Occupancy Standards – One Person Limit in Studio Apartments May be Too Restrictive

A recent court case (Fair Housing Center of Washington v. Breier-Scheetz Properties, LLC, May 2017) found that a Washington community’s rule limiting studio apartments to one occupant violated fair housing law based on familial status.

Facts of the Case

1. The 96-unit community contained a combination of studio and one-bedroom apartments.
2. The studio apartments ranged in size from 425 square feet to 560 square feet.
3. The community limited occupancy in the studio apartments to no more than one person.
4. This policy was confirmed during testing by a fair housing testing organization.
5. The testing organization filed a fair housing suit, alleging that the community applied a facially neutral occupancy restriction that resulted in a disparate, adverse effect based on familial status.

Decision

The court ruled in favor of the fair housing testing organization, stating that the community violated fair housing law by applying an overly restrictive occupancy policy that had an adverse impact on families with children.

Reasoning

1. The fair housing group was able to prove that the community’s practice had an adverse impact on a protected characteristic – in this case, families with children.
2. The group provided statistical evidence from an expert demonstrating that the policy had a greater impact on families with children versus other potential applicants.
3. The burden then fell on the community to show that they had a legitimate, nondiscriminatory business reason for the policy, and that the policy was the least restrictive way to achieve that purpose.
4. The community offered two reasons for the policy:
   1. Because the building was master-metered for utilities, the community developed a “formula” for billing the cost of utilities to residents. The community argued that allowing more than one occupant in a studio apartment would require the installation of meters in every unit in order to ensure a fail billing system; and
   2. The configuration of the studio units was designed to accommodate only one person.
5. The Court rejected both arguments:
   1. The Court found that the argument relating to the billing of utility costs was nothing more than an arbitrary, after-the-fact justification for the discriminatory policy. There were clearly other ways to establish a fair billing system; and
   2. The community failed to provide evidence that the units could not adequately accommodate more than one person. In fact, the city code permitted two people in studio apartments as small as 150 square feet.

Conclusion

Always check applicable state and local occupancy codes when developing property occupancy policies. Federal fair housing law generally defers to state and local restrictions regarding occupancy, and following such requirements will make it difficult for your policy to be challenged. If there are no applicable state or local requirements, an occupancy policy of two people per bedroom, plus one, and two persons for studio units, is generally considered reasonable.