September 19, 2018
Author: EDWARD HOFFMAN, JR.
Organization: FITZPATRICK LENTZ & BUBBA, P.C.
I. Housing Discrimination.
A. Fair Housing Act.2
Fair housing laws apply to residential leases.3 Title VIII of the Civil Rights Act of 1968 (“Fair Housing Act” or “FHA”), and its subsequent amendment in 1974, made it illegal to threaten, coerce, intimidate or interfere with anyone exercising a fair housing right or assisting others who exercise that right, or advertise or make any statement that indicates a limitation or preference based on race, color, national origin, religion or sex (gender).
In some cases, the FHA exempts:
- Owner-occupied buildings with no more than 4 units;
- Single-family houses sold or rented without a broker;
- Houses operated by private organizations and clubs that limit occupancy to members.
However, a person in the business of selling or renting housing is never exempted from discriminatory actions taken in the sales or rental of a single-family home, and discriminatory advertising is never permitted.
The Fair Housing Amendments Act of 1988 (FHAA) added two more protected classes to the FHA: (1) familial status; and (2) individuals with disabilities. Familial status includes the presence or expected presence of children under 18 (it is important not to “steer” families with children away from a rental property), pregnant women and individuals securing the custody of children under 18. Exemptions to familial status include when the housing is planned and managed for people 55 years of age or older and the policies and procedures that demonstrate its intent to qualify for the exemption are followed and distributed. A disability includes physical, mental, sensory, AIDS/HIV and persons recovering from addiction Two types of discrimination can be alleged under the FHA: Disparate Treatment and Disparate Impact. Disparate Treatment involves discrimination due to different treatment, i.e., treating someone differently because of race, color, sex, religion, national origin, familial status or disability. Disparate Impact involves discrimination by different impact, i.e., when a neutral policy or procedure has a disproportionately negative impact on a protected class (such as a background or credit check, for instance).
It is important to note that the FHA does not cover/apply to the following five (5) things:
1. Fair housing laws do not guarantee a person the right to housing they cannot afford.
2. An owner is not required to rent to users and dealers of illegal drugs.
3. Property owners may set rents at whatever the market will allow.
4. Property owners can apply nondiscriminatory rental criteria designed to evaluate an applicant’s character, credit history and reliability.
5. Property owners can refuse to rent to an individual if documented reliable information shows the individual has a history of violent, disruptive or destructive behavior.
Landlords should also be aware that Pennsylvania state law, specifically the Pennsylvania Human Relations Act (PHRA) (43 P.S. 951 et seq.) also prohibits landlords from discriminating when engaging in leasing decisions and/or in their practices related to leasing.
Finally, since violations of fair housing laws have been held to violate the Unfair Trade Practices and Consumer Protection Law (UTPCPL), 73 P.S. 2011 et seq, which can lead to treble damages should a violation be found. See, Creamer v. Monumental Properties, Inc., 459 Pa. 450 (1974).
Landlords should therefore become familiar with the various fair housing laws which are pertinent to the multi-family housing industry and educate their staff accordingly in order to avoid the possibility of a violation occurring.
B. Screening and qualifying prospective tenants legally.
1. Can a landlord keep a list of “bad tenants” to share with other landlords?
The simple answer is “no”. This would be tantamount to “blacklisting” tenants, can be viewed as discriminatory conduct and the legal repercussions could be severe (i.e., expensive) as same could also be held to be a violation of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692-1692p. To wit, Section 805 of the FDCPA, “Communication in connection with debt collection”, provides, in Section (b), “Communication with third parties”, as follows:
Except as provided in section 804, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a post-judgment judicial remedy, a debt collector may not communicate, in connection with the collection of any debt, with any person other than a consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.
Accordingly, landlords should avoid keeping and sharing such “bad tenant” lists and instead rely upon the legally permitted screening processes including background checks and consumer reports, as discussed below.
2. Fair credit reporting: what can you use to “qualify” a tenant?4
Landlords may use consumer [credit] reports to evaluate rental applications — as long as they follow the provisions of the Fair Credit Reporting Act (“FCRA”) (15 U.S.C. § 1681 et seq.). The FCRA is designed to protect the privacy of consumer report information and to guarantee that the information supplied by consumer reporting agencies (CRAs) is as accurate as possible. A consumer report contains information about a person’s credit characteristics, character, general reputation, and lifestyle. A report also may include information about someone’s rental history, such as information from previous landlords or from public records like housing court or eviction files. To be covered by the FCRA, a report must be prepared by a CRA — a business that assembles such reports for other businesses. The most common type of CRA is the credit bureau.
Landlords often use consumer reports to help them evaluate rental applications. The reports can be gathered only with the prior written consent of the applicant. These reports include:
• A credit report from a credit bureau, such as Trans Union, Experian, and Equifax or an affiliate company;
• A report from a tenant-screening service that describes the applicant’s rental history based on reports from previous landlords or housing court records;
• A report from a tenant-screening service that describes the applicant’s rental history, and also includes a credit report the service got from a credit bureau;
• A report from a tenant-screening service that is limited to a credit report the service got from a credit bureau; and
• A report from a reference-checking service that contacts previous landlords or other parties listed on the rental application on behalf of the rental property owner. Landlords often ask applicants to give personal, employment and previous landlord references on their rental applications. Whether verifying such references is covered by the FCRA depends on who does the verification. A reference verified by the landlord’s employee is not covered by the Act; a reference verified by an agency hired by the landlord to do the verification is covered.
The FCRA requires landlords who deny a lease based on information in the applicant’s consumer report to provide the applicant with an “adverse action notice.” An adverse action is any action by a landlord that is unfavorable to the interests of a rental applicant. Common adverse actions by landlords include:
• Denying the application;
• Requiring a co-signer on the lease;
• Requiring a deposit that would not be required for another applicant;
• Requiring a larger deposit than might be required for another applicant; and
• Raising the rent to a higher amount than for another applicant.
When an adverse action is taken that is based solely or partly on information in a consumer report, the FCRA requires you to provide a notice of the adverse action to the consumer. The notice must include:
• the name, address and telephone number of the CRA that supplied the consumer report, including a toll-free telephone number for CRAs that maintain files nationwide;
• a statement that the CRA that supplied the report did not make the decision to take the adverse action and cannot give the specific reasons for it; and
• a notice of the individual’s right to dispute the accuracy or completeness of any information the CRA furnished, and the consumer’s right to a free report from the CRA upon request within 60 days.
Disclosure of this information is important because some consumer reports contain errors. The adverse action notice is required even if information in the consumer report was not the main reason for the denial, the increase in security deposit or rent or other adverse action. Even if the information in the report plays only a small part in the overall decision, the applicant still must be notified.
Landlords who fail to provide required disclosure notices face legal consequences under both the FHA and the FCRA. The FHA allows for a potential charge of discrimination and the FCRA permits individuals to sue landlords for damages in federal court. A person who successfully sues is entitled to recover court costs and reasonable legal fees. The law also allows individuals to seek punitive damages for deliberate violations of the FCRA. In addition, the Federal Trade Commission (FTC), other federal agencies and the states may sue landlords for non-compliance and get civil penalties.
However, a landlord who inadvertently fails to provide a required notice in an isolated case has legal protections, so long as he or she can demonstrate “that at the time of the . . . violation he maintained reasonable procedures to assure compliance” with the FCRA. In other words, an attempt to comply is required; a wanton disregard of the notice requirements will not provide the landlord with a defense against such a suit.
II. Lead Paint.
A. The Lead Paint Disclosure Rule5
Congress passed the Residential Lead-Based Paint Hazard Reduction Act of 1992, also known as Title X, to protect families from exposure to lead from paint, dust, and soil. Section 1018 of this law directed HUD and EPA to require the disclosure of known information on lead-based paint and lead-based paint hazards before the sale or lease of most housing built before 1978.
1. What is Required?
Before ratification of a contract for housing sale or lease, sellers and landlords must:
- Give an EPA-approved information pamphlet on identifying and controlling lead-based paint hazards (“Protect Your Family From Lead In Your Home” – attached to materials as Appendix “A”).
- Disclose any known information concerning lead-based paint or leadbased paint hazards. The seller or landlord must also disclose information such as the location of the lead-based paint and/or lead-based paint hazards, and the condition of the painted surfaces.
- Provide any records and reports on lead-based paint and/or lead-based paint hazards which are available to the seller or landlord (for multi-unit buildings, this requirement includes records and reports concerning common areas and other units, when such information was obtained as a result of a building-wide evaluation).
- Include an attachment to the contract or lease (or language inserted in the lease itself) which includes a Lead Warning Statement and confirms that the seller or landlord has complied with all notification requirements. This attachment is to be provided in the same language used in the rest of the contract. Sellers or landlords, and agents, as well as homebuyers or tenants, must sign and date the attachment.
- Sellers must provide homebuyers a ten-day period to conduct a paint inspection or risk assessment for lead-based paint or lead-based paint hazards. Parties may mutually agree, in writing, to lengthen or shorten the time period for inspection. Homebuyers may waive this inspection opportunity.
2. Types of Housing Covered?
Most private housing, public housing, Federally owned housing, and housing receiving Federal assistance are affected by this rule.
3. Effective Dates
The regulations became effective on September 6, 1996 for transactions involving owners of more than 4 residential dwellings and on December 6, 1996 for transactions involving owners of 1 to 4 residential dwellings.
Sellers and lessors must retain a copy of the disclosures for no less than three years from the date of sale or the date the leasing period begins.
B. Philadelphia's Lead Paint Disclosure Law6
Beginning December 21, 2012, the Lead Paint Disclosure and Certification Law requires Philadelphia landlords to ensure that property rented to families with children six years and younger is lead safe. Owners of pre-1978 rental housing in which children aged six and under will reside must provide a new lessee with a valid certification prepared by a certified lead inspector that states whether the property is either lead free or lead safe. Landlords must provide a new tenant with the certification prior to entering into a lease agreement. The landlord provide the Philadelphia Department of Public Health with a copy of the lead safe or lead free certificate, signed by the tenant. In addition, landlords must indicate they are complying with the law when they apply for a new or renewed rental license. A copy of the Ordinance, along with a copy of “A Landlord’s Guide to the Philadelphia Lead Disclosure and Certification Law” (includes sample Certificates), and other related documents, are attached to the materials as Appendix “B”).
III. Slip/Fall and Other Dangers
Landlords have a duty to provide a reasonably safe environment for their tenants, guests and others who enter the property for other purposes, such as contractors or delivery people. This duty generally does not extend to the entire property, but to “common” areas, such as sidewalks and walkways, hallways and corridors, stairs, parking lots and garages, laundry facilities, pools, community rooms and playgrounds.
Those present on the leased premises are generally considered invitees or licensees. In Pennsylvania, an invitee is characterized as follows:
(1) An invitee is either a public invitee or a business visitor.
(2) A public invitee is a person who is invited to enter or remain on land as a member of the public for a purpose for which the land is held open to the public.
(3) A business visitor is a person who is invited to enter or remain on land for a purpose directly or indirectly connected with the business dealings with the possessor of the land.
Restatement (Second) of Torts § 332 (emphasis added).
With respect to invitees, possessors of land owe a duty to protect them from foreseeable harm. Banks v. Trustees of the University of Pennsylvania, 446 Pa. Super. 99, 666 A.2d 329 (1995) (emphasis added). Moreover, section 343 of the Restatement provides that:
A possessor of land is subject to liability for physical harm caused to his invitees by a condition on the land, if, but only if, he
(a) knows or by the exercise of reasonable care would discover the condition, and should realize that it involves an unreasonable risk of harm to such invitees, and
(b) should expect that they will not discover or realize the danger, or will fail to protect themselves against it, and
(c) fails to exercise reasonable care to protect them against the danger.
Restatement (Second) of Torts § 343.
Thus, in order for an invitee to recover damages, the invitee must establish that the possessor of land (i.e., the landlord) knew, or in the exercise of reasonable care should have known of the existence of the alleged hazardous/defective condition that caused the injury. Zito v. Merit Outlet Stores, 647 A.2d 573 (Pa. Super. 1994). Section 343 also requires the invitee to prove either that the possessor of land helped to create the harmful condition, or that it had actual or constructive notice of the condition. Zito v. Merit Outlet Stores, 647 A.2d 573 (Pa. Super. 1994).
In contrast to the status imposed on property owners for invitees, a licensee is a person who enters the premises with the owner’s express or implied permission for his or her own purposes, rather than to the benefit of the landowner. Owners generally have a duty to warn a licensee of a dangerous condition that creates an unreasonable risk of harm, provided that it is known to the owner and not likely to be discovered by the licensee. However, an owner’s duty to a licensee does not extend to an obligation to inspect for latent defects that are unknown to him. Rather, the obligation to a licensee is that of exercising reasonable care to warn of dangerous conditions known to the possessor, and is thus distinguished from the obligation to an invitee who has an implied assurance that the land has been made safe. Wiegand by Wiegand v. Mars Nat. Bank, 308 Pa. Super. 218, 454 A.2d 99 (Pa. Super. 1982), citing Restatement, §§ 330, 341, 342.
The Pennsylvania Supreme Court has also commented on the duty of care a possessor of land owes to a licensee: A possessor of land is subject to liability for physical harm caused to licensees by a condition on the land if, but only if, (a) the possessor knows or has reason to know of the condition and should realize that it involves an unreasonable risk of harm to such licensees, and should suspect that they will not discover or realize the danger, and (b) he fails to exercise reasonable care to make the condition safe, or to warn the licensees of the condition and the risk involved, and (c) the licensees do not know or have reason to know of the condition and the risk involved. Sharp v. Luksa, 440 Pa. 125, 129, 269 A.2d 659, 661 (1970).
It is important to note that “control” is the element the courts consider when performing a liability analysis. In general terms, a landlord who retains control of a portion of the premises (such as a leasing office, maintenance office, conference rooms, etc.) will remain responsible for that portion (“landlord in possession”). Landlords in possession are required to perform reasonable inspections of the common areas for defects and other hazardous conditions (i.e., ice and snow).
An “out-of-possession” landlord (for an example an owner who leases a single family home to a tenant) is generally not liable for injuries suffered by third persons on the leased premises unless the owner/landlord retained control over the dangerous portion of the premises involved (See Restatement (Second) of Torts, Section 360 (“Parts of Land Retained in Lessor's Control Which Lessee is Entitled to Use”). Of course, if there is some defect present which contributes to the cause of the injury, and the landlord had knowledge (or should have had knowledge) regarding same, the landlord may be held liable.
IV. Molds/Pets/Security and Other Areas of Concern
The Environmental Protection Agency has ranked indoor air quality (IAQ) among the top 5 environmental risks to public health (the Environmental Protection Agency publication, “A Brief Guide to Mold, Moisture, and Your Home”, is attached to the materials as Appendix “C”). Mold has a negative impact on IAQ and is therefore is a major issue for landlords. Although health effects resulting from mold exposure vary, mold may become life threatening in some situations. Landlords must therefore educate themselves on mold related issues including detection, corrective action/remediation (i.e., hiring proper, certified mold remediation contractors) and proper due diligence. Landlords should also talk to their insurance brokers/carriers to determine coverage for a mold-related event should a claim arise.
It is also recommended that landlords include a “Mold Addendum” to the lease where the tenant acknowledges that he/she will maintain appropriate climate control, keep the apartment clean and take necessary measures to retard and prevent mold from accumulating in the Apartment, among other things. The tenant should also agree to immediately report, to the landlord, in writing, any evidence of water leaks and excessive moisture, evidence of mold that cannot be removed with household cleaners, any failure or malfunction in the heating, ventilation or air conditioning systems at any time and any inoperable doors or windows. Finally, the tenant should also agree that he/she will be responsible for any damage to the apartment and/or to the tenant’s personal property as well as any injury to tenant and all occupants of the apartment resulting from the tenant’s failure to comply with the terms of the Mold Addendum.
Finally, trade groups like the Pennsylvania Apartment Association – East (www.aagp.com) as well as the National Apartment Association (NAA - http://www.naahq.org) are good resources for information pertaining to mold (if an NAA member, ask NAA for the “Mold Operations and Maintenance Training Program for Multifamily Housing Professionals”).
In the context of a liability discussion, pet issues in apartments most frequently involve dog bites/attacks. Generally, a landlord can be held liable for an attack by his/her tenant’s dog if the landlord had actual knowledge of the dog’s presence and of the dog’s vicious nature (i.e., “dangerous propensities”). A landlord who knowingly allows a dangerous dog on the leased premises is less likely to be released from legal responsibility if the dog injures someone.
In Rosenberry v. Evans, 2012 PA Super 91 (Pa. Super. 2012), the Pennsylvania Superior Court specifically addressed this issue. In this matter, a landlord leased premises to a tenant in Fayette County, Pennsylvania. On June 15, 2008, a ten-year-old child and his grandparents visited the leased property to choose a puppy from a litter born to a pit bull owned by the tenant’s girlfriend. During the visit, the child was bitten by the pit bull and suffered significant injuries. The child’s mother subsequently sued the tenant, his girlfriend and the landlord alleging, inter alia, that the landlord: (a) was in control of the leased premises when the incident occurred; (b) was aware or should have been aware of the pit bull’s dangerous propensities; and (c) was negligent for permitting the dog to remain on the leased premises and failing to advise others of its violent propensities. The landlord denied the allegations and moved for summary judgment. The trial court concluded that there was no evidence that the landlord was actually aware of the pit bull’s dangerous propensities and granted the landlord’s motion for summary judgment, dismissing the case against him with prejudice.
The plaintiff appealed and the Pennsylvania Superior Court affirmed the lower court’s decision. The court found that there was no evidence that the landlord had any knowledge regarding the pit bull’s dangerous propensities, or that the landlord had any reason to believe that the dog posed any danger to guests or invitees. Rather, the lower court’s record established that prior to the pit bull biting the child, the dog was exposed to numerous others without incident, and that the dog had never acted in a threatening manner towards anyone. The court found that there was no reason for the landlord to believe that the dog was dangerous and, hence, there was no duty on his part to warn any others, including third parties, of any potential danger (a copy of the Rosenberry v. Evans opinion is attached to the materials as Appendix “D”).
A landlord who fails to provide “reasonable” security measures may be held liable for criminal activity on the premises. The standard that is used is that the landlord either knew or should have known about security issues and failed to take reasonable steps to remedy the issues. Most frequently, the issue of security is examined in the context of an alleged failure by the landlord to protect the tenant and/or his guests from allegedly foreseeable criminal acts of a third person. This issue was discussed at length in the seminal case of Feld v. Merriam, 506 Pa. 383, 485 A.2d 742 (1984), in which the Pennsylvania Supreme Court, held as follows:
Absent therefore an agreement wherein the landlord offers or voluntarily proffers a program, we find no general duty of a landlord to protect tenants against criminal intrusion. However, a landlord may, as indicated, incur a duty voluntarily or by specific agreement if to attract or keep tenants he provides a program of security. A program of security is not the usual and normal precautions that a reasonable homeowner would employ to protect his property. It is, as in the case before us, an extra precaution, such as personnel specifically charged to patrol and protect the premises. Personnel charged with such protection may be expected to perform their duties with the usual reasonable care required under standard tort law for ordinary negligence. When a landlord by agreement or voluntarily offers a program to protect the premises, he must perform the task in a reasonable manner and where a harm follows a reasonable expectation of that harm, he is liable. The duty is one of reasonable care under the circumstances. It is not the duty of an insurer and a landlord is not liable unless his failure is the proximate cause of the harm. Id. at 394, 485 A.2d at 747.
Common security issues include broken doors and locks, windows that do not work/lock, inadequate lighting, broken security systems and cameras and inoperable building entry/access systems. Landlords should ensure that security issues are dealt with especially if reported by a tenant.
D. Carbon Monoxide
On December 18, 2013, Governor Tom Corbett signed Act Number 121, the “Carbon Monoxide Alarm Standards Act,” which requires all apartment units and multifamily dwellings that use fossil fuel-burning appliances or have an attached garage to install a centrally located and approved carbon monoxide alarm near bedrooms and the fossil fuel-burning appliance. The Act became effective immediately and allows eighteen (18) months, or until June 2015, for owners and management to put the carbon monoxide alarms in place. The Act puts the burden of device upkeep and battery replacement on the tenant during their occupancy of the unit. A tenant must also replace the device if it is lost, stolen, removed or broken during their occupancy. Residents must notify the owner in writing if the device is found to be defective or not working.
Landlords should thus ensure to comply with Act 121 in order to minimize liability related to same.
E. Repairs to make before possession.
Landlords have a duty to ensure that the rental property is “habitable” prior to possession. The duty stems from the implied warranty of habitability, as adopted by the Pennsylvania Supreme Court in Pugh v. Holmes, 486 Pa. 272, 405 A.2d 897 (1979). The warranty of habitability is implied as a matter of law to ensure that a landlord, will, at minimum, place the rental property in a “livable” condition prior to occupancy by the tenant or that the landlord will do so within a “reasonable” time after the tenant’s occupancy begins. If the landlord breaches the implied warranty by virtue of a defect of such a nature and kind that will prevent the occupancy of the demised premises, the tenant may:
(1) remain in possession, repair the defect and deduct the cost of such repairs from the rent;
(2) surrender possession of the premises;
(3) sue for damages;
(4) maintain a counterclaim against the landlord in a suit for rent; or
(5) utilize any other available contractual remedies.
Finally, a tenant must prove that he or she gave adequate notice to the landlord of the defect, that the landlord had a reasonable opportunity to make the necessary repairs, and that the landlord failed to do so. Staley v. Bouril, 553 Pa. 112, 718 A.2d 283 (1998).
V. Ways to Minimize Risk
Landlords can minimize risk by educating themselves on risk management issues and seeking guidance from professionals on the legal, insurance and maintenance issues which most frequently impact landlords. Staying proactive and being “one step ahead of the problem” is the best way to minimize risk.
1 Edward Hoffman, Jr. is a Shareholder with Fitzpatrick Lentz & Bubba, P.C. in Center Valley, PA.
2 Source: National Apartment Association publication – “An Overview of Fair Housing”.
3 While the focus of these materials is federal law, the Pennsylvania Human Relations Act, 43 P.S. §§ 951-963, also applies to “housing accommodations” and expands the protections provided under federal law to
include age (over 40) as a protected class. The author also notes that many local governments have also expanded the protections afforded under the federal law. The city of Philadelphia, for example, has
expanded protected classes to include marital status, sexual orientation, gender identity, domestic or sexual violence victim status and source of income.
4 Source for entire discussion on Fair Credit Reporting provided in this section: Federal Trade Commission (FTC) publication: Using Consumer Reports: What Landlords Need to Know, available at: http://business.ftc.gov/documents/bus49-using-consumer-reports-what-landlords-need-know
5 Source for entire discussion on the Lead Paint Disclosure Rule in this section: HUD: The Lead Paint Disclosure Rule, available at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/healthy_homes/enforcement/disclosure
6 Source: http://www.phila.gov/health/ChildhoodLead/LeadPaintLaw.html