On May 17 a jury in the District of Montana found that a landlord violated the Fair Housing Act by requiring a pet deposit from a disabled tenant and awarded damages of almost $40,000. (U.S. v. Katz et al, Case No. 14-68). Why is this good news for landlords? Because there was a jury trial, meaning the landlord had a chance to win.
HUD and the DOJ have long taken the position that any requirement of a pet deposit for a service dog or assistance animal* violates the reasonable accommodation provisions of the FHA. (Notice dated April 23, 2013, FHEO-2013-01). The position is illogical on its face because HUD and DOJ recognize that a disabled tenant remains responsible for any damage caused by a service or assistance animal. If the tenant remains responsible for the damage, why not require a damage deposit? HUD does not require that landlords waive a rent or general damage deposit for disabled tenants, and a pet deposit is no different. Nonetheless, HUD has spoken and requests for accommodation in the form of pet deposit waivers have skyrocketed since 2013.
HUD’s rigid view has been rejected by some courts (Unconventional wisdom concerning pet deposits under the Fair Housing Act). A 20 year old Ninth Circuit decision concerning a parking fee explains exactly why HUD is wrong. In U.S. v. California Mobile Home Park Mgmt. Co., 107 F.3d 1374 (9th Cir. 1997) the plaintiff claimed that the defendant should have waived parking fees charged to a caregiver. The Court found that the plaintiff had failed to make a prima facie case of discrimination because: “Cohen–Strong failed to show that the assessment of the fees caused the denial of her use and enjoyment of her dwelling.” The Court went on to discuss various possibilities for others to pay the fees, none of which had been proven wrong by the plaintiff. A pet deposit fee, like any other fee charged by a landlord, has a discriminatory effect only if the disabled individual cannot afford to pay it. On its face a pet deposit requirement is neutral, applying to every renter, regardless of disability.**
It is conceivable that a pet deposit policy might have a disparate impact on disabled individuals because they are more likely to lack the financial resources to pay the deposit, but assuming this is true merely insults the community of disabled individuals, many of whom have no desire for charity and value their independence. A reasonable accommodation analysis might consider the financial resources of the tenant, but it is foolish to assume all disabled tenants are impoverished. The real beneficiaries of HUD’s position are the sellers and buyers of disability letters and certificates based on internet questionnaires or thirty minute phone calls. Both those who sell such letters and those who buy them are morally disabled, but that is not a disability recognized by the Fair Housing Act.
And so a jury verdict for the United States against a landlord is good news. Based on interviews with attorneys familiar with the case and a review of the court’s docket it is clear the government never tried to use HUD’s policy statement as a way of proving discrimination as a matter of law. This forced the government to prove that the pet deposit requirement actually interfered with the use and enjoyment of the premises. The landlord lost, but at least the court allowed the jury to consider the evidence. If other courts follow this precedent landlords willing to put up a fight will have a chance to win, and plaintiffs claiming discrimination based on failure to waive a pet deposit will be required to prove that a pet deposit requirement really interfered with their use and enjoyment of the premises. Most landlords understand that in the world of FHA litigation you can lose. U.S. v. Katz strengthens the argument that it should at least be a fair fight.
*”Assistance animal” is HUD’s term for animals that do not qualify as service dogs or service miniature horses under the ADA, but nonetheless provide some emotional comfort or other assistance to a disabled person.
**HUD has argued that a “pet deposit” does not apply to service and assistance animals because they are not “pets;” an position that could be evaded by changing the name of the deposit to “animal deposit.” If there is nothing more substantive than this HUD’s position is just silly.