Occupancy Standards . . . Not As Simple As "2 Persons Per Bedroom"

Simply stated, occupancy standards focus on how many individuals can live in a rental unit. Landlords have the right to set reasonable, non-discriminatory, limits as to how many people can live in a rental unit.

Many landlords believe that as long as they follow a policy of "2 person per bedroom" that they will be fine. Unfortunately that is not always the case. There is no clear-cut occupancy guideline and as such there is confusion amongst landlords, management companies, and even the attorneys representing them : ).

In what is referred to as the Keating Memo, the Department of Housing and Urban Development (HUD) stated that it believes that "an occupancy policy of two persons per bedroom, as a general rule, is reasonable under the Fair Housing Act." However, the memo goes on to say that "the reasonableness of any occupancy policy is rebuttable" and HUD clarifies that the memos it issued in the past on the subject of occupancy standards do not state or imply that HUD will determine compliance with the Fair Housing Act based solely on the number of people permitted in each bedroom.

In fact, HUD issued the following statement in the final rule implementing the Fair Housing Amendments Act of 1998:

"Thus, the Department believes that in appropriate circumstances, owners and managers may develop and implement reasonable occupancy requirements based on factors such as the number and size of bedrooms and the overall size of the dwelling unit."

In the Keating Memo, HUD sets forth what factors it will consider when reviewing fair housing complaints involving occupancy issues:

1. Size of the bedroom and unit

2. Age of the children

3. Configuration of the unit

4. Other physical limitations of housing (i.e. capacity of the septic, sewer, or other building systems)

5. State and local law

6. Other relevant factors, such as:

- if the landlord has made discriminatory statements

- if the landlord has taken steps to discourage families with children from living in its housing

- if the landlord has enforced its occupancy policies only against families with children

So what occupancy standard can a landlord set forth that will avoid discrimination complaints and keep the landlord out of trouble? I wish that I could provide you with a simple answer but unfortunately there is no bright line rule.

What I can tell you is the key issue or focus in discrimination cases that involve occupancy limits is always whether or not the landlord is discriminating against a family with children. So even if your occupancy policy is reasonable, if you make some discriminatory comment to the applicant, you can forget about hiding behind your occupancy standards. As such, an occupancy policy based on the number of children per unit is much less likely to be found to be reasonable than one which limits the number of persons per unit. A Mississippi property management company learned that lesson the hard way earlier this year.

Margaret Bowitz of the Metropolitan Milwaukee Fair Housing Council stated during a seminar that I attended, that “2 persons per bedroom" is just a starting point. Next, a landlord should look at the size of the bedroom. So if you have a large-sized bedroom than possibly more than 2 persons could sleep there. If the bedroom is smaller than average, maybe only 1 person would be allowed. Consider an occupancy code of 70 square feet per person for one person using the room for sleeping purposes and 50 square feet per person for rooms to be used for sleeping purposes by more than 1 person. Ms. Bowitz added that if the room is less than 70 square feet you would not have to allow it to be used for sleeping purposes, although you could allow it. She also mentioned that one can consider whether or not the area must be allowed to be considered a "sleeping quarter." So for instance, if you have to walk through the room in order to get to another room in the rental unit, you would not be required to allow it to be used for sleeping purposes.

The city of Milwaukee has an ordinance that was created to prevent overcrowding (not to serve as an occupancy standard) that focuses on size (square footage) and ignores the number of bedrooms in a rental unit entirely.

Some states such as California have laws that state that "2 persons plus one" is the occupancy standard that should be used..

So "clear" guidance on this issue is hard to come by.

I am currently defending a landlord against a fair housing complaint for refusing to rent a two-bedroom unit to a family of 5 persons. When speaking with the investigator I was told that HUD's policy is 2 person per bedroom and if that was my client's policy, the case would most likely be dismissed. But later in that same conversation I was asked if the rooms were larger than average and then told that if they were then maybe more than 2 people could live there. I was told that measurements of the room would need to be taken. So obviously, it is not as simple as having an occupancy standard of "2 persons per bedroom." If it was, why would HUD have even investigated this claim against my client.

Another example that demonstrates that the "2 person per bedroom" occupancy standard is not the panacea that some landlords believe it to be, occurred in December of 2012 when 3 real estate groups in Connecticut agreed to pay a local woman $40,000 as a result of a complaint she filed against them for discrimination based on familial status (i.e. children). The woman's complaint alleged that a "2 person per bedroom" occupancy limit was more restrictive than state and local law and therefore unreasonably limits the ability of families with children to rent from the 3 real estate groups. Again, if it was as simple as "2 persons per bedroom" why would the Connecticut case have been investigated and why would the landlords involved have agreed to pay out $40,000 to the complainant.

So it is pretty clear to me that the "2 person per bedroom" occupancy limit is not enough to protect an landlord. However, to confuse the issue further, I have read conciliation agreements (i.e. settlement agreements resolving a claim of discrimination) between HUD and a landlord in which the settlement language requires that the landlord adopt an occupancy standard of "2 persons per bedroom" going forward. What gives?

All I can tell you is there is no "hard and fast" rule for occupancy limits in residential rental housing. Whether or not the occupancy standard that you have in place will be found to be reasonable will depend on the specific facts of your rental property and the specific facts of your interactions with the prospective tenant that says you discriminated against her.

So don't be foolish and assume that you are "safe" as long as you follow the "2 person per bedroom" rule, otherwise you might find yourself on the wrong side of a discrimination claim.

UPDATE 8-26-13: Here is yet another example of the 2 person per bedroom rule no longer being acceptable for HUD.

UPDATE 11-10-14 - Here is another example of the 2 person per bedroom rule being acceptable.