Fair Housing Act Exemption: No more than three ’such’ single-family houses
Earlier today in property class, we were going through some of the common exceptions to the Fair Housing Act (FHA), which reads, in part:
42 USCA § 3604
(b) Exemptions
Nothing in section 3604 of this title (other than subsection (c)) shall apply to -
(1) any single-family house sold or rented by an owner: Provided, That such private individual owner does not own more than three such single family houses at any one time: Provided further,….
The requirements for exemption continue, however we are only concerned here with the meaning of “[no more] than three such single family houses…”
In short, case law holds that possession of any single family home, even if it is the landlord’s primary residence, counts towards the three allowed single family homes.
Discussed in greater detail below, there are three cases that deal with this question, specifically, and their holdings are presented in chronological order below:
In the first case, Lamb v. Sallee, 417 F. Supp. 282, the court reasoned, “…the language excepting from the Act owners who do not own more than three “such single-family houses” obviously refers to “sold or rented” houses and not to a private owner’s personal residence.”
“The Court has found no authority construing this section and counsel for the respective parties have cited none. However, in the Court’s opinion, the language of the Act precludes the possibility that a duplex can be considered a “single-family house” within the meaning of the statute. In addition, the language excepting from the Act owners who do not own more than three “such single-family houses” obviously refers to “sold or rented” houses and not to a private owner’s personal residence. Therefore, the defendants own only three single-family rental houses and do not come within the Act. Thus, the court is without subject matter jurisdiction under42 U.S.C. § 3612.” Id.
Hogar Agua y Vida en el Desierto v. Suarez-Medina, 36 F.3d 177, which involved a landlord who refused to rent housing to an organization that provided living for HIV infected persons, discussed more of the legislative intent of the FHA exemption. “I know we have people who have a summer home or a winter home. . . . One could easily have three homes.” (statement of Senator Jordan). Since this legislative history, at the very least, precludes our finding “a clearly expressed legislative intention to the contrary,” Laracuente, 891 F.2d at 23, we must conclude that a defendant’s residence, qua residence, is not to be excluded under Provisos 1 and 3 of section 3603(b)(1).
“1. Exclusion for Residence Qua Residence
As its prefatory clause makes clear, the FHA § 3603(b)(1) exemption assuming its four provisos are satisfied applies to any “single-family house sold or rented by the owner” in a discriminatory manner. For section 3603(b)(1) purposes, therefore, the relevant SFHs in this case are Houses A and B, located on the Los Llanos Property Suarez refused to rent or sell to HAVED. Section 3603(b)(1)neither defines the term “SFH,” nor does its prefatory clause expressly limit the term “SFH” to structures in which the defendant does not reside. Conversely, as Suarez acknowledges, if the Suarezes had refused to rent or sell their Guarico Residence to HAVED, the prefatory clause would not have debarred the Suarezes from a section 3603(b)(1) exemption merely because the property being rented or sold was their residence.
The statutory context in which the prefatory clause appears undermines the Suarez contention as well. See Skidgel v. Maine Dep’t of Human Servs., 994 F.2d 930, 937 (1st Cir. 1993) (meaning of particular statutory language assessed in light of entire statute). The four FHA § 3603(b)(1) provisos do not give rise to four independent exemptions, as Suarez suggests, but represent four cumulativepreconditions to the single exemption set out in the prefatory clause. If any of the four provisos is not satisfied, no section 3603(b)(1)exemption is appropriate.
Proviso 2 refers specifically to a discrete subset of the “discriminatory” SFH sales focused upon in the section 3603(b)(1) prefatory clause, namely, sales of SFHs in which the defendant is not residing. If the unqualified term “SFH” in the prefatory clause were intended to embrace only SFHs in which the defendant is not residing, no such further qualification would be needed in Proviso 2. See Mosquera-Perez v. INS, 3 F.3d 553, 556 (1st Cir. 1993) (court should avoid interpretations which render any part of statute meaningless). Thus, if the term “SFH,” as used in the prefatory clause, applies to residences and nonresidences, the pendent references to “such [SFHs]” in Provisos 1 and 3 also necessarily encompass the Suarezes’s Guarico Residence qua residence.
Finally, the legislative history discloses no basis for second-guessing the “plain language” of section 3603(b)(1). See Laracuente v.Chase Manhattan Bank, 891 F.2d 17, 23 (1st Cir. 1989) (”Absent a clearly expressed legislative intention to the contrary, the plain language of the statute is conclusive.”). As initially introduced in Congress, the FHA contained few significant exemptions from liability,see, e.g., supra note 7 (describing “Mrs. Murphy” exemption), and the breadth of the FHA’s coverage caused vigorous Senate opposition. See generally Jean E. Dubofsky, Fair Housing: A Legislative History and a Perspective, 8 Washburn L.J. 149 (1969). Senator Everett M. Dirksen proposed to assuage opposition by exempting sales and rentals of “any single-family house sold or rented by an owner residing in such house at the time of such sale or rental, or who was the most recent resident of such house prior to such sale or rental.” See 114 Cong. Rec. 4571 (1968). Yet even the “Dirksen substitute,” later modified and enacted as Proviso 2, failed to gain enough Senate support. To break the deadlock, Senator Robert C. Byrd proposed the expanded four-part exemption, later codified as present section 3603(b)(1). During floor debate, Senator Byrd offered two illuminating hypotheticals to demonstrate the coverage which would be provided under his proposal, but not under the Dirksen substitute:
A widow owns and lives in a single-family dwelling. She also owns a single-family dwelling across the street, the tenant therein being her daughter. The daughter moves to another State. The widow cannot qualify for exemption under the Dirksen substitute because she neither resides in the house across the street of which she is the owner nor is the “most recent resident” of such dwelling prior to a subsequent sale or rental.
An individual lives in his own single-family dwelling located on a three-quarter-acre lot. He decides to build a second house on the lot. Ten years later misfortune forces him to parcel the lot and sell the house thereon. He does not qualify under the Dirksen substitute exemption because he is neither “residing in” the adjacent dwelling nor was he the “most recent resident” thereof.
114 Cong. Rec. 5640 (1968) (emphasis added).
Asked why “it was necessary to raise the number of houses owned by one party to three,” Senator Byrd referred to these two hypotheticals, and noted that he had “already discussed situations in which there would be at least two [single-family] houses involved.” Id. (emphasis added). Significantly, both hypotheticals assumed that the houses in which the seller currently resided would be counted toward the four-SFH threshold in Provisos 1 and 3. See Rice v. Rehner, 463 U.S. 713, 728, 77 L. Ed. 2d 961, 103 S. Ct. 3291 (1983) (noting that HN9interpretation of statute by sponsor is “‘authoritative guide to the statute’s construction’”) Brock v. Pierce County, 476 U.S. 253, 263, 90 L. Ed. 2d 248, 106 S. Ct. 1834 (1986) (sponsor’s statements credited if consistent with statutory language). Other senators likewise recognized that the “more than three” threshold would include houses in which the seller resided. See 114 Cong. Rec. 5641 (1968) (”I know we have people who have a summer home or a winter home. . . . One could easily have three homes.”) (statement of Senator Jordan). Since this legislative history, at the very least, precludes our finding “a clearly expressed legislative intention to the contrary,” Laracuente, 891 F.2d at 23, we must conclude that a defendant’s residence, qua residence, is not to be excluded under Provisos 1 and 3 of section 3603(b)(1).
2. Exemption for “Off Market” SFHs
Suarez proposes to exclude the Guarico Residence under Provisos 1 and 3 because it was neither for rent nor sale at the time he refused to sell the Los Llanos Property to HAVED. See Lamb v. Sallee, 417 F. Supp. 282, 285 (E.D. Ky. 1976). The theory is that the term “such [SFHs]” in Provisos 1 and 3 unambiguously relates back to the complete phrase “single-family house sold or rented by an owner” in the section 3603(b)(1) prefatory clause. The language of the statute is not dispositive on this issue, and the interpretation proposed by Suarez is at least plausible.
Although it is conceivable that Congress’s choice of the indeterminate modifier “such” was intended only to require the counting of residences qua residences under Provisos 1 and 3 in direct contrast to the more constricted scope of the term “SFH” under Proviso 2 Provisos 1 and 3 reasonably might be read to impose the additional, distinct requirement that any SFH, regardless whether it is the defendant’s “residence,” be counted under Provisos 1 and 3 only if it is a “single-family house sold or rented by an owner.” Indeed, Congress’s choice of words “sold or rented” in the section 3603(b)(1) prefatory clause is a most curious usage. In order for liability to attach under FHA § 3604, a defendant need never have consummated the discriminatory rental or sale of the SFH to which the section 3603(b)(1) prefatory clause adverts. Rather, FHA liability attaches as soon as the defendant “refuses to sell or rent after [the plaintiff makes] a bona fide offer,” see supra note 1, without regard to whether the SFH is ever “sold” or “rented” to anyone. With these linguistic difficulties in mind, it seems arguable at least, in keeping with the structure and language of the statute, that the term “such,” as used in Provisos 1 and 3, imports the same “on the market” qualification necessarily implicit in the section 3603(b)(1)prefatory clause.
As noted earlier, however, normally latent ambiguity in a statutory modifier like “such” should be construed in furtherance of the statute’s remedial goals. See Cia. Petrolera, 754 F.2d at 428. HN10(”When Congress uses broad generalized language in a remedial statute, and that language is not contravened by authoritative legislative history, a court should interpret the provision generously so as to effectuate the important congressional goals.”) Not only does the authoritative legislative history not contravene the HAVED interpretation, see supra Section II.B.1, it contradicts the Suarez contention. Most importantly, neither hypothetical advanced by Senator Byrd assumed or intimated that the seller’s residence was “on the market” at the time the discriminatory sale of the second house took place, yet Senator Byrd included both these SFHs under Provisos 1 and 3. Notwithstanding a conceivable vestige of literal ambiguity, therefore, we are persuaded to the view that the Guarico Residence must be included in the four-SFH calculus under section 3603(b)(1) consistent with the FHA’s legislative history and its broad remedial design.”
Finally, Pittman v. Johnson, 2006 U.S. Dist. LEXIS 2723 rejected the reasoning in Lamb stating, “Thus, the Sixth Circuit, like the court in Hogar, included the defendant’s primary residence as one of the “more than three single-family houses” when considering the first proviso. 1″
“In their motion to dismiss, the defendants argue that pursuant to 42 U.S.C. § 3603(b)(1) they are exempt from the prohibitions of theFair Housing Act. Under this section, the Fair Housing Act does not apply to sales and rentals of single-family houses by the owner subject to the following provisos: (1) the owner does not own more than three such houses at any one time; (2) in the case of a sale of a dwelling, the owner has not made a similar sale within the past twenty-four months; (3) the owner does not have a beneficial interest in any part of the proceeds from the sale or rental of more than three such dwellings; and (4) the dwelling was sold or rented without using professional broker and without publication of an advertisement prohibited by the Act. The four provisos “do not give rise to four independent exemptions . . . but represent four cumulative preconditions to the single exemption set out in the prefatory clause. If any of the four provisos is not satisfied, no section 3603(b)(1) exemption is appropriate.” Hogar Agua y Vida en el Desierto, Inc. v. Suarez-Medina, 36 F.3d 177, 184 (1st Cir. 1994) (emphasis omitted). The party seeking the exemption has the burden of proving that the exemption applies. Id. at 182 n. 4.
The only issue raised by the defendants relates to the first proviso; that is, whether they own more than three single-family houses.The defendants claim that they are entitled to the exemption because they only own three rental houses in Jefferson County in addition to their primary residence in Knox County. The meager case law on this issue, however, demonstrates that ownership of three rental properties in addition to their primary residence disqualifies the defendants from the benefit of the exemption. In Hogar, the First Circuit considered the same issue; that is, whether the defendant’s primary residence should be considered as one of the “more thanthree single-family houses” for purposes of the exemption. The Court noted that the Fair Housing Act is a remedial statute and found that ambiguous exemptions in remedial statutes are to be narrowly construed. Id. at 181. After carefully considering the language of § 3603(b) and its legislative history, the Court concluded that the defendant’s primary residence should not to be excluded under the first proviso. Id. at 185.
Although the issue in Michigan Protection and Advocacy Service, Inc. v. Babin, 18 F.3d 337 (6th Cir. 1994), was whether the alleged discriminatory sale was exempt under all four of the provisos, the Sixth Circuit found that the defendant “only owned two dwellings, her principal place of residence and the 24 Mile Road property.” Id. at 342. Thus, the Sixth Circuit, like the court in Hogar, included the defendant’s primary residence as one of the “more than three single-family houses” when considering the first proviso. 1
Therefore, the court finds that the defendants’ ownership of three dwellings in addition to their primary residence disqualifies them for the exemption set out in 3603(b), and their motion to dismiss for lack of jurisdiction must be denied. The defendants’ request for attorney’s fees and costs must also be denied since they are not prevailing parties on this motion. An order reflecting this opinion will be entered.”
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