Case Files: Ground Floor Only Policy Leads to Heavy Fines – Episode 27

A recent case, *United States vs. MSM Brothers, Inc.*, highlights the importance of understanding fair housing laws —particularly in relation to familial status protections. Let’s see how one company’s ground floor-only policy led to heavy fines.

United States v. MSM Brothers, Inc. d/b/a White Cliffs at Dover (D. N.H.)

The Case Debrief – Ground Floor Only?

The Department of Justice (DOJ) filed this lawsuit on behalf of Kelsey Hoyne, alleging discriminatory practices at a residential property in New Hampshire. The complaint revolved around a policy that limited families with young children to first-floor units, regardless of the availability of upper-floor apartments.

At its core, the case addressed violations of familial status protections under the Fair Housing Act (FHA), which safeguards families with children from housing discrimination. While the property management may have had good intentions—such as reducing noise complaints from neighbors—this practice ultimately restricted the housing options available to families, which is illegal under the FHA.

The central issue in this case was that the property management company allegedly enforced a policy that required families with children under the age of 10 to live only on the first floor. When Kelsey Hoyne, a prospective tenant with an infant, inquired about two-bedroom units, she was informed that only first-floor apartments were available for families with children. However, at the time, no first-floor units were vacant. Ms. Hoyne alleged that this policy effectively prevented her from securing housing, even though units on the second and third floors were available, and she had expressed her willingness to live on an upper floor.

This type of restriction is referred to as “illegal steering,” where applicants are directed toward certain units or areas based on a protected category, such as familial status. Steering practices and outright refusal to consider other available units because of a child’s presence are both examples of familial status discrimination under the FHA.

A Fair Housing Tool: Testing

In response to the alleged discrimination, Kelsey Hoyne sought help from the New Hampshire Legal Assistance Fair Housing Project, which conducted testing to verify her claims. Testing, a common practice for fair housing enforcement organizations, involves sending individuals posing as applicants to the property to see what type of treatment or responses they receive. The testing allegedly revealed that the management company consistently applied the first-floor-only policy for families with young children, thereby confirming that this was an established practice and not an isolated incident.

Following the testing, a complaint was filed with the Department of Housing and Urban Development (HUD), which found that there was cause to believe a violation had occurred. This lawsuit resulted, which ultimately settled. The Defendants agreed to pay $25,000 to the Plaintiff and implement significant changes, including revising their policies, undergoing fair housing training, and submitting regular reports to the DOJ to ensure compliance. This settlement reinforces the importance of understanding and adhering to fair housing laws in property management.

Key Takeaways for Property Managers – Review Your Policies

The details of this case should serve as a critical reminder for property managers about the implications of discriminatory policies, even those that may seem well-intentioned. Here are a few key lessons to consider:

1. Understand Protected Classes: The Fair Housing Act covers various protected classes, including families with children. Limiting their housing choices, even for seemingly practical reasons, can result in allegations of discrimination.

2. Avoid Steering Practices: Directing families or any other protected groups to specific units or areas of your property because of their protected category is considered discriminatory and must be avoided. All available units should be equally offered to all qualified applicants.

3. Train Your Team: Employees must be well-versed in fair housing laws and practices to avoid inadvertent violations. Regular training ensures that everyone in your organization understands what constitutes discrimination and how to prevent it.

4. Monitor and Update Policies: Review your leasing policies regularly to ensure they comply with current fair housing regulations. Even policies with good intentions can sometimes unintentionally result in discrimination.

By adhering to these principles, property managers can ensure they remain compliant with fair housing laws, providing an inclusive environment for all residents, and avoiding costly legal battles.

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