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Alexander F. Barth is an Associate in the Firm's Business Transactions, Commercial Litigation, and Real Estate Groups. He focuses his practice on commercial litigation, and represents businesses and individuals in complex commercial disputes involving real estate title matters, breach of contract claims, "business divorce" litigation, as well as assisting both debtors and creditors in collection matters.

On June 25, 2015, Justice Kennedy delivered the Supreme Court’s decision in Texas v. Inclusive Communities Project.  In the case, the Court determined that the Fair Housing Act of 1968 includes disparate impact claims.  Prior to Texas v. Inclusive Communities Project, nine of the twelve federal Courts of Appeals had ruled that the Act encompassed disparate impact claims. Nevertheless, there remained much dispute over the Act’s inclusion of such claims.

There are two forms of discrimination:  disparate treatment and disparate impact.  Disparate treatment is the intentional discrimination based on a person’s inclusion in a protected class (such as race, color, national origin, sex, religion, familial status, or disability).  Disparate impact, on the other hand, has little to do with intent.  Rather, disparate impact occurs when a policy that appears to be neutral on its face is discriminatory against a protected class when it is applied.  It has never been questioned that the Act prohibits disparate treatment.  Until June 25, however, there had been much debate over whether the Act prohibits disparate impact.  The debate is now settled!

The Court recognized, though, the potential dangers of disparate impact claims.  In his opinion, Justice Kennedy wrote:  “An important and appropriate means of ensuring that disparate-impact liability is properly limited is to give housing authorities and private developers leeway to state and explain the valid interest served by their policies.”  The Court concluded that policies adopted by government or private developers are not “contrary to the disparate impact requirement” unless they are “artificial, arbitrary, and unnecessary barriers.”

To address this problem, the Court decided to heighten the burden necessary to establish an initial case of disparate impact liability before considering evidence to rebut the claim.  In short, plaintiffs in discrimination cases will need to show that the implementation of the policy of which they complain creates the discriminatory impact.  By raising the bar of what is needed to assert a valid disparate impact claim, the Court has created some protection for housing providers to ensure that disparate impact claims will not cripple the industry.   The Court also recognized that housing providers  must be allowed to consider market factors when making housing decisions and take into consideration many factors in defending their policies.  If the challenged policy “is necessary to achieve a valid interest,” it will likely survive scrutiny under the disparate impact analysis.

While Texas v. Inclusive Communities Project involved the specific issue of tax credit distribution for housing projects, the Court’s decision makes clear that its holding applies to all housing matters covered by the Act.  Thus, all housing providers should carefully review their policies with counsel to limit the risks of having to defend disparate impact claims.

About the Authors: 

Steven M. Williams is the Managing Partner of the Harrisburg, Pennsylvania office of Cohen Seglias, Chair of the firm’s Commercial Litigation Group and a member of the Business Practices and Labor & Employment Groups. Steve has been representing landlords in virtually every aspect of their business for over 23 years and concentrates his practice in the areas of commercial and civil litigation, real estate, landlord and tenant law, employment law, business and corporate law and construction law.  He can be reached at 717.234.5530 or swilliams@cohenseglias.com.

Alexander F. Barth is an Associate in the Business Transactions and Commercial Litigation Groups at Cohen Seglias. He focuses his practice on commercial litigation and represents businesses and individuals in complex commercial disputes.  Alex represents residential and commercial real estate developers in land use and zoning matters throughout Pennsylvania and New Jersey. He can be reached at 215.564.1700 or abarth@cohenseglias.com.

December 21, 2012 was the effective date of the Philadelphia Lead Paint Bill 100011-A (the “Ordinance”), which amended Chapter 6-800 of the Philadelphia Code and established new lead paint disclosure and certification requirements for certain residential rental properties. The Ordinance places a substantial burden on the owners of affected properties (“Targeted Properties”), requiring costly and burdensome inspections and certifications regarding the presence of lead paint older housing units. The Ordinance also applies to existing leases, requiring property owners to comply with the Ordinance within ninety days of the effective date, or March 21, 2013.

Certain properties were exempted from the Ordinance:

  • housing units in which children six years of age and younger will not be residing during the lease term;
  • student housing owned by educational or academic institutions;
  • buildings leased entirely to college or university students;
  • housing units owned or subsidized by the Philadelphia Housing Authority; and
  • units leased under the HUD Housing Choice Voucher Program, more commonly referred to as Section 8.

The Ordinance requires that when entering into a lease with a residential tenant, an owner of a Targeted Property must provide both the tenant and the Philadelphia Department of Public Health with a certification from a certified lead inspector, stating that the Targeted Property is either (i) lead safe or (ii) lead free. A certification that the property is lead safe is valid for two years, whereas a certification that the property is lead free is permanent in nature. If an owner fails to obtain one of the required lead certification before leasing a Targeted Property, the owner may be liable to the City of Philadelphia and/or the tenant for up to double the cost of the following expenses: (i) inspection of the leased property, (ii) rent abatement, (iii) injunctive relief necessary to compel the owner’s compliance with the Ordinance, (iv) attorneys’ fees and costs, and (v) exemplary damages of up to $2,000 per offense. Owners of a Targeted Property must annually certify their compliance with the requirements of the Ordinance or risk having their housing inspection license revoked.

Additionally, owners must notify tenants, in writing, that it is the tenant’s responsibility to periodically inspect the property and notify the owner of the presence of deteriorated paint, which is defined in the Ordinance as paint that is either cracking, flaking, chipping, peeling, chalking, not intact or otherwise separating from the substrate of a building component, except that pinholes and hairline fractures attributable to the settling of a building shall not be considered deteriorated coating. Upon such notification, the owner must promptly make the necessary repairs.

Owners should be careful not to violate other existing laws while trying to comply or exempt themselves from the Ordinance. For example, while properties not occupied by persons under the age of six are exempt, owners must be careful not to inquire if a potential tenant has children or intends to have children under the age of six living in the property, because inquiring about children when leasing a residential property may be a violation of the Pennsylvania Human Relations Act or the Federal Fair Housing Act. The Owner may only inquire if children will reside in the property after the owner has made a firm offer to rent to that tenant.

Marian A. Kornilowicz is the Chair of the Business Practice Group of Cohen Seglias Pallas Greenhall & Furman PC. His practice is concentrated in the representation of clients in varied business transactions and real estate matters. 

Alex Barth is an Associate at Cohen Seglias Pallas Greenhall & Furman PC and a member of the Business Practice Group.