The ESA Fight Goes to Court—and HUD Loses
What the Henderson ruling reveals about agency overreach, tenant claims, and how property managers should respond.
A recent judge’s ruling has thrown everything we know about emotional support animals (ESAs) and HUD guidance up in the air. If you’re a NARPM member, you probably saw an article in the latest newsletter email talking about it. But even if you’re not, you may have seen it talked about on Facebook groups, LinkedIn, etc., because it didn’t take long for property managers everywhere to start celebrating. But what is the truth here about what this decision by Judge Vance really means for our industry? Let’s do a deep dive.
The ESA Problem
For as long as I’ve been in the industry, the question of ESAs has always been one that has animated property managers. I can remember attending a NARPM Broker/Owner Conference where the HUD representative who gave a talk had a line out the door of PMs wanting to ask her questions (and frankly, to berate her) about ESA rules.
To be honest, I’ve always found it all a little bit over-the-top. Sure, I thought it was idiotic that someone could buy a letter on the internet from a dishonest healthcare provider and get out of pet restrictions, but this was always a very minor problem for me and my business. We’re a pet-friendly company (as I recommend everyone to be), so this just doesn’t come up very often. We probably get two or three ESAs a year. When you let people have pets and just charge reasonable pet fees for them, they don’t tend to go out and get fake letters. They only do that when you tell them they just can’t have pets.
But regardless, however big of a problem this has been for your business, it’s always been a big bone of contention with PMs just as a matter of principle. Without any actual statutes passed by Congress and signed by the President, HUD just decided on their own many moons ago that having an ESA letter exempted you from pet restrictions or pet fees. This, of course, never made any sense at all. Let’s look at a tenant in a wheelchair. This is the classic case of reasonable accommodation included in every textbook and real estate exam. A disabled tenant asks for a wheelchair ramp. Do you have to provide it? No. You just have to allow for it. It’s an accommodation. The tenant is allowed to install their own ramp, and they have to return the property to its original condition on move-out. All at their own expense. This makes perfect sense. Disabled people need a place to live, obviously, but landlords can’t be made to suffer financially for providing it.
But somehow that same standard never seemed to apply to ESAs. What is the reason that landlords don’t allow pets, or charge pet fees if they do allow them? Because animals can cause damage to properties. Now, I’ve written before about how this fear is overblown and easily solved with pet fees, but the reality is still there that pets can cause damage and landlords want to avoid that. Unlike the wheelchair situation, though, HUD made ZERO accommodations to the landlord related to their possible expenses. Not only could you not restrict ESAs, or charge pet fees for them, but you couldn’t even charge an extra refundable deposit for them. How is it that an actual disabled person who needs a wheelchair to get around at all has to pay for their own ramp on a rental property, but someone with a fake ESA can avoid having to spend any money at all for their accommodation?
Quite simply, this rule was always idiotic, and it’s about time that a court did something about it.
Henderson v. Five Properties LLC
Enter Michaela Henderson. In July 2022, Ms. Henderson rented an apartment at Almondtree Apartments in Louisiana. The property is owned by Five Properties LLC, and managed by Tonti Management, a local multifamily and corporate rental management company. Ms. Henderson had a dog named Tydus, and she paid a $350 non-refundable pet fee at the time. But fast forward a year, and she wanted to move to another property owned and managed by the same companies, Sunlake Apartments. This time she handled it differently, though. Instead of paying the pet fee (which was $400 at the new property), she claimed that Tydus was now an ESA, and that she expected the fee to be waived. When challenged on it, she went out and got an ESA letter from Steph Lee, a “gender affirming care” nurse practitioner.
Now’s the fun part, and why Tonti Management is my new hero: they received the letter and basically said “that’s nice, but you still have to pay the fee, because you haven’t demonstrated that you can’t afford it.” They offered her the option to pay the fee in installments of $100 over four months, but they said the fee would NOT be waived. Their rationale here was fantastic. They basically said that the ESA letter gives you the ability to have the ESA, but it doesn’t excuse you from the financial burden that literally every other person who has an animal in the house has to pay. The “reasonable accommodation” for her disability is having the dog, not having it for free. The only reason a “reasonable accommodation” would be necessary, in their view, was if she demonstrated that she literally couldn’t afford to live if she had to pay the fee for the dog. Of course, this makes perfect sense. Just like a disabled tenant has to pay for their own wheelchair, Ms. Henderson needs to pay for her dog.
But, of course, logic and reason don’t work on this kind of entitled person, so she filed a formal complaint with HUD. HUD being HUD, they investigated and issued a charge of discrimination, referring the matter to the Justice Department. However, it’s worth noting here that unlike many other cases where they find that discrimination occurred, DOJ did not file a lawsuit in this matter. It ended there with HUD and DOJ. Read into that what you will. But that didn’t stop Ms. Henderson. She pressed forward and filed her own lawsuit in federal court under the Fair Housing Amendments Act (FHAA) and Louisiana Equal Housing Opportunity Act.
After some interesting legal maneuvering that I won’t bore you with here, including some attempts by the plaintiff to hide her income by avoiding discovery, Judge Sarah Vance (a Clinton appointee and a highly respected jurist) issued a ruling against the tenant. Her rationale was fantastic:
Fee Waivers Are Not Automatic - Judge Vance found that nothing in fair housing law says anything about automatic fee waivers. HUD basically pulled that concept from thin air. Instead, the judge said that Henderson had to prove both that a fee waiver was necessary for her to be able to use and enjoy the home, and that the waiver was reasonable to the landlord. Just having an ESA was not enough to justify a fee waiver.
HUD Guidance Has No Binding Authority Whatsoever - This is the big one, and we’ll talk more about this below. The judge essentially said that yes, HUD issued guidance on this back in 2020 stating very clearly that fees can’t be charged for ESAs, but that HUD has absolutely no authority under the law to make that determination, since the statute itself says nothing about it, nor has any court issued a ruling supporting that interpretation.
Accommodations Are Case-by-Case - There are no blanket waivers or blanket accommodations for disabilities. The judge ruled that every situation is different, and the landlord is within their rights to take into account many factors, including the following:
How expensive is the fee relative to the rent?
How important are pet fees to the landlord’s revenue model?
Do other tenants pay the fee, or is it only charged for ESAs?
Can the tenant afford the fee?
Can other accommodations be made besides a waiver, such as paying a fee in installments?
In short, the judge basically said that HUD’s authority to interpret the law is non-existent outside of very clear statutes and court rulings. Their job is to enforce the statute, not to make up their own rules. Courts interpret the law, government agencies do not.
What Made This All Possible
In order to understand how this ruling happened, we need to take a bit of a deeper dive into a recent Supreme Court ruling. Way back in 1984, there was a lawsuit called Chevron USA Inc. v. Natural Resources Defense Council Inc. This was a major landmark Supreme Court (SCOTUS) ruling that gave immense power to unelected government agencies like HUD. The short version of the case was that Chevron was challenging the ability of the EPA to interpret the Clean Air Act of 1963 when the clear text of the Act did not include the EPA’s interpretation. Essentially, Chevron’s argument was that the EPA was only allowed to enforce the clear language of the law that Congress had passed, or if it wasn’t clear enough, a court’s ruling on what it meant. If there was no statue and no court ruling, Chevron’s view was that EPA could not make up their own interpretation. When ruling on the case, the SCOTUS back then said that courts had an obligation to defer to the interpretations of the government agency unless the interpretation directly conflicted with the clear text of the law or was a clearly unreasonable interpretation.
That SCOTUS decision was the law of the land for four decades. Unelected government agencies such as HUD could basically make up their own rules, so long as they didn’t directly contradict what was in the law, and we and the courts had to bow down to them and go along with it.
That all changed last year. A new case came along to the SCOTUS called Loper Bright Enterprises v. Raimondo. This case involved some fishing companies who were being forced by the National Marine Fisheries Service (yes, there are so many government agencies that you literally haven’t even heard of many of them) to pay for the cost of federal monitors assigned to spy on them on their own boats. The agency claimed this authority under the Magnuson-Stevens Act (MSA), but that Act doesn’t say anywhere that fishing companies have to pay anything. The fishing companies had enough, and filed a lawsuit challenging what has been called “Chevron deference,” and saying that the government agency should not have the right to impose financial obligations on anyone unless Congress said so in the law.
This is a very different SCOTUS than existed in 1984. And they issued a very different ruling than the Chevron case. The court did not hold back. They essentially eliminated Chevron deference and found that the only real authority to interpret the law rests with the courts. Government agencies have no authority whatsoever to interpret law. They can only administer the law that Congress has created. If the law is unclear and needs to be interpreted, then only the courts can do that. The only role that the government agency has in the process is to provide their expertise to the courts so that judges and juries can consider their opinions when making interpretations. The SCOTUS did leave in place any prior court decisions that had been made on the basis of Chevron deference, but that was it. Anything that hadn’t already been ruled on by a court was now fair game, and the interpretations and opinions of government agencies no longer mattered.
What the New Ruling Means for Us
Of course, I am not an attorney, and I’m definitely not your attorney. This is not legal advice. Don’t do anything without consulting with your own competent legal counsel that is knowledgeable in landlord/tenant law, the Loper decision, your own state’s anti-discrimination laws, etc.
Now, with that out of the way, this decision is huge. And not just when it comes to ESAs. This is a far-reaching decision that impacts all sorts of regulations that we deal with on a daily basis. Essentially, if it’s not in the law, and it’s not in a court ruling, then it isn’t binding on us. HUD, EPA, whoever can come up with their own regulations and interpretations, but if it’s not in the law, it’s just their opinion. It’s advice, not binding. We sort of already knew this after the Loper decision last year, but this ruling makes it very tangible, especially to our industry. This is the first time that a court has ruled against a government agency related to housing issues since Chevron deference was eliminated.
That said, I want to caution you on how you proceed. While I will probably move forward charging for ESAs, I am much less risk-averse than the average person. The elimination of Chevron deference doesn’t mean that government agencies won’t try to impose their will on you. It just means that if they do, you have a legal defense and can fight back in court. The court makes the final decision, and their ruling is binding and precedent-setting, but the government agency can try to do what they want until you challenge it in court.
As far as this case, because it was tried in a federal trial court and was not a ruling from an appellate court or the SCOTUS, it is only binding on that specific case. While not required to follow this precedent, other courts within the 5th Circuit (Louisiana, Texas, and Mississippi) will likely follow it. Even courts in other circuits are likely to find it persuasive, especially in more conservative circuits, and you can cite it in litigation if necessary. But it is not nationally binding by any stretch. You are still assuming a little bit of risk to follow this judge’s reasoning.
All of those disclaimers being said, yes, I am planning to start charging our standard pet fees to anyone with an animal, regardless of what purpose that animal serves. If you meet our income qualifications to rent a property, then you have enough money to pay a pet fee, and waiving it is NOT a reasonable accommodation as far as I’m concerned. You need to pay for your animal just like everyone else without an ESA letter does. If you are managing low-income housing, you might need to look at this differently, as the judge did say that this needs to be looked at on a case-by-case basis. So if someone is renting housing at basically the bottom of the income ladder and literally can’t afford a pet fee if they have an ESA, then you need to look at that differently than you do someone renting a middle class home who makes 3x the rent in income.
Whatever you decide to do, make sure you have it written into an official policy. Your greatest protection is always transparency and having a policy to refer back to, making sure that you are treating everyone fairly and equally.
Only One Free Article This Week
After being out of town most of last week, I have a heavy consulting call schedule this week, so probably will only be able to get out this one free article instead of my usual two. We’re also a little short on advertisers, so it’s difficult for me to justify the time commitment to writing if the ad revenue isn’t coming in for it. In other words, if you like these articles and want to see them keep coming, encourage your vendors to sponsor us. 🙂 Subject to change if we get a sponsor before Friday and I can squeeze it in.
Open to Work
Are you an experienced PM industry employee looking for work? Or are you a PM company or vendor seeking the best talent? Send me your info and I’ll feature it here! And look forward to future editions where we’ll be featuring some of the best RTMs available!
Newsletter Stats
Here are our statistics for the last 30 days:
67,688 impressions
43.46% open rate
Issue with the highest readership:
6,254 impressions
Looking for Advertisers!
We always have some available ad slots open for industry vendors, and we offer discounts if a slot is still open within the next four weeks. Sign up for an ad or ad package here. Pricing and ad details can also be found at that link.
Debate Me
Disagree with my take here? Have a different perspective? There’s nothing I love more than a good debate or even just an intelligent conversation. If you’d like to jump on a podcast recording with me to discuss this topic, please let me know!
The views expressed in this publication are the views of the author only and not any advertisers, sponsors, partners, affiliates, or organizations that the author may be a member of.