Iowa Court Case on Section 8 Vouchers

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For many years, there have been continuing debates around the nation over the Section 8 housing choice voucher program, which was designed to be a voluntary program through which the federal government provides rent subsidies. Specifically, one debate is over whether lawmakers should enact (1) “source-of-income” laws, which essentially require landlords to accept Section 8 vouchers, or (2) conversely, laws that expressly allow landlords to turn away tenants who receive Section 8 vouchers and otherwise keep the Section 8 housing choice voucher program as a voluntary program.

In recent years, in states like Iowa, where landlords are allowed to refuse Section 8 vouchers, tenants have asked courts to force landlords to accept Section 8 vouchers under one or more legal theories.

Recently, and as detailed below, a U.S. federal district court in Iowa ruled upon this type of case where the tenant argued that the landlord should accept Section 8 vouchers as a reasonable accommodation for the tenant’s disability. The initial decision was in favor of the tenant, the landlord immediately appealed, and the case is now on appeal with the Eighth Circuit Court of Appeals of the United States.

This case is of great significance to landlords in both Iowa and throughout the nation.

Factual Background

The plaintiff, Suellen Klossner, is a tenant at a manufactured home community in Dubuque, Iowa that is owned and operated by IADU Table Mound MHP and Impact MHC Management, LLC (“Impact”). Iowa Legal Aid filed the lawsuit on Klossner’s behalf. Impact is being represented by Jodie McDougal and Chris Jannes of Dentons Davis Brown, along with Abbey Furlong and David Waterman of Lane & Waterman.

At one point, Klossner informed Impact that she needed to start using Section 8 vouchers to pay her rent and asked Impact to accept her Section 8 vouchers. As detailed below, a landlord’s acceptance of Section 8 vouchers entails additional terms and burdens for landlords. Like many Iowa landlords, Impact’s policy is that it does not accept Section 8 vouchers from its Iowa tenants, due to, among other things, the financial and administrative burdens, as well as the lease amendments, that come with a landlord’s acceptance of Section 8 vouchers. Thus, Impact declined Klossner’s request.

Notably, neither Dubuque nor the state of Iowa has adopted a source-of-income law requiring landlords to accept Section 8 vouchers. Additionally, in 2021, the state of Iowa enacted a law expressly allowing Chapter 562A landlords to turn away tenants who receive Section 8 vouchers.

In the litigation, Klossner asserted that Impact should have waived its no Section 8 voucher policy and accepted her Section 8 vouchers as a reasonable accommodation for her disability. Specifically, Klossner asserted that she cannot work because of her disability, thereby resulting in her need for Section 8 vouchers to cover her rental payments. Thus, Klossner asserted that Impact violated the Fair Housing Amendments Act (“FHAA”) after refusing to accept her Section 8 voucher as a reasonable accommodation for her disability, despite the fact that the Section 8 program is a voluntary program and neither Dubuque nor Iowa has adopted a source-of-income law.

Legal Questions and Arguments at Trial

The case involves two overarching legal questions.

The first legal question is whether a landlord’s forced acceptance of a Section 8 voucher can even be considered a reasonable accommodation for a disability under the FHAA.

There is a Circuit split on this question, with the Second Circuit (Salute) and Seventh Circuit (Hemisphere) concluding that courts cannot force landlords to accept Section 8 vouchers as an accommodation for a tenant’s disability. Only the Ninth Circuit’s decision (Giebeler) could be interpreted as supportive of Klossner’s position.

On this question, Impact’s position was that, based on the relevant case law, the forced acceptance of a Section 8 voucher is not a reasonable accommodation under the FHAA as a matter of law. Instead, landlords have the choice of whether or not they want to participate in the voluntary Section 8 program.

The second legal question is of reasonableness. Specifically, the second question is, even if the Court concluded that landlords have an obligation to consider a Section 8 voucher as a means of accommodating a tenant’s disabilities (which Impact maintained it did not), whether the requested disability accommodation—that is, the acceptance of the Section 8 housing voucher is (1) “reasonable” and (2) “necessary to afford a disabled person the equal opportunity to use and enjoy a dwelling” in this case, which is required under the FHAA.

Based upon the applicable facts and case law, Impact’s position was that the requested accommodation was not reasonable because of the substantial administrative and financial burdens it entails and because it will impose a fundamental alteration to the nature of Impact’s leases and rental policies. Moreover, the requested accommodation was not necessary to afford Klossner an equal opportunity to use and enjoy her leased premises, as Klossner could not establish a causal link between her disability and inability to satisfy her rent obligations.

  1. At trial, Impact provided extensive testimony regarding the added administrative duties and burdens for landlords should they be forced to Section 8 vouchers, which include, among other things:
    The landlord is forced to sign an additional contract with the government, called the Housing Assistance Payments Contract or HAP Contract, which modifies the terms of the underlying landlord-tenant lease agreement.
  2. Per the HAP Contract, the lease agreement is amended such that landlords must comply with “for cause” termination requirements to terminate a tenancy during the initial or any extended term of the lease, thereby eliminating a landlord’s right to not renew a lease.
  3. Government inspections are required of the leased premises.
  4. There are extra administrative work and costs.
  5. There are inefficiencies in recordkeeping, tracking multiple rental payments, imposing late fees, raising rents, and enforcing rules.
  6. The landlord is forced to enforce two (in several ways, conflicting) leases, i.e., the HAP Contract and Impact’s lease.
  7. The landlord has less control to ensure contracts are fulfilled and manufactured homes are maintained, often resulting in losses of $5,000 to $10,000 to remove a home after it is abandoned when the tenant loses their assistance.

For these reasons, Impact argued that the requested accommodation—forcing landlords to take part in the otherwise voluntary Section 8 program—was not reasonable.

The Decision and Appeal

Following a two-day bench trial, the district court found in favor of Klossner on her FHAA claim, contrary to the decisions reached by the Second Circuit (Salute) and Seventh Circuit (Hemisphere) of the United States, and concluded that Impact is legally required to accept Klossner’s Section 8 vouchers--that is, Impact is legally required to sign the HAP Contract with the government and agree to the additional lease terms and obligations imposed under the Section 8 program--to accommodate Klossner’s disability.

In reaching that finding, the district court surprisingly found that Klossner had “proved by a preponderance of the evidence that her requested accommodation is necessary to ameliorate the effect of her disability” and that Klossner’s “requested accommodation was reasonable” and does not create an undue hardship.

Impact immediately appealed the decision, and the case is now on appeal with the Eighth Circuit Court of Appeals of the United States. Briefs are being submitted through the end of February, which will be followed by oral arguments, and ultimately a decision by the Eighth Circuit in late 2022 or 2023.

Bottom Line

Landlords must seek immediate legal counsel when approached by a tenant to accept a Section 8 voucher, particularly as an accommodation for the tenant’s disability.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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