Recorded Restrictive Covenant Prohibiting Use Of House As Group Home For Disabled Persons Leads To $90K Fair Housing Settlement; Listing Brokerage, Law Firm Each To Cough Up $45K; Prospective Buyer Scores $78K, Buyer's R/E Agent Pockets $12K For Initiating Complaint With HUD
From the Department of Housing & Urban Development:
- The U.S. Department of Housing and Urban Development (HUD) announced  a $90,000 Conciliation Agreement with Coldwell Banker Residential Brokerage and the seller of a home in Worcester, Massachusetts, settling allegations they violated the Fair Housing Act by preventing the sale of a house to be used as a group home for persons with disabilities.
The Fair Housing Act prohibits discrimination in rental or sales transactions based on disability, including preventing a home sale because the home is going to be used by persons with disabilities.
- The prospective buyer planned to rent the house to a non-profit organization that provides supportive housing for persons with disabilities. When Erwin Miller, the executor of the estate learned the house would be used as a rental property, he agreed to sell the home on the condition a restrictive covenant was attached to the property. Miller stated in an email, “If they rent to a responsible family it is okay, BUT no unrelated individuals, students, dorm! Neighbors will fight this.”
Donna Truex, Miller’s attorney, at Bowditch & Dewey, LLP, recorded a restrictive covenant prohibiting the use of the house as a group home for disabled persons. Miller’s real estate agent, an independent contractor associated with Coldwell Banker Residential Brokerage, then emailed the restrictive covenant to the prospective purchaser’s sales agent, thereby prompting the prospective purchaser to withdraw from the sale.
The prospective purchaser and his sales agent subsequently filed a complaint with HUD, alleging the restrictive covenant that prohibited future owners of the home from using it as a group home for individuals with disabilities.
After receiving the complaint, HUD filed its own Secretary-initiated housing discrimination complaint alleging that the actions of the seller, real estate agent Maureen Kelleher, and attorney Donna Truex violated the Fair Housing Act.
Under the terms of the agreement, which was negotiated by HUD’s Regional Counsel in Boston, Coldwell Banker Residential Brokerage and Bowditch & Dewey will each pay $39,000 to the prospective buyer and $6,000 to his sales agent.
Coldwell Banker Residential Brokerage and Bowditch & Dewey, LLP, will provide their employees with fair housing training. In addition, Bowditch & Dewey, LLP, will donate 100 hours of free legal services directly related to fair housing and 100 hours of free legal services directly related to the promotion of disability rights.