BrokerageFair Housing

Housing Rights Initiative sues 120 firms in fair housing suit

Douglas Elliman, eXp Realty, Coldwell Banker, and RE/MAX are among brokerage franchises named in suit alleging discrimination against renters attempting to use housing vouchers in NYC

A covert investigation by Housing Rights Initiative, a national nonprofit housing watchdog group, claims to have uncovered a widespread pattern of discrimination by property owners, brokers and real estate agents against renters attempting to use New York City Family Homelessness and Eviction Prevention Supplement (CityFHEPS) vouchers.

CityFHEPS is a rental assistance program that helps families and individuals in New York City who are at risk of or are experiencing homelessness to access secure, clean, and safe housing.

In a lawsuit filed on Wednesday in New York County court, HRI states that it is suing more than 120 companies, including Douglas Elliman, eXp Realty, Coldwell Banker, RE/MAX and various other brokerage networks, as well as property owners and managers, for their “pattern and practice of unlawfully discriminating against persons in the rental of lease of housing accommodations based on lawful sources of income.”

In the filing, HRI alleges that the defendants “have explicitly and systematically refused to rent apartments to tenants who intend to pay their rent with government-provided rental assistance, and refused to permit prospective tenants with government-provided rental assistance the opportunity to apply to apartments.”

HRI’s legal filing was prompted by interactions HRI “testers” had with property owners and managers, as well as real estate agents and brokers between October 2021 and early May 2022 through the course of its investigation.

During the investigation, HRI said that its “testers” posed as prospective tenants and contacted listing agents and property managers of rental properties that had monthly rents within the maximum allowable for CityFHEPS vouchers. When testers asked if they could use a voucher for the apartment, representatives told the testers things like “the owners are not currently participating in any programs,” “the owner is currently not accepting vouchers,” or “no. It’s rent stabilized so the landlord is looking for an excellent applicant.” In other instances, the listing agents or property managers stopped responding when the tested asked about using a CityFHEPS voucher.

“The tragedy here is that these real estate agents, brokers and landlords are standing between homes and homelessness,” Randolph McLaughlin, a lawyer from HRI’s legal counsel at Newman Ferrara LLP, said. “If you are asking why people are sleeping in subways and under bridges in New York City, it is because people won’t take vouchers. It is estimated that only 20% of voucher holders are able to find an apartment.”

“By their acts, policies, and practices, Defendants refused to rent to individuals who intend to use CityFHEPS at their rental properties,” the legal filing said. “In doing so, Defendants unlawfully discriminated against renters based on their source of income.”

The laws in question in this suit are the New York State Human Rights Law (NYSHRL), which prohibits owners, real estate brokers, and others from discriminating against tenants and prospective tenants based on their “lawful source of income,” and the New York City Human Rights Law (“NYCHRL”), which prohibits owners, real estate brokers, managing agents, and others from refusing to rent to prospective tenants “because of any lawful source of income.” In both laws, “lawful sources of income” include ““any form of federal, state, or local public assistance or housing assistance.”

Brooklyn-based RE/MAX Edge was one of the brokerages named in the lawsuit. A spokesperson for RE/MAX wrote in an email: “RE/MAX is committed to supporting housing for everyone equally — whether through homeownership or renting. Though each RE/MAX franchise is an independently owned and operated business, if any RE/MAX agent is acting in a way that is not in accordance with the law or our values, we expect our franchise owners to immediately rectify the situation. Our expectation of all RE/MAX agents is not simply to meet the minimum requirements of applicable laws, regulations and ethical codes, but to aspire to levels of honesty and professionalism that exceed the rest of the industry.”

A spokesperson for Coldwell Banker shared a similar sentiment, writing: “Upholding the letter and spirit of the Fair Housing Act remains one of our highest priorities and we expect the same level of commitment of those who chose to affiliate with our company. We take this matter seriously. As each franchise office is independently owned and operated, and as this matter is pending litigation, we cannot comment further.”

In an emailed statement, a spokesperson for eXp Realty also said it does not comment on ongoing litigation, but “eXp Realty supports fair and equitable housing, and denies any allegations of wrongdoing.”

A spokesperson for Douglas Elliman declined to comment.

McLaughlin said that although a jury trial was demanded in the filing, they are hoping the defendants will settle out of court, otherwise HRI will request a summary judgement.

According to the filing, if the nonprofit wins the lawsuit it is asking the court to require the real estate companies to no longer give renters the impression their voucher income would not be accepted by a property owner. In addition, HRI is also requesting that real estate companies be required to update their policies, train their employees and establish testing systems to ensure compliance with this aspect of fair housing law.

The HRI is no stranger to housing rights lawsuits, including quite a few over the past few years alleging that landlords are discriminating against tenants using federal housing assistance programs or refusing to follow rent stabilized leases.  

This story has been updated to include comments from eXp Realty and Coldwell Banker.

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