The DC Voice

AG Racine Sues Major District Landlord Responsible For Nearly 1,000 Apartments Over Source of Income Discrimination

February 11, 2020

OAG Alleges DARO and Company Executive Targeted Housing Voucher Recipients with Added Fees, Rejected Rapid Re-Housing Applicants, and Subverted Rent Control Laws

WASHINGTON, D.C. – Attorney General Karl A. Racine today announced a lawsuit against three real estate companies—DARO Management Services, DARO Realty, and Infinity Real Estate—and company executive Carissa Barry, for illegally discriminating against low-income District residents who receive housing assistance. In its lawsuit, OAG alleges that the defendants forced housing voucher recipients to pay fees waived for non-voucher holders; placed voucher holders who fell behind on fee payments on track for eviction while failing to do the same for non-voucher holders; and engaged in discriminatory advertising. OAG also contends that defendants illegally raised rents on vacant units. Finally, OAG alleges that the DARO entities and Barry violated the terms of a settlement resolving previous violations of the District’s consumer protection laws. OAG is seeking a court order to stop the illegal conduct, relief for harmed consumers, and civil penalties to the District, to deter the defendants and other real estate companies from engaging in discriminatory practices that limit access to affordable housing in the District.

“There is a severe affordable housing crisis in the District of Columbia, and many vulnerable residents rely on housing assistance to afford a place to live,” said AG Racine. “Discriminating against recipients of that assistance is illegal in the District of Columbia. That’s why the Office of the Attorney General is filing this lawsuit, reminding landlords that trampling over the civil rights of residents is unacceptable.”

DARO Management Services, LLC is a District-based and licensed real estate management company founded in 1935. The company operates, maintains, and leases nearly 1,000 residential units in 12 apartment buildings located across Wards 1, 2, and 3. Carissa Barry is a District-licensed real estate broker and property manager and oversees DARO Realty, LLC, which owns all but three of these apartment buildings and offers residential real-estate services. Barry also serves as managing director for Infinity Real Estate, LLC, the parent company of both DARO entities. Infinity, based in New York State, manages 9,000 residential units located in urban areas including the District, and maintains one of its two management offices in the District.

Housing Assistance and Non-Discrimination
Housing assistance programs are a core pillar of the District’s response to its affordable housing crisis, helping low-income residents keep a roof over their heads. Roughly 10,500 low-income District households depend on the federally-funded Housing Choice Voucher Program, commonly called “Section 8” vouchers, to rent housing at market rates. Another form of housing assistance, rapid-rehousing vouchers, serves as a temporary but crucial support program to help residents transition from homelessness to permanent housing. In the last year, 2,200 families used rapid-rehousing vouchers.

The District’s Human Rights Act (HRA) is one of the strongest civil rights laws in the country. Among the protections the law affords, it specifically outlaws housing discrimination based on source of income, making it illegal for landlords to refuse prospective tenants or treat tenants differently simply because they rely on vouchers or other forms of housing assistance. Despite these protections, a recent study showed that 15 percent of District-area landlords still refuse to accept vouchers. District residents expressed significant concerns to OAG about housing discrimination at Civil Rights Listening Sessions held in 2019.

Lawsuit
According to OAG’s lawsuit, the DARO entities, Infinity, and Barry allegedly charged Section 8 voucher recipients added fees, targeted those tenants for eviction, and posted discriminatory housing advertisements. They engaged in this conduct despite full awareness of their legal obligations to follow the District’s non-discrimination and consumer protection laws.

In the suit, OAG argues that the companies violated the HRA and the Consumer Protection Procedures Act (CPPA) by:

Targeting housing voucher recipients with fees waived for unsubsidized tenants: The DARO entities charged tenants reliant on housing assistance for application, move-in, and security fees, but waived these costs for tenants not using housing assistance. Despite indicating on applications that the security deposit payment depended on an applicant’s credit score, the DARO entities required all voucher recipients to pay the deposit, regardless of their credit. If tenants could not pay the full amount immediately, the company would place them on payment plans, and evict them for falling behind—even while allowing unsubsidized tenants who fell into arrears to remain in their units.
Refusing tenants participating in rapid-rehousing: While the companies subjected Section 8 voucher holders to added fees and eviction targeting, they rejected rapid-rehousing altogether, refusing to consider applications from prospective tenants who relied on these vouchers. The companies explicitly touted this discriminatory policy in an online advertisement that Barry approved. This advertisement, posted on Craigslist, stated, “!!!!NO RAPID REHOUSING!!!!”
Falsely claiming to follow fair housing laws and misrepresenting security deposit policies: On their websites and leasing forms, the companies repeatedly claim to follow fair housing laws and assert that they do not discriminate based on source of income. The application form notes that the security deposit requirement depends on an applicant’s credit rating. But all these claims are misleading. In making these false claims, the DARO entities violated the CPPA—and, in turn, a settlement agreement resolving the District’s prior lawsuit against the two companies regarding their involvement in illegally converting apartments into short-term rentals, which required them to comply with the CPPA.
Subverting the District’s rent control laws: District law limits landlords’ ability to increase the rental prices of units in rent-controlled properties that are vacant. In late 2018, the Council passed the Vacancy Increase Reform Amendment Act of 2018, which reduced the amount by which landlords could raise rents for certain vacant units. Before the law went into effect, defendants entered into purported leases with relatives and other acquaintances for units that were not actually available to rent in order to raise rents in excess of what the District’s rent-control laws would soon permit. The District alleges this conduct in violation of the District’s rent control laws violates the CPPA.

The complaint as filed is available at: https://oag.dc.gov/sites/default/files/2020-02/DC-v-Daro-Infinity-Barry-Complaint.pdf

OAG filed this lawsuit in the Superior Court of the District of Columbia, and is seeking a court order to put a stop to these practices, secure restitution and damages, civil penalties, and other relief.

OAG’s Civil Rights Work and Resources
OAG’s Civil Rights Section investigates and brings lawsuits to challenge discriminatory policies and practices that harm District residents. Since the Civil Rights Section was established in 2019, OAG has filed several lawsuits against landlords that unlawfully discriminated against low-income renters and worked with Apartments.com and Zillow to fight housing discrimination on their platforms. OAG has also reached a settlement with a home repair company that illegally refused to do business in certain District neighborhoods. OAG held several Civil Rights Listening Sessions across the District in 2019 to hear directly from residents regarding their civil rights concerns and help the Civil Rights Section define its priorities. On February 19, OAG will testify before the Council on its pending legislation to reinforce the office’s enforcement authority regarding the HRA. Learn more about the District’s civil rights protections and how OAG is working to enforce them.

If you believe you have been a victim of discrimination, you may report it to OAG’s Civil Rights Section by:

Calling (202) 727-3400
E-mailing OAGCivilRights@dc.gov
Mailing OAG, ATTN: Civil Rights Section at 441 4th Street N.W., Suite 600S, Washington, D.C. 20001

OAG’s civil rights work complements the work of the Office of Human Rights (OHR), which is the primary District agency that investigates individual discrimination complaints. You can file a complaint with OHR at https://ohr.dc.gov/ or call 202-727-4559.

How to Report Unfair Business Practices
To report scams, fraud, or other unfair businesses practices, submit a consumer complaint to OAG by calling (202) 442-9828, emailing consumer.protection@dc.gov, or submitting a complaint online.

Content retrieved from: https://oag.dc.gov/release/ag-racine-sues-major-district-landlord-responsible.

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