55 or Over Communities

In 1988, the Fair Housing Amendments Act (the “Act”) made it unlawful, except in certain limited situations, to discriminate against persons on the basis of "familial status." The Act generally allows any person under the age of 18 (“a child”) domiciled with a parent, legal guardian (or someone else having custody under written permission) to live where the family chooses, without discrimination. For example, the Act prevents yuppie apartment complexes from discriminating against renters with children. Similarly, buyers with children can not be excluded from condominium and townhome projects.

In passing the statutory amendments of 1988 to protect families, Congress respected the needs of senior citizens for retirement communities. While the Act generally prohibits discrimination against families with children, it also allows "housing for older persons" to keep children out. Housing which does not qualify as "housing for older persons" must admit families with children.

There are three types of projects which the Act (and regulations promulgated under the Act) permits to discriminate against children: first, state and federal housing projects for the elderly; second, housing where no one is under age 62; and third, the 55-or-over community — housing in which 80% of residential units are occupied by one resident over age 55, where the housing facility or community publishes and adheres to policies and procedures that demonstrate the intent to provide housing for those 55 and over and which complies with regulations on age verification. This article will examine 55-or-over housing in detail.

The initial regulations under the Act were promulgated and explained by the Secretary in 54 Fed. Reg. 3252-3257 (1989) and codified at 24 C.F.R. §§ 100.300-100.304 (1989) (the “1989 Regulations”). The Act originally required that housing for those 55 or over have ‘significant facilities and services especially designed to meet the physical or social needs of older persons.' Significant difficulties in developing regulations promulgated on this subject in 1994 and 1995 prompted Congress to delete that requirement in the 1995 Amendment to the Act.

The 1995 Amendment charges the Secretary of the Department of Housing and Urban Development (the “Secretary” and the “Department,” respectively) with the responsibility to develop regulations that provide for verification of age by reliable surveys and affidavits and include examples of the types of policies and procedures that the housing facility or community must publish and adhere to that demonstrate the intent to provide housing for those 55 or over.

The 1995 Amendment also provided for a limitation on recovery against individuals who can show that they had no knowledge of non-compliance of a development, when the development has stated in writing that it complies with the Act.

Exemptions allowing discrimination against children under the Act are interpreted narrowly, so it should be expected that all communities of retired persons will not qualify for treatment under the Act and will not be able to legally discriminate against families with children. In such non-qualifying developments, market forces may discourage, but not preclude, young families from seeking residency even though legal exclusion is not possible.

The easiest way to qualify as housing for older persons under the Act is to ensure that no one under age 62 lives in the development. Under 24 C.F.R. §100.303 (1995) and 42 U.S.C. §3607(b)(2)(B) if housing is "intended for, and solely occupied by, persons 62 years of age or older" children can be kept out. This almost requires that the facility be of a nursing home nature since not even an underage spouse or adult child can reside within the community. Further, the statutory use of the phrase "solely occupied" implies that extended overnight visits by those under age 62 would disqualify the project. The "62 and older" housing is a narrow category.

Housing may also qualify as "housing for older persons" if it demonstrates that it is provided pursuant to a specific state or federal program found by the Secretary to be designed and operated to assist elderly persons. Because this exemption under the Act allowing discrimination against children has not been widely utilized it will not be further discussed.

The classification of housing for older persons which would embrace most developments seeking to discriminate against children is designated as 55-or-over housing. This is housing in which most residential units (a minimum of 80%) are occupied by at least one person over age 55, which holds itself out to the public and administers itself as such housing, and which uses age verification procedures to ensure its qualification. 42 U.S.C. §3607 (b)(2)(C). Such housing can, in limited circumstances, be occupied by individuals under 55. There may even be children who occupy some units. The burden of showing that a community qualifies as 55-or-over housing rests upon the facility or community.

The housing facility or community must, at the time of an alleged violation, be able to affirmatively demonstrate through credible and objective evidence that:

• 80% of the units are occupied by at least one person 55 years of age or over;
• policies and procedures which demonstrate an intent to provide housing for older persons are published and adhered to; and
• the community has complied with regulations for verification [of age] by reliable surveys and affidavits.

42 U.S.C. §3607 (b)(2)(C). If the housing facility or community can not meet this burden, it will not be able to discriminate against children.

The first threshold that must be met to qualify as housing for those 55 and older is that "at least 80% of the occupied units in the housing facility are occupied by at least one person 55 years of age or older per unit . . . " 42 U.S.C. §3607(b)(2)(C)(i). See also 24 C.F.R. §100.305(c) and §100.315(a) (1995).

It is important to remember that the requirement is “occupancy” and not “ownership.” Family members under age 55 can own a unit in a 55-or-over community which is occupied by the parents, if at least one is over age 55.

It is further obvious that this requirement is much less stringent than the exclusive occupancy requirement for 62 and over housing. Spouses may be under age 55 since only one occupant per unit needs to be over 55.

Even if the development discriminates against minor children (children under age 18), adult children under age 55 may reside in the unit. A unit could qualify if a couple under age 55 had a parent over age 55 living with them.

Further, up to 20% of the units do not need to have anyone over age 55 in them. Legislative history and commentary indicates that the 20% allowance permits caretakers, managers, etc., to reside on the premises.

In the initial analysis of most projects, it is relatively easy to conduct a census to determine whether this 80% occupancy threshold requirement has been met. In snowbird or resort communities, however, the 80% occupancy threshold may be difficult to ascertain and maintain. Residence is not sufficient; actual occupancy is required.

Some have suggested that the allowance of 20% of units for younger persons thwarts the purpose of the Act. They expressed concern that an owner might market "80% of the units for persons 55 years of age or older and market the remaining 20% in a radically different way (e.g., young adults)." Implementation of the Fair Housing Amendments Act of 1988. 54 Fed. Reg. 3,255 (1989). Regulators and legislators have responded:

Id. (quoting Memorandum of Senators Kennedy and Specter).

An attempt to "dual market" a development may lead to a community's failure to meet the requirement that it be "intended" for older persons. "[T]he Department does not believe it would be consistent with the intent of the statute to permit an owner or manager seeking to qualify for the ‘55 or Over’ exemption to sell or rent the first 20% of the units to persons all of whom are under 55 years of age. Filling so many units with non-qualifying persons might be creating an impression that the housing is not intended for older persons." Id. at 3,256.

The second threshold requirement that a housing facility or community must meet is that it publish and adhere to policies and procedures which demonstrate an intent by the owner or manager to provide housing for persons 55 or older. 42 U.S.C. §3607(b)(2)(C)(ii) and 24 C.F.R. §100.305(d) and §100.316 (1995).

Among the factors which will be evaluated in determining compliance with this requirement are:

(i) The manner in which the housing facility is described to prospective residents;
(ii) The nature of any advertising designed to attract prospective residents;
(iii) The use of age verification procedures;
(iv) Lease provisions;
(v) Written rules and regulations;
(vi) Actual practices of the owner or manager in enforcing relevant lease provisions and relevant rules or regulations; and
(vii) The public posting of a self-certification (discussed later).
24 C.F.R. §100.316(b) (1995).

This requirement that policies and procedures be "published and adhered to" ensures that in the market the housing will look like and act like housing for elderly persons. This requirement demands continuous action since compliance is evaluated on the date of an alleged violation. See Housing for Older Persons; Defining Significant Facilities and Services; Proposed Amendments, 60 Fed. Reg. 13,841 (1995).

Publication of policies and procedures, standing alone, is not sufficient to qualify for the over-55 exemption. The preceding list only suggests vehicles for publishing the development's rules and regulations. The Regulations do not suggest the specific content necessary for the policies and procedures to affirmatively and objectively demonstrate that the housing is intended for persons 55 or older.

At all times the housing facility should be described and represented to prospective buyers and renters as housing for persons 55 years of age or older. The polices and procedures should require that all oral and written communications, (including advertising, marketing, sales and rental materials or displays) constitute a clear statement of intent that (i) the housing facility is intended for housing of persons 55 years of age or older and (ii) that the housing facility claims an exemption from the provisions of the Fair Housing Act regarding discrimination based on familial status and the occupancy of units by persons under age 18 is prohibited. Where units are owned individually, such as in a subdivision, townhome or condominium development, the association’s rules and regulations must also require individual owners to make the statement of intent. Prospective residents should be informed that a copy of the policies and procedures governing the adult community can be provided upon request.

All advertising portraying residents should use older persons and reflect that the community is intended for older persons. A young model near a pool in a print ad will convey an intent contrary to that required to maintain the exemption. See United States of America v. Cenvill Illinois Corp., Case No. 90 C 644 at page 2 of Attachment A (N.D. Ill. Consent Decree entered Feb. 12, 1990).

Posting a notice that the housing is intended for those 55 and over at entrances may be desirable. Housing for Older Persons; Defining Significant Facilities and Services; Amendments, 60 Fed. Reg. 43,325 (1995).

The 1995 Amendment to the Act requires that age verification procedures such as affidavits or surveys be implemented, according to regulations to be established by the Secretary. Such procedures are an important way of demonstrating that the community intends to be “housing for older persons.” They also help ensure that occupancy requirements are met. Any age verification procedure adopted must (i) be “enforceable, objective and consistently applied” and (ii) be applied to current and potential occupants. Age verification procedures will help a 55-or-over community avoid violating the 80% occupancy rule.

Until the promulgation of verification regulations by the Secretary, it is not possible to technically comply with the Act, as amended in 1995. The Act requires compliance with "rules issued by the Secretary" and until they exist, they cannot technically be met. However, it is possible, based on prior enforcement and practice to suggest policies which could be used until the rules are promulgated.

The age of occupants can be verified by having current and prospective occupants complete an age verification form. At a minimum, an age verification form should establish (i) who will be the occupant of a unit — the purchaser, renter or family member and (ii) each occupant's age by use of a driver’s license, birth certificate, passport, or other equally reliable form of identification. Id.; see also Cenvill, supra, at p. 4 of Attachment A. The statutory reference to affidavits means that these statements should be under oath.

In addition to receiving age verification affidavits, current age surveys should be maintained for all occupants of all dwelling units. Deaths and other events changing the occupancy status of a unit should be closely monitored.

The policies and procedures should require leases to be written, contain the statement of intent, and require the renter to comply with the policies and procedures of the adult community. Violation of the facility policies and procedures should constitute default under the terms of the lease.

Rules and regulations are also necessary to bind the unit owners and occupants. Publication and dissemination of the policies and procedures and rules and regulations alone is not sufficient. The lease provisions and rules and regulations pertaining to the adult community must actually be enforced. 24 C.F.R. §100.316 (b)(6) (1995).

The policies and procedures should include visitor regulations, record keeping requirements, regular employee training, and penalties for acts of employees and agents which might be reasonably understood to convey that the community is not intended and operated for housing of persons 55 and over. The policies and procedures and rules or regulations should be incorporated by reference in any recorded Declaration of Covenants and Restrictions for a housing facility and in purchase and sale agreements for each unit.

The requirement of "publishing" will necessitate actual dissemination of the policies and procedures. Use of periodic newsletters or bulletins, inclusion in marketing or descriptive materials, and posting in common areas or public places would all be well advised.

Compliance with this requirement of "policies and procedures" will be particularly difficult for homeowner's and resident associations. The typical homeowner's association is a non-profit corporation governed by unpaid, elected lay persons. They may not be educated on the need for constant vigilance. They may not have sufficient time or incentive to disseminate the policies and procedures and see that association members adhere to the published policies and procedures. There is often a lack of central control over the many persons who may be deemed to have authority to act for the association.

Control over individual unit owners is difficult to maintain. If an association member rents a unit to persons who are under age 55, in violation of the published policies and procedures, the homeowner's association is not in privity of contract with the tenant to proceed with an eviction and will be forced to take action against the violating association member.

A housing facility or community will not be able to defend itself against a discrimination claim if it has not held itself out to the public and acted in all ways as housing for elderly persons on the date of the alleged violation. In the long term, publishing and administering policies and procedures may be the most difficult element of maintaining an exemption for a "55-or-over" community.

Conclusion

In determining whether a development or complex can exclude families with children, there are substantial objective standards. If a complex cannot qualify because someone is under age 62 or because the housing is not provided pursuant to a state or federal program, the complex can attempt to qualify under the "55-or-over" rules. The occupancy requirement is relatively easy to meet. The requirement of publishing and adhering to procedures is entirely within the control of the housing facility or community and relatively easy to meet as long as it is consistent vigilance is exercised. The 1995 Amendment will be followed by regulations which outline the surveys and affidavits required for compliance. Housing facilities and communities which discriminate against families with children may now proceed with greater certainty when relying on these provisions. As the regulations are issued, communities may act to maintain their senior status in a protected manner.