Ways to Avoid and Limit Liability
by Monica Gilroy, Esquire
Multifamily management brings its own share of trials and tribulations and opens up property managers to a variety of potential issues which may lead to liability. The Multifamily and SFR sector are constant targets by the U.S. Department of Housing and Urban Development (HUD) Fair Housing investigations across the nation. Protecting yourself from liability is simple if common sense, routine practices and strong sensible policies are in place.
April is Fair Housing month, having been established this month in 1968. Fair Housing has recently gone through two major changes which the industry needs to continue to watch.
Fair Housing Laws
Fair Housing laws prevent discrimination in the terms, conditions, availability and other factors of rental housing for certain Protected “Classes,” namely: Race, Color (meaning color of your skin), National Origin, Religion, Familial Status (meaning a family is a family is a family — it is not for us to say what comprises a family), Disability and Sex (meaning gender). Some localities have specific additional protected classes such as Source of Funds (Section 8).
Pursuant to a United States Supreme Court ruling related to the definition of “Sex” under the Equal Employment Act, the definition of “Sex” was expanded to include sexual orientation and gender identity, with the Court finding those were inextricably linked to the definition of Sex. While not formally amended, HUD views sexual orientation and gender identity as part of Fair Housing definitions of Sex.
Disability has had prominent publicity as it encompasses Emotional Support Animals (ESA) and Service Animals. The number one area of Fair Housing claims is Disability, with over 75% of those claims surrounding ESAs.
ESA and Service Animals
ESA and Service Animals are not pets — they are to be viewed as another resident of the property. You cannot charge any pet fees or deposits related to ESAs and Service Animals, but you can charge for any damage they cause. The quintessential Service Animal is a seeing eye dog, or a dog which assists with detecting seizures or helps a deaf person hear.
Emotional Support Animals are animals which are verifiable by medical or legitimate therapeutic documentation to provide emotional support. The documentation should be current (within a year) and specific to explain why the ESA is needed by the tenant.
To assist with the challenges which property managers face with ESAs and Service Animals, in January 2020, HUD’s Office of Fair Housing and Equal Opportunity (FHEO) released Notice FHEO-2020-01, sometimes referred to as the “Assistance Animals Notice.” The Notice included two sections, “Assessing a Person’s Request to Have an Animal as a Reasonable Accommodation Under the Fair Housing Act,” which provided a set of best practices for complying with the FHA when assessing a person with a disability’s accommodation requests involving animals in housing. The second section “Guidance on Documenting an Individual’s Need for Assistance Animals in Housing,” provides guidance on information that an individual seeking a reasonable accommodation for an assistance animal may need to provide to a housing provider about his or her disability-related need for the requested accommodation.
Late last year, HUD withdrew FHEO-2020-01 without much fanfare or explanation. In February of 2026, HUD noted that the withdrawal was to provide an updated notice to the public in the future. The 2020 Notice was an excellent tool for property managers as it was specific, gave real world examples and provided property managers with the ability to push back on suspect documentation regarding emotional support animals. The continued use of the 2020 Notice, even though withdrawn, is suggested for training staff and for creating protocols.
Case Studies
An example of Fair Housing enforcement actions regarding Disability in multi-family housing includes a Chicago high-rise under management by a third-party property manager. The tenant had a minor child who was autistic and needed a rabbit to pet to provide peace. The property manager and the owner denied the rabbit, saying they did not allow “farm animals.” The tenants provided documentation from doctors, therapists, school counselors, all current and specific, but the property manager and the owner refused to permit the rabbit. A Fair Housing claim ensued, and the property manager and owner were fined over $75,000 for the wrongful denial of the rabbit, citing the mistake of ignoring what was clearly a well-documented and legitimate ESA.
Another significant change within the world of Fair Housing occurred in late 2025 when the current administration indicated that they would no longer enforce the concept of “Disparate Impact” in Fair Lending and Fair Housing complaints. Disparate Impact is a facially neutral policy or practice which has an unintended discriminatory effect upon a Protected Class, i.e., a policy which limits the number of 911 calls which can occur within a month in a multi-family community by a tenant. While facially neutral (trying to limit noise and disruption), the policy has a disparate impact on the protected classes of Sex (women) and Familial Status as women and women with children are more likely to call 911 as they are the most frequent victims of domestic abuse.
Preventing Fair Housing claims is simple: have consistent policies for everyone. Treat every tenant who is screened the same. Use categories which are “Protected Class” blind such as credit score, eviction history, and bankruptcy history to prevent accusations of discrimination.
If you receive a Fair Housing Claim, do not panic. Gather your documents and create a timeline of events. Many errors and omission policies are now covering Fair Housing Claims and will pay for an attorney to defend you. Common sense and good training of your staff, especially your virtual team members who are the first line of defense on tenant screening, are the key to preventing liability with Fair Housing.
