Occupancy Standards for Rental Housing
As a general statement, there is no national occupancy standard for rental units. Landlords must develop occupancy policies that are legally compliant at the governing level or agency requirement and appropriate to the particular rental unit and specific situation.
Determining legal compliance for occupancy standards in rental units requires careful analysis and understanding of all applicable federal, state, and local laws, municipal codes, and other published guidance on the subject.
Legally compliant policies are commonly based upon an industry standard of “reasonable occupancy.” An occupancy policy based on a reasonable occupancy standard takes into consideration rental unit particulars and situational factors. Without fully understanding what is considered reasonable in context with federal, state, and local jurisdictions, a landlord may incur liabilities for claims of fair housing discrimination. Jurisdictions may differ in their compliance requirements. Consequently many landlords have questions regarding applicable occupancy standards and restrictions.
Federal Law
The federal Fair Housing Act prohibits discrimination in housing because of race, color, national origin, religion, sex, familial status, and disability. Landlords cannot use occupancy restrictions to discriminate based on familial status. A landlord’s occupancy policy that directly or indirectly excludes or restricts children would be a violation of fair housing laws.
Familial status protections include:
- Adults in the household who have legal or designated custody of the child or children living in the household
- A child or children under the age of 18 years
- A child or children who are members of the household or expected to become household members
HUD Guidance
A commonly utilized standard for rental occupancy limits is the Department of Housing and Urban Development (HUD) guidance that “an occupancy policy of two persons in a bedroom, as a general rule, is reasonable under the Fair Housing Act.” Known as the Keating Memo, the guidance provided “that in appropriate circumstances, owners and manager may develop and implement reasonable occupancy requirements based on factors such as:
- Size of bedrooms and unit,
- Age of children,
- Configuration of unit,
- Other physical limitations of housing,
- State or local housing and occupancy codes, and
- Other relevant factors.
Since the number of bedrooms is not the only factor that must be considered in developing occupancy standards, the HUD guidance is sometimes referred to as the “two-per-bedroom-plus” rule.
The guidance goes on to state that an occupancy policy which limits the children per unit is less likely to be reasonable than one which limits the number of people per unit.
While landlords have some flexibility in developing an occupancy policy by taking into consideration the reasonable policy of two persons in a bedroom plus other relevant factors of a given situation, the guidance does not categorically set an occupancy limit for a rental unit. A landlord cannot know for certain that a reasonable two-plus occupancy limit for a unit will meet federal standards for legal occupancy. Until a landlord analyzes each applicant in each situation, a legal maximum occupancy number for a unit cannot be established.
State and Local Laws
States and municipalities can set their own occupancy standards that may be different than federal standards. State and local standards are usually equal to or greater than federal standards. Additionally, states or municipalities may designate other protected classes which are covered by anti-discrimination laws.
In some states occupancy standards may allow fewer people to occupy a rental unit. This could result in a landlord being compliant with state standards but non-compliant with the federal standard if the HUD guidance is applied.
Building Codes, Health and Safety Regulations
Occupancy standards have historically been justified based on habitability. That is, allowing too many occupants makes the rental unit less safe or less healthy.
There may be local zoning or building occupancy limitations that apply to rental units. Some localities have based guidelines on the Uniform Housing Code (UHC) model code standards. The UHC standard provides occupancy guidelines based upon square footage rather than the number of bedrooms.
Typically, guidelines are tied to building codes (e.g., Building Officials and Code Administrators [BOCA] guidelines), number of bedrooms, or number of square feet, but some guidelines make allowances due to size of rooms, layout of the unit, availability of other living areas, age of children, and any physical limitations of the housing such as capacity of septic/sewer or water systems.
In the past, a BOCA guidance to municipalities for health and safety issues for existing properties was sometimes referenced as a safe harbor standard for setting occupancy limitations. The guidance was based on the maximum number of persons who could safely occupy a building without overcrowding. However the code was not created to use for habitability purposes and the use of this standard is no longer recommended.
Landlords are advised to consult current guidance and applicable federal, state, and local standards when developing occupancy policy. As of this writing, the accepted industry standard is the reasonable occupancy standard as provided in the HUD Keating memo.
General
Justification for occupancy limitations is generally based on health and safety considerations, but financial consideration can also be of concern to landlords regarding real or perceived issues related to more occupants such as wear and tear, damage, parking spaces, utilities, noise, disturbances to neighbors, demands on services, and overcrowding of common areas.
A landlord may have legitimate business reasons to restrict the number of occupants allowed in a particular rental unit. Legitimate business reasons to limit the number of occupants in a particular rental unit could include limitations of building systems such as plumbing, electrical, or sewer or septic systems that could not accommodate increased use. The age and condition of the rental unit as well as the size and configuration of the unit may also be a limiting factor for occupancy.
If the landlord’s occupancy policy restricts the number of occupants for reasons other than health, safety, or legitimate business need, the landlord may be putting himself at risk for claims of familial status discrimination.
A landlord, when developing occupancy standards for his units, must research federal, state, and local occupancy standards to determine how many people must be allowed in a particular rental unit under federal standards, under state statutes, and under local standards. There will be two sets of numbers that must be taken into consideration for occupancy standards, (1) the minimum number of occupants allowed in a particular unit, and (2) the maximum number of occupants as set by state and local health and safety codes based on the size of the rental unit and the number of bedrooms and bathrooms in the rental unit.
It may be that the safest way to avoid potential problems is to use common sense and use standards that are at least as generous as the federal standards, but follow state and local standards if those standards are more generous than federal guidelines/standards.
Summary
Unreasonable or overly restrictive occupancy standards may be in violation of federal, state, and/or local fair housing laws.
Landlords may develop appropriate occupancy standards as long as the standards do not have the effect of discriminating against familial status.