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August 2017
Residential Occupancy Limits & Fair Housing

By John M. Mione, Paletz Law

Allegations of discrimination often arise out of residential occupancy limits. In the 1990s, the Department of Housing and Urban Development (HUD) established a guideline commonly known as the “Two Heartbeats Per Bedroom” rule. Under this rule, landlords could reasonably limit the number of persons in a rental unit based on the number of bedrooms without fear of violating the Fair Housing Act (42 USC 3601, et seq.).

HUD has since revised its standards to what is now known as the “2 plus 1” rule, which allows tenants to have at least three occupants per bedroom. Therefore, it may now be considered familial status discrimination to limit the number of occupants based on the prior standard. However, if there is an underlying building code in the respective municipality that limits the number of occupants, a landlord needs to be mindful of that as well.

Additionally, case law is not consistent. For example, in Department of Civil Rights ex rel Smith v. Countryside Townhouses (Mich App No. 327176, October 11, 2016, unpublished), the landlord’s policy allowed only two adults (defined as 18+) per unit. The Michigan Civil Rights Commission found it to be discriminatory based on age, which is prohibited for housing purposes under the Michigan Elliott-Larsen Civil Rights Act. MCL 37.2102(1). On appeal, the circuit court ruled that the policy was not discriminatory, reasoning that it is permissible to differentiate between adults and children in housing. The Court of Appeals agreed, finding that since adults and children are not similarly situated, the treatment of the two could be different.

Regardless of the outcome, landlords should still be aware that although it may not be age discrimination, a comparable situation could still be deemed discriminatory based on familial status.

Enforceability of an Oral Agreement for a Broker’s Commission

RPLS AcademyBy Glen Zatz, Bodman PLC

The Michigan statute of frauds requires certain types of agreements to be in writing and signed by the party against whom they will be enforced, or the agreements are void. MCL 566.132. This includes “[a]n agreement … to pay a commission for or upon the sale of an interest in real estate.” MCL 566.132(1)(e). However, there are various judicially created exceptions to the statute of frauds.

In North American Brokers, LLC v. Howell Pub. Schs. (Mich App No. 330126, February 9, 2017, unpublished), the Court of Appeals applied the judicially created promissory estoppel exception to reverse the trial court’s grant of summary disposition against a broker claiming commission on an oral agreement. In this case, the property in question had a for-sale sign that indicated it was “broker protected.” The broker approached the potential (and ultimate) buyer about the property. The seller and the buyer eventually reached a purchase agreement through another real estate agency and the broker received no commission.

The Court said that the for-sale sign was not a signed writing for purposes of the statute of frauds. However, since the broker alleged that the “broker protected” sign was a promise that induced it to pursue the buyer, the Court held that the broker had successfully pled promissory estoppel. The Court reluctantly applied this exception stating: “The continued validity of the judicially created promissory estoppel exception to the legislative statute of frauds has been the subject of considerable debate ... Regardless of the wisdom of using a judicially created exception to a statute, we must apply it ... [O]nly the Michigan Supreme Court has the authority to overrule one of its prior decisions.”

Practice Tip: Get everything in writing, especially where the statute of frauds applies.

Legislative Note

PA 54 of 2017, which became effective June 15, 2017, amends MCL 565.221(1) and provides that any written instrument offered for recording after April 6, 2017, no longer must state whether a male grantor is married or single.

Legislative Report

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