New Laws and Regulations for 2022 – Part 1 (Fair Housing Updates)

New Laws and Regulations for 2022 – Part 1 (Fair Housing Updates)

By: D. Keith Dunnagan, Esq.

January 11, 2022

Last week we introduced our looking forward series and touched on a couple things to look for in 2022. Today, we start by looking at new laws and regulations that will be affecting various industries. We start by looking at some of the new laws and regulations related to Fair Housing in California.

The Department of Fair Employment and Housing (“DFEH”) is functionally charged with enforcing the civil rights laws of California in a variety of forums. As part of its duties, it also implements regulations to enforce California’s civil rights laws. 2021 was a busy year for DFEH as there were numerous revisions and additions to the regulations promulgated by DFEH.

First, on January 10, 2022, DFEH released its fact sheet related to discrimination against Child Care Providers. Health and Safety Code 1597.41 makes it unlawful to discriminate against licensed child care providers. Under the statutes, landlords and HOAs cannot refuse to rent or sell properties to individuals who will operate a licensed child care home. Further, HOAs cannot fine, limit or create restrictions to impede the use of a property as a child care home. The law is clear and states that restrictions against the use of a family care home are void.

In addition to the prohibitions aimed at landlords and HOAs, the new regulations also place restrictions on local jurisdictions related to zoning. The laws prevent local jurisdictions from requiring zoning permits for operating a family child care home in residential zones and prevents the creation of special rules or zoning regulations adversely impacting child care homes.

Second, DFEH passed several new regulations. DFEH added a section related to intentional discrimination practices. Under the added regulations, the agency identified burden of proof issues and liability shifting mechanisms. Also, if a complainant shows intentional discrimination through direct evidence or a combination of direct and indirect evidence the respondent cannot use affirmative defenses, excepting however any claims related to facially discriminatory policies that objectively benefit the protected class or respond to legitimate safety concerns raised by individuals affected by the facially discriminatory policy. One of the more curious additions to the regs was that a respondent cannot use a legally sufficient justification in a case predicated on intentional discrimination.

Let’s say a person has a religious reason for not considering something (religion is routinely excepted from compliance issues because of the First Amendment to the US Constitution), the new regulation seems to say that if discrimination does result from a protected religious action, that liability under the DFEH regs may exist. Without knowing more, it would seem that this particular regulation may run afoul of the US Constitution. However, there are certain exceptions to the discrimination rules that allow landlords to examine the level or source of income as allowed in the regulations or allows an owner-occupier of the home who is renting rooms and sharing the common area to advertise availability to only persons of one sex.

Third, the updated regulations prohibit landlords and housing providers from discriminating against individuals based upon their source of income. While the landlord or housing provider has the right to inquire as to source of income to verify ability to pay, they may not discriminate against someone because the potential tenant has government assistance. Further, when qualifying a tenant based upon financials, the landlord or housing provider may only consider the portion of the rent that the tenant will actually pay when determining if the tenant meets financial eligibility standards.

Further, the landlord or housing provider cannot discriminate against prospective tenants because they participate in government assistance programs. Going forward landlords or housing providers that refuse to negotiate in good faith with tenants that participate in government assistance programs, impose different procedures or terms on such prospective tenants, or even misrepresent the availability of a unit may be subject to penalties under the modified regulations.

Finally, DFEH modified the regulations related to reasonable accommodations for disabled individuals. Primarily DFEH added the distinguishing feature of a reasonable modification to the reasonable accommodation section of the regs. It has long been required that reasonable accommodations must be made. However, accommodations usually did not require modifications to the actual structure. Under the modified regs reasonable modifications must now be made and regs define the failure of compliance with a reasonable modification request to be actionable under the discrimination rules. This set of rules will take some time to develop through case law as it marks a potentially significant addition or obligations on landlords and housing providers.

There are a couple important items to note related to the modification obligations. Under the regs as promulgated, if a person makes a request for a reasonable modification and it is a modification that the owner is not required to make, the owner does not have to approve the request if the requesting party refuses to the pay for the modification. Additionally, if the requesting party is willing to pay for the modification but unwilling to commit to paying for the restoration of the rental unit at their departure time, then the modification can be denied. However, the regs did leave open a potential action if the agency determines that the requirement to remove the modification is reasonable. It is a veritable pandora’s box of potential litigation.

DFEH was certainly busy over the last year and the complete text of these new discrimination regulations can be found here. Pay attention to the some of the examples that DFEH includes in the body of the regulations. Landlords and housing providers would be wise to double check with their attorneys on whether they are compliant with the new DFEH regulations.

The attorneys at BPE Law have a long history working with landlords, property managers and real estate investors on their real estate needs. If you or someone you know has questions related to their real estate holdings, BPE’s attorneys are here to help you navigate the complex web of statutes and regulations related real estate.

The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.

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