10th Anniversary

Why We Are Here – 10 Years Later

Last month we celebrated our 10th anniversary at Caffé Luna in Raleigh with friends, family, clients, fellow attorneys, judges, and many others we have met over the past decade. We are here because of all of those people and their support and trust. We are here because our clients have come back time and time again, as their businesses have grown or changed, or as new needs have arisen. We are here because our spouses supported us when we had rough days, when we had late nights, and when cases did not go as planned. We are here because of the other legal professionals that we have genuinely enjoyed working with. And we are here because of each other – because the stressful and busy moments are not as overwhelming when the entire office family is your support system. Thank you! Thank you to each and every one of you who celebrated with us, whether in person or in spirit.


We hope you enjoy a few photos from our celebration!  (photo credit to Callie Doty)

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verification for assistance animal

Where Do You Draw The Line On Verification For Assistance Animals?

As landlords and property managers, you walk a thin line with regard to accommodation requests involving assistance animals.  You obviously want to make sure that any tenant who needs an assistance animal is accommodated.  At the same time, you need to require enough verification to weed out anyone who is trying to take advantage of the Fair Housing Act.  As a fair housing attorney, I’m always curious about where to draw the line.  How much verification is too much?

That’s why a recent complaint filed by HUD caught my attention.  HUD challenged the reasonable accommodation and pet policies of a housing provider as having “impose[d] mandatory burdensome conditions on individuals with disabilities who request animal assistance.”  The landlord required tenants to fill out several forms, including an accommodation request form and a doctor’s prescription form.  So what bothered HUD?  Apparently, it was the doctor’s prescription form, which required the doctor to accept liability for any damage or injury caused by the animal in question.

As I am sure you can imagine, each of the doctors approached in the case above refused to sign any such form.  This requirement was seen by HUD as a violation of the Act on the basis of discrimination, given that the failure of the tenant to secure a doctor’s signature resulted in the denial of the request.

So what should you do?

Other than the guidelines I discussed in a previous post, do not, I repeat, do not attempt to assign liability to the prescribing doctor in a tenant’s request for an assistance animal. This action will likely be considered discriminatory under the Act, and could open you up to enforcement for an FHA violation.  Keep in mind that this doctor requirement is just one example of a recent burdensome requirement, and if any part of your reasonable accommodation process may be interpreted as placing an excessive burden on the requesting tenant, it is worth looking at.

Do We Have to Allow Criminals As Tenants? HUD Says Maybe.

Now that the Supreme Court has definitively ruled that disparate impact claims are valid under the Fair Housing Act (discussed in further detail here), HUD has issued guidance regarding one common multifamily property policy that it believes has a discriminatory effect on minorities—criminal background screening.

In light of statistics demonstrating that African Americans and Hispanics are incarcerated at rates disproportionate to their share of the general population, HUD warned in guidance published on April 4, 2016 that criminal records-based barriers to housing are likely to have a disproportionate impact on minority home seekers.  Accordingly, landlords and management companies will need to have a substantial, legitimate, and nondiscriminatory reason for implementing a policy which considers criminal records in the housing application process.  Moreover, landlords and management should ensure that the interest achieved by their criminal background screening policy cannot be achieved by another practice that has a less discriminatory effect.

So does that mean that you cannot consider a prospect’s criminal background at all during the application process?  Not exactly.  HUD seems to agree that ensuring resident safety and protecting property are likely to be considered substantial and legitimate interests.  But it also warns that your criminal background policy darn sure better be tailored to achieve those goals. In terms of actual, specific (and useful) guidance, HUD does make two clear assertions: 1) a policy that excludes prospects because of one or more prior arrests (without a conviction) is unlikely to achieve a substantial, legitimate, nondiscriminatory interest; and 2) a policy that imposes a blanket prohibition on any person with any conviction (without any consideration of when the conviction occurred, what the underlying conduct entailed, or what the convicted person has done since) is also unlikely to achieve a substantial, legitimate, nondiscriminatory interest.

So what can you do?  Simple—sit down, and review your criminal background policy to make sure that it is tailored to meet your policy goals (such as protection of residents and property).  In essence, make sure that your policy only excludes based on criminal conduct that indicates a demonstrable risk to resident safety and/or property.  And make sure that you are taking into account mitigating factors, such as the amount of time that has passed since the conviction.  In other words, while you may be fine with a policy that excludes prospects with a violent felony conviction in the past seven years (absent any mitigating circumstance), you’re probably going to want to rethink a policy that excludes any prospect with a minor traffic offense.  The bottom-line is that you need to sit down and give some serious (and documented) thought to your criminal background policy to make sure that it is truly achieving your policy goals.

We’re Going To Be Tested On This?!

The Increasing Prevalence of Testing Under The Fair Housing Act

As landlords and management companies, I understand that you want to treat people fairly, and that you strive to stay within the confines of the Fair Housing Act.  Unfortunately, I have seen many well-intentioned owners and management companies caught off-guard by a housing discrimination claim filed as a result of “testing” that was done at the property.

While many owners and landlord companies may feel like they have been the victim of a “sting operation,” testing is a perfectly lawful (and efficient) means by which local fair housing advocacy organizations test properties to see if discrimination is occurring.  Advocacy organizations will send in two or more “comparable” testers—one or more of which is a member of a protected class under the FHA, and the remaining testers which are not—to inquire about renting similar units at a property.   “Comparable” in this regard means that the testers inform the property that they share the same background, employment, rental, and educational background.  In other words, everything should be the same about the testers except for their status as protected class-members—meaning that the testers should receive the exact same treatment and information about available units at the property.   If, as a result of the testing, the fair housing advocacy group finds that discrimination has occurred, then they (or the individual testers) will bring a housing discrimination claim against the property.

So is testing lawful?  In a word, yes.  The United States Supreme Court sanctioned these types of testing practices over twenty years ago.  So how do you avoid a tester-based housing discrimination claim?  The key is to have strong policies and procedures in place in ensure that all similar prospects are treated equally, and to instill those policies and procedures in employees through training.  In addition, it is essential to maintain records of all interactions with prospects, and to document the reasons for any deviations from standard procedure (e.g., if a leasing agent shows a prospect a unit that is not on the standard tour because of a maintenance issue, the reason for the deviation should be documented and kept on file).  Keeping proper records of leasing availability, prospect interaction, and deviations from policy may prove invaluable in the event that you find yourself defending against a discrimination claim from a fair housing advocacy group or tester!

Basics Of NC Lien Law – Part 2 – Claim Of Lien On Funds

We looked at the Claim of Lien on Real Property in Part 1.  This week, let’s take a look at the second type of lien in North Carolina, the claim of lien on funds.   Basically, a lien on funds allows a subcontractor to prevent a property owner from paying the general contractor who has failed to pay its subcontractors.

The Lien on Funds

The claim of lien on funds is available to all contractors of any tier.  This lien allows the subcontractor to have a lien right to any funds owed to the party with whom they entered into the contract.  In other words, the lien on funds exists to the extent that there is money owed to the tier immediately above the subcontractor.  A subcontractor’s lien upon funds arises, attaches and is effective immediately on the first furnishing of labor or materials.  There is no time limit by which a subcontractor or supplier has to assert a claim of lien on funds, but it is not perfected until it is served on the party holding the funds (the “obligor”).  The lien upon funds relates back to the date the contractor or supplier first furnished labor or materials to the construction project.

What are the notice requirements?

The notice must include all statutorily required information as set forth in NCGS § 44A-19 and substantially follow statutory form for the applicable tier (NCGS § 44A-19(b) and (c)).

How must the Notice of Lien on Funds be Served?

The notice of a claim of lien on funds must be served by personal delivery or by service authorized under Rule 4 of the North Carolina Rules of Civil Procedure.  Notice does not get filed with the Clerk of Superior Court, unless it is attached to a claim of lien on real property that is filed with the Clerk or filed to discharge the claim of lien upon funds.

What if I Receive a Notice of Claim of Lien Upon Funds?

Upon receiving a notice of lien on funds, the owner is obligated to retain funds subject to all liens up to the total amount received.  A perfected notice flows with any payments and obligors/owners are personally liable up to the amounts of wrongful payments, up to the total of claims received prior to payment.   But, if the owner has spent all the funds due under the contract for the project, the subcontractor cannot recover.   If the owner does become personally liable to the subcontractor, then it has a claim against the general contractor for indemnification.  But, if the general contractor has no money (as is usually the case), that claim is essentially worthless.  The better practice for the owner receiving a notice of claim of lien on funds is to stop paying anyone until the issue is resolved or to post a bond or cash payment with the Court.