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The Two Most Common Fair Housing Mistakes Builders Make

Seth G. Weissman

November 2013

Developments in Real Estate

I am really starting to hate the word “active adult,” particularly when it is attached to communities that are not age restricted through recorded covenants. Advertising communities as active adult that are not legally age restricted violates our fair housing laws. This is because such advertising shows a preference for seniors and thus discriminates against families with children, one of the seven protected classes of persons under our fair housing laws.

“Active adult” has always been a bit of nonsensical label. Are couch potatoes not allowed because they are not active adults? Are handicapped persons prohibited (another protected class of persons under our fair housing laws) because in some cases they may not be as active as other adults? While the term is a bit peculiar, it has taken on the common meaning of a community for seniors who have not yet suffered from the inevitable infirmities of old age.

Some builders target seniors through their advertising without making their communities age restricted. The thought is that if they limit occupancy by creating an age restricted community for seniors only, they needlessly narrow the market of potential buyers. Some builders also worry that limiting the community to seniors may scare some of them away who really want to live in a senior community but cannot bring themselves to admit it. Referring to the community as “active adult” tries to have it both ways. Unfortunately, the practice is unlawful and leaves the builder exposed to a fair housing claim.

Can builders encourage seniors to live in their communities that are not age restricted without violating our fair housing laws? The answer to this question is yes. So, for example, builders can advertise single-level living, elevators, master bedroom on the main floor, fewer bedrooms, smaller guest bedrooms, grab bars in showers and greater handicapped accessibility, maintenance of landscaping and building exteriors by the homeowners association, and clubhouses designed for activities seniors enjoy. The trouble is that such advertising is more subtle in sending the message that the product type is well suited to seniors. Using a phrase like “active adult” seems to hit seniors over the head that this is the community for them. The bottom line, however, is that while the term may work, it is not allowed unless the community is age restricted through covenants.

So, what is the second mistake builders make? The answer is using pictures of people in builder advertising that incorrectly shows a preference for particular groups. So, for example, if the pictures in advertising are of buyers who are all the same race, it shows a preference for people of that race, and is thus discriminatory against persons of other races. It doesn’t matter whether all of the pictures of people are of Caucasian, African- American or Asian people; showing a preference for one race in advertising housing discourages persons of other races from living in the community. How can builders get around these restrictions? There are two answers. The first is to only show pictures of the houses themselves without any pictures of people at all. While this is legally the best approach, the marketing gurus say that it is harder to sell the lifestyle or dream the house represents without pictures of people enjoying the house. The second answer is to have a widely diverse group of people in all advertising. While this could include, for example, pictures of one race of people in one advertisement, another race of people in a second advertisement and a third race in a third advertisement, the risk of a claim is increased if not all of the advertisements get the same air time. Usually, it is better to just be overly  inclusive in each advertisement and show a broad cross-section of the people in all advertisements. Of course, this sometimes can look contrived particularly if all of the people are inside a home. (This is usually why pictures of diverse groups of people are normally shot at the amenity area.)

Pictures are powerful images and can lead to fair housing claims even when the builder had no intent to discriminate. For example, we defended a builder in a fair housing claim after they innocently posted pictures in the sales office of the people who had purchased homes in the neighborhood under the banner of “meet your new neighbors.” As it turned out, the pictures were almost entirely of Caucasian people. An African-American potential buyer felt the pictures sent a message that African-Americans were not welcome and filed a fair housing complaint. While the complaint was eventually dismissed, the builder spent thousands of dollars defending himself.

Fair housing continues to be an area of great risk for builders. Discrimination is not allowed on the basis of race, color, sex, national origin, religion, handicap or familial status. Not only can penalties be severe but the bad publicity associated with being a defendant in a fair housing complaint can hurt sales. Builders should treat fair housing complaints seriously. If a complaint is filed, a thorough response drafted by legal counsel showing that no discrimination occurred is usually the best first step to protect the builder’s good reputation.

 

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