Suit Accuses Apartment Owners of Bias

A housing agency has sued the owners of four Orange County apartment complexes for allegedly discriminating against families with children.

The Fair Housing Council of Orange County claims that the apartment owners are violating federal and state laws by boosting rents when more than two people rent a two-bedroom apartment.

The apartment owners imposed surcharges of 25% to 35% per tenant, beginning with the third occupant, according to the suit, which was filed in U.S. District Court in Santa Ana.

While the surcharge was allegedly imposed whether the third occupant was a child or an adult, the council maintains that such fees generally affect families with children.

A Newport Beach attorney, whose firm represents owners and managers of rental properties, said this could be an important industry test case.

“There’s no law that says an owner cannot charge a per-tenant surcharge,” attorney Helaine Ashton said. “But it is an untested area.”

The suit, which was filed last month, named La Quinta Hermosa Apartments and Seawind Village apartments in Huntington Beach, Enchantress Apartments in Buena Park and Casa de Oro Apartments in Costa Mesa. They are owned by limited partnerships headed by Melvin J. Hoeffliger of Corona del Mar, and Sally A. Gipple, who also lives in Orange County, the housing council said.

Neither Gipple nor Hoeffliger could be reached for comment.

The Fair Housing Council, a nonprofit agency that provides housing services for Orange County residents, said it began investigating rental practices at the complexes last June after receiving a complaint from Edward and Elia Ahrens, who had attempted to rent an apartment at the La Quinta Hermosa complex.

The Ahrenses, who have a young son, said the manager first told them the monthly rent would be $980, the lawsuit says. But when Elia Ahrens returned the following day with a completed rental application, the manager said the earlier quote was a mistake and the actual rent would be $1,235--a 26% increase--because of the “extra” person, the lawsuit says.

The manager said the surcharge was to cover the additional cost of utilities for the third person, the lawsuit says. Rents at all four complexes include utilities, the council said.

An attorney for the council said apartment owners are increasingly imposing surcharges and the Ahrenses’ case offered an opportunity to challenge the practice.

“It’s a growing problem,” Elizabeth Martin said. “We’ve never had a situation where the surcharges were this high.”

Ashton said apartment owners in Los Angeles sometimes charge an additional “per head” fee. She said she has not seen an increase in the practice in Orange County.

Following the complaint from the Ahrens family, the council launched a four-month investigation of the four complexes. A string of “fair housing testers” called the apartment complexes to inquire about rental rates, the lawsuit says. Posing as potential renters, they gathered information about the rents and how they varied depending on the number of occupants, the lawsuit says.

Martin said some industry attorneys now advise their clients to impose surcharges as a way of limiting occupancy. Instead, she said, apartment owners should set a reasonable occupancy maximum and base the rent on that maximum. The rule-of-thumb maximum for two-bedroom apartments is five people, she said.

She said apartment owners can legally impose a surcharge if it reflects an actual added expense caused by the additional occupant.

The lawsuit seeks unspecified compensatory and punitive damages.