New York Sting Embroils 120 Companies In Fair Housing Lawsuit

The lawsuit accuses brokerages and property owners of telling renters at risk of homelessness that their vouchers would not be accepted.

An undercover operation by a watchdog group in New York City claims to have found a widespread pattern of discrimination by brokers, agents and property owners against renters who are at risk of homelessness, a new lawsuit alleges.

The lawsuit filed Wednesday by the nonprofit Housing Rights Initiative alleges that more than 120 companies expressed they would not accept applications from certain at-risk renters who were using government vouchers, or otherwise discouraged these renters from applying.

The lawsuit claims this practice violates the law in the state and in New York City, where it’s illegal to discriminate against renters based on their use of a lawful source of income.

“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,” the group stated in its lawsuit filing.

The groups sued include brokerage franchises for Douglas Elliman, eXp Realty, Coldwell Banker, RE/MAX and various other brokerage networks. They also include an array of property owners.

At the heart of the legal battle is New York’s CityFHEPS (Family Homelessness and Eviction Prevention Supplement) program, which offers vouchers for people at risk of becoming homeless. The Housing Rights Initiative’s sting operation called a number of agents and brokers, pretending to be renters who were trying to obtain housing with these vouchers.

Many of the accounts described in the lawsuit followed a similar pattern.

RE/MAX Edge, a brokerage based in Brooklyn, was one of the companies named in the lawsuit. 

An undercover worker, pretending to be a prospective renter, inquired about a studio apartment listed at $1,700 a month, the lawsuit says. A RE/MAX Edge associate allegedly told the worker that the apartment was available. 

The would-be renter then asked whether the owner would accept their government voucher. The brokerage associate replied she would check with the property owner.

In a later conversation, that associate allegedly backtracked. After speaking with the management company, the associate reportedly said the apartment wouldn’t be available after all.

“So you’re saying that it wouldn’t — that I wouldn’t be able to use it here, then?” the worker asked.

“Yeah, yeah, because this is a co-op,” the brokerage associate responded, according to the filing.

Cooperative housing, a common ownership model of New York condo communities, came up more than a dozen times in the accounts. Co-op boards “don’t take” vouchers, one agent allegedly told the group. Another worker was told to “stay away from co-op” communities because “you cannot do vouchers on a co-op.” 

In an email to Inman, a spokesperson for RE/MAX said that when an agent acts outside the law or the franchise network’s values, it expects its franchise owners to “immediately rectify” the situation.

Unlike the franchise RE/MAX Edge, the national organization was not named in the lawsuit.

“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,” the spokesperson said.

Spokespersons for Coldwell Banker and eXp Realty did not reply Thursday morning to a request for comment from Inman. They and Douglas Elliman were among the many real estate brands that had franchises named in the suit.

Douglas Elliman told Inman via email that the company does not comment on pending litigation.

If the Housing Rights Initiative 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. 

The group is also asking that the 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.

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