Co-operative and Condominium Law

Potential Landlord Liability For Tenant-on Tenant Harassment Under Federal Fair Housing Act Is Clarified

A potentially large legal development occurred last week when the US Court of Appeals for the Second Circuit (a federal appeals court which covers NY, CT and VT), held that, under some narrow circumstances, a landlord will not be held liable under the federal Fair Housing Act (“FHA”) for a tenant’s harassment of another tenant when the tenant being harassed is a member of a protected class.

A quick summary of the facts in Francis v. King’s Park Manor, Inc. is in order. An African-American tenant (Francis) was subjected to race-based harassment by his neighbor (Endres). Francis sought police intervention, which ultimately resulted in prosecution Endres’ prosecution for aggravated harassment, Endres voluntarily vacating his apartment and pleading guilty to harassment. According to the opinion, Francis renewed his lease without objection and never sought intervention by the landlord or its managing agent.

Francis later sued the landlord claiming that the landlord’s failure to prevent tenant on tenant harassment constituted a violation of the FHA. Francis also sued for breach of contract (his lease) and intentional infliction of emotional distress. In the litigation history, the federal District Court (a trial level court) dismissed the discrimination and emotional distress claims. Francis appealed to the Second Circuit, which initially reversed the lower court and reinstated Francis’ claims. The landlord requested that the entire panel of Circuit Court Judges hear the appeal (a process known as “en banc”). Although an en banc appeal request is rarely granted, in this case the entire Second Circuit agreed to decide the case en banc.

In a bitterly divided set of opinions (a 7 Judge majority opinion and a 5 Judge dissenting opinion), the majority of the Second Circuit agreed with the District Court that Francis had not “plausibly alleged” violations of the FHA or intentional infliction of emotional distress. But in a minimally disguised warning to landlords, owners and managers of residential properties, the Second Circuit majority held:

We assume, for purposes of this appeal, that deliberate indifference may be used to establish liability under the FHA when a plaintiff plausibly alleges that the defendant exercised substantial control over the context in which the harassment occurs and over the harasser. Nevertheless, we hold that Francis has failed to state a claim because his Complaint provides no factual basis to infer that the KPM Defendants had “substantial control over [Endres] and the context in which the known harassment occur[red].” Nor can such control be reasonably presumed to exist in the typically arms-length relationship between landlord and tenant, unlike the custodial environments of schools and prisons. The typical powers of a landlord over a tenant—such as the power to evict—do not establish the substantial control necessary to state a deliberate indifference claim under the FHA.

Francis v. Kings Park Manor, Inc., No. 15-1823-cv, 2021 U.S. App. LEXIS 8761, at *10-11 (2d Cir. Mar. 25, 2021)

Thus, a majority of the Second Circuit ruled that when a landlord or property owner/manager exercised “substantial control over the context in which the harassment occurs and over the harasser” liability under the FHA can be both plausibly alleged and ultimately proved in Court.

This opinion is generally consistent with our firm’s advice over the years that landlords, property owners and managers are well advised, upon learning of tenant-on-tenant harassment, whether based upon one party’s race, disability or even on no apparent basis at all, to take affirmative steps to attempt to defuse the hostility and counsel the warring factions to take affirmative steps to avoid further confrontation. Mediation is oftentimes advisable.

The five Judge dissenting opinion believed Francis “plausibly alleged” discrimination by alleging that the owners of the management company told its property manager “not to get involved” in the tenant-on-tenant harassment and argued for a much broader reading of the FHA to apply to conduct similar to that alleged here.

The decision in Francis v. King’s Park Manor, Inc. substantially conflicts with a decision by the Seventh Circuit Court of Appeals (in the Midwest) which found the tenant being harassed had plausibly alleged a violation of the FHA. Because there exists a conflict of opinions between two Circuit Courts of Appeal, it is possible for the Supreme Court to become involved.

At Bleakley Platt & Schmidt, we continue to advise our landlord, property owner and property manager clients to intervene to prevent disputes from escalating into allegations of harassment and discrimination. Failure to intervene may result in legal liability and a charge of discrimination.

Bleakley Platt & Schmidt will continue to provide guidance to its landlord and tenant clients as laws and case law continue to evolve on the federal, state and local levels.

Landlord-Tenant/Co-op Issues New Required Notice To Tenants

New York State has mandated that owners of residential rental properties must notify residential tenants of the tenants’ right to request (a) reasonable accommodations of rules, policies, practices, procedures and services and (b) reasonable modifications to their apartments or common areas, when such reasonable accommodations or reasonable modifications are necessary to allow a person with disabilities to experience the same use and enjoyment of their premises as a person without disabilities.

The new law, which amends Section 296 of the New York Executive Law to add a new subsection 18-a, took effect on March 2, 2021.  Highlights of this new law are:

• Section 18-a applies to “every owner, lessee, sub-lessee, assignee, or managing agent of, or other person having the right of ownership of or possession of or the right to rent or lease housing accommodations.”
• Section 18-a requires notice to all current and prospective tenants of their right to request reasonable accommodations or reasonable modifications if they are a person with a disability.
• The notice must be in writing and given in such form and in such manner at the NY State Division of Human Rights (“DHR”) may proscribe.
• Notice must be given to all current tenants on or before April 1, 2021.
• The notice must be conspicuously posted on or in all vacant residential premises.

The DHR website contains a sample notice. The sample notice includes numerous possible reasonable accommodations or reasonable modifications which a tenant with a disability may request.  Owners, landlords and managing agents of residential rental properties should be aware, however, that the examples contained in the sample notice are for illustrative purposes only, and are by no means an exclusive list of reasonable accommodations or reasonable modifications which a residential tenant may request and to which a property owner or landlord may be required to respond.

The DHR sample notice also educates a tenant on how to file a complaint with DHR if the tenant’s reasonable accommodation or reasonable modification request is denied or a decision is unduly delayed.

Since Section 296 (18-a) provides that that “such disclosure shall be made in writing in such form and manner as the division by regulation shall prescribe,” landlords and property owners are free to prepare their own notices, but we advise them to use the sample notice on the DHR website as a guide and not to deviate too far from the sample notice in content.

Landlords and property owners should keep several important concepts in mind.  First, the requirement to reasonably accommodate tenants with disabilities is not new, and has existed in some form since the 1970s.  Only the notice to tenants of the right to request reasonable accommodations and reasonable modifications is new.

Second, the notice must be handled in tandem with the underlying legal obligation to reasonably accommodate disabilities.  Requests for reasonable accommodations or reasonable modifications must undergo an “interactive process” by which the property owner or landlord and the tenant attempt to analyze ways to address the issues raised by tenants with a disability.

The “interactive process” and the legal standard for property owners or landlords to reasonably accommodate a tenant’s request are beyond the scope of this article.  Generally, however, whether to accommodate a request by a tenant with a disability requires a balance between (i) the reasonable and justifiable nature of the tenant’s request and (ii) the hardship the request may cause to the property owner or landlord.  If the request is medically, emotionally or psychologically justified and would not cause “undue financial or administrative burdens” to the property owner or landlord, the request is deemed reasonable and should be granted.  If, however, the request involves a significant financial cost to the landlord or a fundamental change in the nature of the landlord’s business, a refusal to accommodate a tenant’s request may be justified.

Bleakley Platt & Schmidt will continue to provide guidance to its landlord and tenant clients as laws continue to evolve on the federal, state and local levels.

New York Imposes New Conflict of Interest Rules for Co-op/Condo and HOA Boards

In September 2017, New York State amended the New York Business Corporation Law (“BCL”) and the New York Not-For-Profit Corporation Law (“N-PCL”) to require additional disclosure by “interested directors” of Cooperatives, Condominiums or Homeowners Associations, i.e. directors who have a direct or indirect interest in a party to a financial transaction approved by the Board.  The new law requires the following:

1. Once each year, the Corporation shall provide a copy of BCL Section 713 or N-PCL Section 715, whichever is applicable, to each member of the Board.
2. An annual report must be prepared and signed by each member of the Board listing all contracts in which any Director had a financial interest, the purpose of the contract, the amount of the contract, the identity of the recipient of the contract award, the date of the meeting, which Directors were present at the meeting, how each Director voted, the date the contract became valid and the length of the contract.
3. If there were no contracts during the year in which a Director had a financial interest, the report must be issued and signed anyway.
4. The report must be sent to the shareholders at least annually.

The law does not apply to any other business or not-for-profit corporations.  For reasons no one understands, no similar law was adopted for Condominiums created under Article 9B of the New York Real Property Law (“RPL”), which is the law under which most condominiums are created.

There have been strident complaints from real estate housing trade groups that the law was proposed, voted on and signed by the Governor with no hearings and minimal, if any, debate, that the law is poorly drafted and covers transactions in which potential conflicts are fully disclosed and the interested director does not participate in the discussion or vote.  Remedial legislation is possible, including making the provisions applicable to Condominiums created under the RPL, but repeal of the disclosure and reporting requirements is not anticipated.

The law takes effect January 1, 2018.

For more information about this advisory or to discuss related matters, please contact James W. Glatthaar, a member of the Litigation, Co-Operative and Condominium, Construction and Real Estate Practice Groups by email jwglatthaar@bpslaw.com or by telephone: 914-287-6159.