Long & Foster, a real estate broker with 11,500 agents across 7 mid-atlantic states, is facing a $1.5M discrimination claim from the tenant of a managed property. Anthony Tucker, who is African American, filed a claim in the City of Richmond Circuit Court that is likely to be both costly and time consuming to defend. In addition, the brokerage could be subject to fines and suspension of licenses.
Tucker claims a pattern of systematic discrimination from the property manager after they took charge of the development in early 2014. It is alleged the property manager , Virginia Payne, began monitoring the plaintiff and stopping by for unannounced and unwarranted inspections of the premises. It is further alleged that maintenance complaints were ignored and routine expenses were charged back to the tenant.
From the complaint it appears that the property manager could have been acting under pressure from other unit owners who did not want an African American family living nearby. Although it is legal for common citizens to be prejudiced or racist within the confines of the law – licensed real estate brokers, property managers and unlicensed landlords are subject to fair housing laws. The legal expenses on alleged routinely reach six figures, with complicated cases incurring half a million dollars in legal bills before a settlement is made or verdict is reached. With huge fines and the potential to lose one’s livelihood if a case goes south, investing in the best defense possible is advised.
Sound risk management, which is key to preventing claims, should be implemented at brokerages and property managers of all sizes. In person continuing education, documented procedures and early intervention in complaints are all recommended. However, not matter how careful an operation is there is always the room for bad apples. Not all property managers follow the rules and not all tenants make truthful allegations.
Ensuring that your organization is properly insured is the cheapest and easiest way to sleep well at night. Many standard errors and omissions insurance policies exclude coverage for allegations of discrimination or violations of Fair Housing Laws. Those that do provide coverage often “sub-limit” it – a million dollar limit policy might only offer $25k-100k in coverage for defense costs. Contact an expert property manager insurance broker and discuss better protecting your company and your livelihood.