Housing For Persons 55 And Older
James Brown and Jeffrey Daubman, as joint tenants, owned a condominium unit in The Latvian Tower condominium in southwest Omaha. Sometime in 2003 they decided to sell their condo and on December 12, 2003, listed the condo with a real estate agent for sale for $479,950. Between 2005 and December 2007, several potential buyers were discouraged from purchasing the condo because the Master Deed for the condominium contained a restrictive covenant that read: “No unit shall be sold or leased for any period of time to any person who, at the date of said purchase or lease, has children who will occupy or reside in the unit 180 days or more in any 1 calendar year.”[i] For purposes of that paragraph “children” meant persons under the age of 16 years or such younger age as may be established by the Board of Directors of the condominium association.
Because of this “no children” restrictive covenant contained in the Master Deed, the condominium unit was eventually sold in February 2008 for $239,500 to an individual with no children. Due to this loss in value caused by the “no children” restrictive covenant, James and Jeffrey filed a complaint with the United States Department of Housing and Urban Development (HUD) alleging that the condominium association and the president of the condominium association discriminated against them in violation of the Fair Housing Act (FHA). Specifically, the allegation was that the condominium association and its president interfered with the sale of their condominium because of the “familial status” requirement for potential buyers.[ii]
This resulted in a Complaint filed in the U.S. District Court for the District of Nebraska, entitled United States of America v. The Latvian Tower Condominium Association, Inc. and Karl Tegtmeyer. The lawsuit was ultimately settled pursuant to a Consent Order that required the condominium association and its president to pay $112,500 to various plaintiffs.[iii] This was in addition to training and reporting requirements that the defendants had to comply with.
- Fair Housing Act.
Why was this condominium association liable for interfering with a buyer’s “familial status”? The answer lies with the federal Fair Housing Act (FHA), Title VIII of the Civil Rights Act of 1988, 42 U.S.C. § 3601 et seq. Specifically, § 3604(a) of the FHA makes it unlawful to refuse to sell or rent, or otherwise make unavailable or deny, a dwelling to any person because of “familial status”. Section 3604(c) of the FHA says that any making, printing or publishing of statements with respect to the sale of a dwelling unit that indicate a preference, limitation or discrimination based on familial status is a violation of the FHA. Further, a representation that, because of familial status, a dwelling is not available for inspection or sale when such dwelling is in fact so available, is a violation of the FHA (§ 3604(d)).
“Familial status” is defined as one or more individuals (who have not attained the age of 18 years) being domiciled with a parent or legal custodian. It also applies to a pregnant woman or a person in the process of securing legal custody of a child (under 18 years old).[iv]
Thus, when the condominium association and its president used the “no children” covenant to scare off potential buyers of the condo, they violated § 3604 of the FHA.
The FHA is very broad, and applies to the sale of condominiums as well as leases of apartments. Remember, § 3604 of the FHA refers broadly to the “sale or rental” of any dwelling.
- Housing for Older Persons Act.
So how can a developer build a condominium or apartment building where the sale of the condominiums or lease of the apartments are reserved for persons 55 years of age or older? Specifically, reserving those units for 55 or older persons without running afoul of the FHA? Pursuant to the Housing for Older Persons Act (HOPA).[v] Pursuant to HOPA, nothing in the FHA regarding familial status applies with respect to a housing community for older persons.[vi] By the way, it is important to remember that a “housing community or facility” is any dwelling or group of dwelling units governed by a common set of rules, regulations or restrictions. A portion of a single building may not be considered a housing facility or community. Such a “housing community or facility” would not apply to an owner of single-family houses that are dispersed throughout a geographical area. The common use of the terms “housing community” and “facility” applies to dwelling units which are in the same location and have some relationship to each other.[vii]
As originally written, housing for older persons only meant housing: (i) provided under any state or federal program that is specifically designed and operated to assist elderly persons; or (ii) intended for and solely occupied by persons 62 years of age or older; or (iii) intended for persons 55 of age or older. But this 55 plus category had to include significant facilities and services specifically designed to meet the needs of older persons.[viii] The FHA was amended in 1995 to state that the 55 plus category no longer had to include significant facilities and services specifically designed to meet the needs of older persons.[ix] This amendment was pursuant to HOPA.
As a result, housing could be provided to 55 plus people that was no different than other housing. Some requirements still have to be met though.
First, at least 80% of the occupied units have to be occupied by at least one person who is 55 plus.[x]
Second, the community must publish and adhere to policies and procedures that demonstrate the intent required under HOPA.[xi]
Third, the housing facility must comply with rules for verification of occupancy, which provide for verification by reliable surveys and affidavits and include policies and procedures approved by the Secretary.[xii] Secretary means the Secretary of Housing and Urban Development.[xiii]
Let’s look at these three requirements more thoroughly:
- “Occupied unit” means a unit that is actually occupied on the date the exemption is claimed or a temporarily vacant unit, if the primary occupant has resided in the unit during the past year and intends to return on a periodic basis. If it is a new apartment/condominium building, the 80% rule doesn’t have to be met until at least 25% of the units are occupied. However, you have be careful here. If, after that time, the apartment building does not have a resident 55 years or older in at least 80% of the occupied units, than that apartment building may not discriminate against families with children.[xiv]
There can be unoccupied units as long as at least 80% of the occupied units are occupied by someone 55 plus.
There is an exception to the 55 plus rule: As long as those units are occupied by employees of the housing facility or they are persons who are necessary to provide reasonable accommodation to disabled residents.[xv]
The facility may advertise or market the 20% portion of the units not required to be occupied by at least one person 55 years of age or older. But, the marketing must be done in a way that identifies the facility as housing intended for older persons. Advertising and marketing must not be inconsistent with this intent. [xvi]
If a facility qualifies under HOPA as housing for older persons, the facility is exempt from FHA’s prohibition against discrimination on the basis of familial status. The facility may restrict families with children from benefits of the community, or otherwise treat family households differently than senior households.
When calculating whether a condominium meets the 80% requirement, it is the occupants of the dwelling unit who are counted, not the owners.[xvii] For instance, if a 55 or older individual purchases a condominium in a senior housing condominium building, vacates the unit, and allows an underage adult relative to move in for an indefinite length of time, this underaged occupant would be counted in the 20% portion.
- The facility must publish and adhere to policies and procedures that demonstrate its intent to operate as a 55 plus facility. There are a number of factors that can be considered relevant. Included in these factors are the following:
A. The way the facility is described to prospective residents.
C. Lease provisions.
D. Rules, regulations, covenants, deed or other restrictions.
E. Maintenance and consistent application of procedures.
F. Actual practices of the housing facility.
G. Posting in the common areas statements describing the facility as 55 plus.[xviii]
It is important to remember that all of these factors do not have to be met, and other factors can be relied on to show an intent to have a 55 plus community.
Most of these policies and procedures relate to apartment buildings and leases. But some of these same factors relate to condominiums, especially “covenants, deed or other restrictions”. In particular, what this would relate to is a Declaration creating a condominium. A Declaration is the document that is created and recorded with the real estate records to turn the property into a condominium. Prior to the creation of the new condominium act in Nebraska in 1984, this document was known as a Master Deed.[xix] It is now known as a Declaration. But the effect is the same.
If you’re going to have a 55 plus condominium, you will have to make sure that the Declaration for the condominium has restrictive covenants relating to the 55 plus community. This can be in the Declaration itself or an amendment to the Declaration (or amendment to the Master Deed).
It is also important to avoid using the terms “adult living” or “adult community” in any advertisement or prospectus. Use of the words “adult living” or “adult community” in an advertisement, sign or other informational material, or when describing the facility to prospective renters or purchasers, does not demonstrate an intent to be housing for older persons.[xx] The use of those terms, on the other hand, does not destroy the intent requirement of HOPA.[xxi]
Don’t forget, a unit can have a resident who is less than 55 years old, including children, so long as the other requirements are met.
- The apartment building or condominium must develop procedures for routinely determining the occupancy of each unit and verifying that each unit has at least one occupant 55 years old or older. This procedure must provide for regular updating through surveys or other means. These updates must occur every two years. An apartment building owner or manager for a condominium association is entitled to rely on certain types of documentation regarding occupant age. This can include: a driver’s license, birth certificate, passport, immigration card, military identification or any other official document containing a birthdate of comparable reliability.[xxii] The apartment building owner may also rely upon a certification in a lease that at least one person in the unit is 55 years old or older. This must be signed by a member of the household who is at least 18 years of age.[xxiii]
The apartment building owner or condominium association manager must establish and maintain appropriate policies to require that occupants comply with the age verification procedures. This is easily built into a lease. With respect to a condominium, it would be best to include this as one of the restrictive covenants in the Declaration for the condominium (or amendment to a Declaration or Master Deed).
What if the occupants of a unit refuse to comply with the age verification procedures? The apartment building owner or condominium association manager may consider the unit to be occupied by at least one 55 plus person, if it has sufficient evidence. This sufficient evidence can include: government records, such as local household census; prior forms or applications; or a statement from a person who has personal knowledge of the age of the occupant (this statement must set forth a basis for this personal knowledge and be signed).[xxiv]
Under the HOPA exemption, senior living communities legally can refuse to sell or rent to people who do not meet the age requirement. However, the exemption does not protect these communities from liability for housing discrimination based on other factors like race, religion, etc.
When does the government get involved? There are no federal government filings. If the 55 plus facility is properly set up and no claims are made against the facility, there is no review or certificate to be obtained from the government. However, HUD can get involved in one of two ways: (1) when a person allegedly injured on the basis of familial status files a complaint against a facility and the facility claims the HOPA exemption as a defense; or (2) when HUD commences a Secretary–initiated investigation or files a complaint based on information it has that indicates the need for an investigation. Neither the FHA nor HOPA authorizes or requires HUD to certify whether a particular facility meets the qualifications for housing for older persons.[xxv]
- Conversions of Existing Buildings.
When a developer constructs a new apartment or condominium building, it is fairly easy to develop that building into a 55 plus building. It is more difficult to convert an existing apartment complex or condominium into a 55 plus community.
If it is an existing apartment building, it cannot be converted into a 55 plus apartment building until the 80% rule is satisfied. That is, 80% of the occupied units have to be occupied by someone 55 or older before the apartment complex owner can advertise the complex as 55 plus. So, the owner has to get lucky and have an apartment complex that is already 80% occupied by 55 or older people. Or, leave units vacant for 90 days due to renovation or rehabilitation.[xxvi] If the apartment building doesn’t meet the 80% rule, the owner can’t simply hold apartments for 55 and older people. This would be a plain violation of the FHA’s rule against familial status discrimination.
Further, the apartment building cannot advertise itself as housing for older persons or evict families with children in order to reach the 80% threshold. If a family with children seeks to occupy a vacant apartment in an existing building before the building meets all of the requirements necessary for housing for older persons, the facility must permit the family to live there. Additionally, the apartment building may not make existing families with children feel unwelcome or otherwise encourage those families to move. While the facility may not take any measures deliberately designed to discourage families with children from continuing to reside in the apartment, nothing prevents the owner from offering positive incentives that might lead some families to seek housing elsewhere. An example would be to offer free rent for the final months of the term.
If the apartment building achieves the 80% 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 of age and older and complying with verification of occupancy. The apartment building cannot publish such policies or procedures in advance of meeting the 80% threshold (without discrimination) as such policies and procedures would have a chilling impact upon potential applicants or current occupants who are families with children.
Converting a condominium building is even more difficult. In addition to the requirements mentioned above, the existing owners would have to amend the Declaration (or Master Deed) to add a restrictive covenant regarding the 55 and older rule. But amending the Declaration requires the vote of 67% of the unit owners (it can be more complicated than that, but for our purposes that is sufficient). The Declaration may require an even greater vote.[xxvii]
- Going Beyond HOPA Requirements.
HOPA requires that 80% of the occupied units must be occupied by at least one person who is 55 years of age or older. But that 55 or older person can have a spouse, child, roommate or visitor who is younger than 55 years old[xxviii]. What if the apartment complex or condominium wants to have a stricter restriction so that no resident at all may be under 55?
HOPA says that no provision of the FHA regarding “familial status” applies with respect to housing for older persons. As such, as long as an apartment complex or condominium qualifies under HOPA, that facility is not subject to the “familial status” anti-discrimination provisions of the FHA. For example, the apartment complex or condominium can make its age restrictions stricter than the HOPA requirements (like mandating that all residents be over the age of 55, or that 80% of the households must include a resident over the age of 60, etc.).
- A Twist on Age Restrictions.
As previously mentioned, a 55 and older facility may permit up to 20% of the units to be occupied by people who do not meet the minimum 55 and older requirement. Some facilities are taking a novel approach that encourages intergenerational living. A program at a senior living community in Cleveland allows a handful of college and grad school students with financial need to live rent-free in exchange for the service hours within the community – performing recitals, teaching art classes, etc. Such intergenerational programs are hugely beneficial for both the older and younger participants. There is an added advantage to the senior living community as well. Programs like this are a great way to get younger faces into the community.
There is one caveat here: For those senior living communities that are establishing lower age restrictions (or no age restrictions) in up to 20% of the facility, they have to play the odds carefully. In order to comply with the requirements for the HOPA exemption, a full 80% of the occupied units must have at least one resident over the age of 55. Some of the residents who meet the “over 55” age requirement will inevitably move or pass away; so to maintain a safety cushion with their ratios, many communities only permit a smaller portion of “younger households” in the community – say, 15% of the facility.
- Penalties for Failure to Comply with FHA and HOPA.
On May 15, 2019, HUD published new inflation–adjusted civil penalties for individuals and entities that have been found to have violated FHA laws relating to familial status discrimination. The new civil penalty amounts will apply to violations of the FHA that occur on or after April 15, 2019. Under these revised amounts, someone can be assessed a maximum civil penalty of $21,039 for his or her first violation of the FHA. Defendants who have violated the FHA prohibition against familial status discrimination in the previous five years could be fined a maximum of $52,596.[xxix]
These civil penalty amounts are in addition to actual damages and attorney’s fees and costs that may be awarded to someone who has experienced housing discrimination.[xxx]
The opportunity for developers and builders to develop housing in conformance with HOPA is vast. In the United States, as of the second quarter 2019, there are 15,698 senior housing communities.[xxxi] This would include condominiums and apartment complexes. According to the US Census Bureau, within just a couple of decades, 1 out of 5 US citizens will be at least 65 years of age or older.[xxxii] In Omaha alone, there are a large number of 55 plus apartment buildings.
But compliance with HOPA is important. Failure to comply with HOPA can be very expensive. As the owners at The Latvian Tower condominiums will testify.
[i] United States of America v. The Latvian Tower Condominium Association, Inc. and Karl Tegtmeyer, Civ. 8:08-CV-489, District Court for the District of Nebraska (Complaint, October 29, 2008).
[iii] United States of America and James Brown and Jeffrey Daubmen vs. The Latvian Tower Condominium Association, Inc. and Karl Tegtmeyer, District Court for the District of Nebraska, Case No. 8:08-CV-489 (Consent Order, March 3, 2010).
[iv] 42 USC § 3602(k).
[v] 42 USC § 3607.
[vi] 42 USC § 3607(b)(1).
[vii] HUD – Questions and Answers Concerning Final Rule Implementing the Housing for Older Persons Act of 1995 (HOPA).
[viii] 42 USC § 3607(b)(2)(C).
[ix] 42 USC § 3607.
[x] 42 USC § 3607(b)(1)(C)(i).
[xi] 42 USC § 3607(b)(1)(C)(ii).
[xii] 42 USC § 3607(b)(1)(C)(iii).
[xiii] 42 USC § 3602(a).
[xiv] 42 USC § 3607(b)(2)(C)(i).
[xv] 24 CFR § 100.305(e)(4).
[xvi] HUD – Question and Answers Concerning Final Rule Implementing the Housing for Older Persons Act of 1995 (HOPA).
[xviii] 24 CFR § 100.306(a).
[xix] Neb. Rev. Stat. § 76-802(9).
[xx] 24 CFR § 100.306(b).
[xxi] HUD -Questions and Answers Concerning Final Rule Implementing The Housing for Older Persons Act of 1995 (HOPA).
[xxii] 24 CFR § 100.307(d).
[xxiii] 24 CFR § 100.307(d)(7).
[xxiv] 24 CFR § 100.307(g).
[xxv] HUD - Questions and Answers Concerning Final Rule Implementing The Housing for Older Persons Act of 1995 (HOPA).
[xxvi] 24 CFR § 100.305(d).
[xxvii] Neb. Rev. Stat. § 76-854(a).
[xxviii] 24 CFR § 100.306(d).
[xxix] 42 USC § 3612(g)(3).
[xxxii] 2017 National Population Projections Tables, United States Census Bureau.