Avoid 7 Pitfalls When Responding to a Fair Housing Complaint

This year marks the 56th anniversary of the Fair Housing Act (FHA), enacted by Congress on April 11, 1968. The FHA has been amended several times and now prohibits housing discrimination based on race, color national origin, religion, sex (including gender identity and sexual orientation), disability, and familial status.

Last November, the National Fair Housing Alliance (NFHA) released its 2023 Fair Housing Trends Report which annually examines trends in housing discrimination. According to the report, housing discrimination complaints have reached the highest levels ever recorded. Across the country, a total of 33,007 complaints of housing discrimination were filed in 2022 alone. This is the largest number of complaints ever filed since NFHA began collecting this annual data more than 25 years ago.

Considering the dramatic rise in housing discrimination complaints, there’s a chance your site could get hit with a discrimination lawsuit even if you do everything by the book. As a result, while preventing fair housing issues at your site should take the bulk of your efforts, you also have to be prepared to respond if and when somebody files a complaint against you. We’ll lay out seven common pitfalls owners fall into when responding to a HUD (or state/local) fair housing complaint.  

Pitfall 1. Overreacting

Finding out that you’ve been sued for fair housing discrimination can be extremely upsetting. But don’t lose your cool or act impulsively. Resist the urge to shred documents, forge or alter evidence, make up false excuses, order employees to stonewall the investigation, or take retaliatory action against those involved in the case.

Instead, remember that discrimination cases happen all the time. Also recognize that a complaint isn’t a conviction. All it means at this point is that HUD has determined that the allegation is worthy of investigation and that one of three things is going to happen—at least one of which represents a positive outcome: 

• HUD will find no reasonable cause and toss the complaint;
• HUD will find reasonable cause and you’ll get a chance to defend yourself in court or an administrative law judge proceeding; or
• You’ll reach a conciliation agreement with the complainant.

Pitfall 2. Underreacting

The flip side of overreacting is failing to take notice of a HUD complaint seriously. While you’re still a long way from conviction, you’ve got a lot of work to do and not much time to do it. HUD will expect you to respond within 10 days. So, carefully read the notice and attached complaint so you understand exactly what you’re being accused of. Pay careful attention to the instructions.

Also, don’t be surprised if the investigator sends you long lists of documents to provide, questions to answer, or other “discovery requests.” HUD investigators are not only legally entitled to make these requests, but also authorized to issue subpoenas and compel people to attend interviews if you don’t comply. At the same time, you also have certain rights and aren’t necessarily required to provide everything HUD requests.

Pitfall 3. Answering the Notice Without Speaking to an Attorney

You shouldn’t respond or even talk to a HUD investigator unless and until you speak to your firm’s legal counsel or outside attorney with expertise in fair housing law and the HUD or state/local investigation process. Attorneys cost money but more often than not, legal fees are substantially less than the costs owners incur when trying to navigate the HUD complaint process alone and without counsel.

You should contact an attorney immediately when you receive notice of complaint. Ask the attorney to prepare your response, oversee your internal investigation, and communicate with the HUD investigator on your behalf.

In addition, when receiving notice of a fair housing complaint be sure to check your insurance policies. Most general liability policies don’t cover fair housing complaints or lawsuits, but some do. It’s also crucial to strictly follow the policy’s notice of claim requirements to keep the insurer responsible for covering the claim. It’s generally wise to notify insurers and begin exploring the availability of insurance coverage well before HUD completes its investigation.

Pitfall 4. Botching the Initial Response

You need a careful response strategy that starts immediately after notice is received when responding to fair housing complaints and investigations. One of the first things attorneys can do is buy you more time by filing what’s called an entry of appearance and request for an extension to respond to the notice of complaint.

Consider designating a staff member to lead and coordinate the in-house investigation and response effort, preferably an internal fair housing officer. If your site doesn’t have such an officer, select a manager or experienced employee who understands fair housing laws and procedures and your training, leasing, recordkeeping, and other operations. The coordinator’s responsibilities should include acting as the point-of-contact with your attorney, or the HUD investigator if you don’t have counsel, as well as collecting the necessary documents and information about anyone who witnessed or may have witnessed the events.

Regardless of whether you’re dealing with the normal 10-day or an extended response deadline, the starting point is to find out as much as you possibly can about what happened. Start with the allegations in the complaint. Questions to ask:

• Who’s making the accusation?
• Whom are they accusing?
• Exactly what wrongdoing do they allege happened?
• When, how, where, and how often did the alleged wrongdoing occur? 

Pull all the records and try to construct a timeline or chronology. Start with any documents of interactions with the person who filed the complaint. For example, if the complaint alleges steering or other misconduct while displaying apartments, collect records such as guest cards and files detailing which apartments were available and which ones were shown. If the complaint comes from a current tenant, pull documents related to the allegedly discriminatory events, which may include maintenance records, disability-related accommodation or modification requests, complaints by or about the tenant, or records detailing the reasons leading up to and including the eviction proceedings.

After you collect the relevant documents, identify any potential witnesses who may have had dealings with the person who filed the complaint. That may include current or former management and staff, as well as current or former residents.

The initial investigation will enable you to respond effectively to the complaint and make an informed judgment about how strong the case against you is. Then, once you figure out what you’re dealing with, you can decide on your next move and legal strategy—that is, whether to defend or settle. 

Pitfall 5. Ordering Staff Not to Cooperate with HUD

HUD’s investigation of a discrimination complaint is supposed to last no more than 100 days but often drags on longer. HUD typically begins the investigation by requesting documents and other information it needs to determine whether there’s reasonable cause to believe that your site violated fair housing law.

The mission of HUD investigators is to get to the bottom of what happened, and they have broad powers to gather the evidence they need to accomplish that mission. Resisting HUD authority exposes you to risk of liability for obstruction. It may also result in less favorable outcomes. After all, while investigators are legally required to be fair to both sides, they’re also human beings. So, if investigators feel like you’re trying to make their life miserable, they’re apt to return the favor in kind, even if it’s subtle and unintentional and the investigators subjectively believe they’re being impartial.

Your best strategy is to cooperate with and avoid stonewalling HUD investigators. Of course, you can and should give HUD information that supports your position, such as pictures of ads and brochures displaying children at your community if you’re accused of discriminating against families with children. Nor do you have to forgo your legal rights, such as the right to have your attorney present during certain interviews or not disclose privileged documents. However, you must understand what your rights are and how to properly assert them.

Pitfall 6. Categorically Refusing to Settle

As a practical matter, the conclusion of the investigation report is the make-or-break for most HUD fair housing complaints. Thus, while a finding of no reasonable cause technically doesn’t preclude the complainant from filing a civil lawsuit, very few cases reach court after they’re dismissed by HUD. Conversely, while it doesn’t amount to a final judgment on liability, a HUD finding of reasonable cause totally changes the dynamic by elevating the owner’s risk and incentive to settle the case.

The law requires HUD (or its partner agency) to try to get the parties to work out a mutually agreeable settlement via a process known as “conciliation” during the investigation process. While settlements are voluntary, they often require owners to do things like make monetary payments to the aggrieved party, pay civil penalties to the government, and/or take active measures to remedy discriminatory policies and practices, such as revising rental policies or providing fair housing training to staff. If the parties do reach a settlement, HUD closes the complaint and monitors compliance with the settlement agreement.

But the very thought of settlement is tough for some owners to take, especially when they’re confident that the discrimination complaint has no merit and that the motivation for filing it is to harass and extort a settlement award the complainant doesn’t deserve. However, you can never be sure what a HUD investigator will find. And if HUD does find reasonable cause, the owner not only misses out on vindication but also faces actual discrimination charges. At that point, the options become fewer and less favorable: Settle at a higher price or go to trial and risk even greater penalties. 

Be sure to consult an attorney before entering into a fair housing settlement agreement. Such agreements, referred to as Conciliation Agreements or Voluntary Compliance Agreements, are laden with fine print subtleties that can trip up even the most experienced owners. For example, while avoiding the need to admit liability or wrongdoing is typically a powerful incentive for settling claims, owners may not realize that many consent decrees allow HUD to retain jurisdiction over the matter and impose higher penalties for any subsequent violations. In essence, the settlement is viewed as an admission of liability with the subsequent violation treated as a second offense. 

Pitfall 7. Retaliating Against People Who File Fair Housing Complaints

You can also get into big trouble by seeking revenge or retribution against those who sue you. The FHA makes it unlawful to “coerce, intimidate, threaten, or interfere with” anyone for exercising his rights under fair housing law—and anyone who has helped or encouraged someone to do so. Take special care to avoid even the appearance of retaliation against tenants, applicants, or any other persons who have filed a fair housing complaint against you or your site. Also be very careful about how you treat employees or other residents if you find out that they helped someone to file a fair housing complaint against you. The FHA’s retaliation provisions prohibit coercion, intimidation, or interference with anyone who aided or encouraged any other person in the exercise of her fair housing rights.

Get legal advice before evicting, not renewing, or taking any other adverse action against a tenant who’s filed a complaint. This is true even if you believe the action is justified for legitimate reasons, such as failure to pay rent, because the fact that it occurs after the complaint is filed may make it look like you acted out of a retaliatory motive. Keep in mind that retaliation is treated as a separate offense, which means that you could be found liable for retaliation, even if the initial discrimination claim is ultimately found to be groundless. Moreover, the fact that retaliation is one motive is enough to prove liability, even if there were also other, nonretaliatory motives for the action.