NYC real estate firms accused of housing discrimination face sweeping lawsuit
Feb. 15, 2023, 3:10 p.m.
A federal judge dismissed attempts by real estate firms to throw out the discrimination charges.
Dozens of New York City real estate firms accused of discriminating against people with rental assistance vouchers will soon be forced to explain their practices in court.
A federal judge on Tuesday greenlighted a sweeping lawsuit from a housing rights watchdog against 77 real estate brokerages and property owners for systematically denying apartments to applicants with Section 8 vouchers — an illegal but pervasive practice known as source of income discrimination.
The Housing Rights Initiative and its attorneys say the case could unlock thousands of apartments for low-income New Yorkers.
“Let this decision send a clear and loud message to all of real estate that if you are illegally discriminating against low-income families, the elderly, and the disabled, the question of whether you will be caught is not a matter of if, but when,” said Aaron Carr, HRI founder and executive director. “This decision will lay the foundation for our organization to continue holding landlords and brokerage firms accountable throughout New York City.”
The federal Section 8 program pays the bulk of the rent for low-income tenants, allowing them to maintain housing or move from homeless shelters.
Black and Latino New Yorkers account for around 82% of Section 8 voucher recipients in the city, making source of income discrimination a proxy for racial bias, the lawsuit claims.
People with disabilities also account for about 28% of Section 8 recipients despite making up about 10% of the city’s overall population, meaning that an anti-voucher policy also disproportionately affects them, the complaint continued.
Source of income discrimination remains the most common form of housing bias in the city, according to complaints to the Commission on Human Rights.
HRI conducted years of undercover testing to identify the alleged discrimination before suing the companies in March 2021, Gothamist reported at the time.
The original complaint details the allegedly illegal denials by agents working for some of New York City’s largest brokerages, including Compass Inc., the Corcoran Group and Century 21.
An agent for Corcoran Group steered an HRI “tester” posing as an applicant with a Section 8 voucher away from an apartment in Manhattan’s Turtle Bay priced at $1,550, telling them the last voucher applicant was refused and that co-ops can legally deny units to rent assistance recipients, according to the complaint.
The Corcoran Group did not respond to a request for comment on Wednesday.
Another agent working for the firm Compass flat out told a tester inquiring about a Brooklyn apartment that “we don’t do Section 8 vouchers in this building,” the lawsuit continued.
Over the past two years, several firms, including Compass, agreed to settle and correct discriminatory practices by their agents.
Others fought the accusations, with 11 firms arguing that HRI did not have legal grounds to sue them. The company Manhattan Realty Group claimed the actions of an agent do not represent a “policy of not accepting Section 8 vouchers.”
But Manhattan federal court Judge Sidney Stein denied the claims and is allowing the lawsuit to proceed to the discovery phase, where the real estate companies will be forced to turn over emails and other documents related to their practices to HRI and its attorneys from the Legal Aid Society and firm Handley Farah & Anderson PLLC.
Stein said HRI effectively made the case that anti-voucher policies allow for racist discrimination banned by the federal Fair Housing Act.
HRI “adequately pleads that such a policy has, does and will continue to have a disparate impact on Black and Hispanic individuals, who are protected under the FHA,” Stein wrote in the decision on Tuesday.
Robert Desir, a lawyer with Legal Aid, said the main goal is to get the companies to change their behavior and rent to New Yorkers with housing vouchers amid a deepening homelessness crisis and record-high rents.
“Mostly what we’re after is to get these owners to change their practices, to follow the law and be hospitable to people with vouchers as they try to leave shelters, leave substandard housing and get out of areas where there aren’t opportunities,” he said.
Manhattan Realty Group did not respond to requests for comment.
New York City banned source of income discrimination in 2008 and empowered its Commission on Human Rights and Department of Social Services to crack down on the practice, though the accountability work has often fallen to nonprofits like HRI.
During his State of the City speech earlier this year, Mayor Eric Adams pledged to beef up enforcement and employ more testers to clamp down on the discrimination.
“If you tell a potential tenant that you don't accept Section 8 vouchers or other rental assistance, guess what?” Adams said. “That tenant may be an actor hired by the city and we're going to take enforcement actions against you.”
Correction: A previous version of this story misidentified one of the organization behind the lawsuit. It's the Housing Rights Initiative.