
in the best interest of the child.
My View
I believe that you can look at the prior TCHR policies as a guide for what was
previously considered reasonable by TCHR (i.e. do not count infants under 6
months in the persons-per-bedroom calculation). However, do not rely on the
old TCHR policy alone. You should now add to that TCHR policy a
consideration of factors such as the age of children, bedroom size,
configuration of the unit and any physical limitations of the housing (e.g.
capacity for septic, sewer, or other building systems). Follow the old TCHR
rules set out above but make adjustments to your calculation if the bedroom size
or configuration of the unit would support a greater occupancy.
Let's say a couple with a three-year-old child seeks to rent a one-bedroom
apartment in your community. Assume that the one-bedroom apartment had larger
than average size bedroom and had an unusually large dining/living area. Under
old TCHR guidelines, you could require them to rent a two-bedroom apartment
because their child was over 6 months of age regardless of the characteristics
of the unit. Because Keating guidelines require that you take into account the
bedroom size and configuration of the unit, these people would be entitled to
rent a one-bedroom unit under the Keating guidelines.
If you want to be conservative, use an older age for your definition of an
"infant" than the six months of age used under the old TCHR policy. Other
sources that I have consulted recommend that you treat all children up to one
year as "infants" and do not count infants in calculating the number of people
per bedroom. The older the age of the child that you use before you count them
in your occupancy calculation, the less likely you will have a claim that you
violated the fair housing laws. It is less likely that you will be accused of
discriminating against families if you do not count children under three years
old as opposed to not counting children under six months old in calculating
occupancy limits.
Texas Property Code section 92.010 also governs occupancy limits. Generally, the
maximum number of adults (18 years or older) that a landlord may allow to occupy
a dwelling is three times the number of bedrooms in the dwelling. The statute
does not limit the number of children. Keep in mind that the occupancy standards
may be more restrictive if a family is not involved. The concern is that
occupancy standards may unfairly discriminate against families and violate the
fair housing act. If the prospective tenants do not involve a family, a more
restrictive occupancy policy may be adopted such as one person per bedroom.
Also, just because the prospective tenant is a family, you do not have to
consent to lease to them due to their familial status. The applicants, even if a
family, must meet your other criteria such as financial ability or acceptable
rental history.
Here are some tips to avoid a discrimination claim based on familial status:
1. Read the Keating Memorandum and the TCHR policy set out above and develop a
family occupancy policy based on the Keating guidelines and the TCHR policy with
consideration of the size of the bedrooms and configuration of the units. If
your bedrooms are unusually large or spacious, allow more than two people per
bedroom. If you want to be more conservative, set an age older than six months
for which you will count a child as a person. The older the age, the less likely
you will be accused of discriminating against families.
2. Tell prospective tenants what your occupancy policy is as soon as possible in
the leasing process. Do not wait for them to ask about your policy. If you tell
them up front, you will be less likely to mislead someone into thinking they are
eligible to rent only to find out that the occupancy policy precludes them from
leasing. Tell all prospects about your policy, not just people who ask or people
who have children.
3. Do not have anything in your policy that would prevent children of different
sexes from sharing a bedroom or would restrict a child from sharing a bedroom
with a parent, legal custodian, or person who has written permission of the
child's parent or legal custodian to live with the child. You would not have any
legal basis for such restrictions and it would have a disparate impact on
families.
4. Do not ask a prospect how many children they have or how many children will
be living in the unit. Do not comment on a person's pregnancy. First, imagine
how embarrassed would you be if you asked "When is the baby due?" and her
response was "I'm not pregnant." Secondly, you do not count a pregnant woman as
two people in deciding what size apartment she will need. You may ask how many
people will be living in the unit. Do not say things like "we only allow two
children per bedroom because a remark like that may look like you are
discriminating. Use neutral language that would apply to any prospective tenant
such as "we allow two people per bedroom." Keating says that "An occupancy
policy which limits the number of children per unit is less likely to be
reasonable than one which limits the number of people per unit.
5. Be consistent in applying your family occupancy policy. Do not make
exceptions.
In summary, the law says you may not discriminate against families with
children. You can enforce a limit on the number of people who live in a
dwelling. Two people per bedroom is presumed reasonable. The exception to this
presumption is units that have extra-large bedrooms or the overall size and
configuration of the unit would warrant more than two persons per bedroom. The
age of any children should also be considered. Put your occupancy standards in
writing and be consistent in enforcing them.
Bio:
Charles Brown is an attorney who invests in real estate in the Austin, Texas
area. He is Board Certified in Residential and Commercial Real Estate Law by the
Texas Board of Legal Specialization. He can be reached at 512-476-8942.