Real Estate

D.C. real estate firms fined $10M for discrimination

DARO Management Services, DARO Realty and Infinity Real Estate were accused of violating civil rights and consumer protection laws

Three Washington, D.C.-based real estate firms — DARO Management Services, DARO Realty and Infinity Real Estate — and company executive Carissa Barry, have been handed a hefty $10 million civil penalty as part of a settlement for illegally discriminating against low-income renters using Section 8 vouchers for housing.

According to Washington Attorney General Karl Racine, this is largest civil penalty in the nation’s history to be awarded in a housing discrimination case.

Racine filed the lawsuit against the companies in 2020, which accused the group of denying housing to low-income applicants using Section 8 vouchers and of imposing illegal fees and requirements for applicants with government housing vouchers.

“When landlords break the law and refuse to accept vouchers, it’s reminiscent of Jim Crow-era housing discrimination policies intended to restrain opportunities for Black residents,” Racine said in a statement. “We’re sending a message to all landlords: If you follow this playbook, you will face consequences.”

The companies, which own and manage over 1,000 units in 15 buildings across the nation’s capitol, were charging move-in and security fees to applicants with housing vouchers while waiving these fees for other residents, according to the lawsuit.

The companies also illegally raised on empty units, a violation of the Vacancy Increase Reform Amendment Act of 2018, which reduced the amount by which landlords could increase rents for certain vacant units, Racine’s office said.

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Low-income residents who were late on payments were also placed on track for eviction, per the court filings, while other residents were not. In addition, the trio refused to consider rapid rehousing applications from renters.

“Vouchers are a critical tool that help our vulnerable residents,” Racine said. “Too many residents, especially people of color, face serious obstacles in finding safe and affordable housing. This displacement is not just the result of market forces. Instead it’s often caused … by a deliberate, illegal and unethical business model.”

Over 30,000 Washington residents are dependent on some form of government assistance to help make housing more affordable, and about 11,500 low-income households receive aid from the Housing Choice Voucher Program, commonly called Section 8 vouchers.

Of the voucher holders in Washington, about 95% are Black, Racine said.

According to Racine, the investigation by his office uncovered “mountains of evidence” to support the discrimination claims, including a Craiglist advertisement posted by the companies that stated, “!!!!NO RAPID REHOUSING!!!!”

Per the lawsuit, Barry approved the ad, despite it touting the discriminatory rapid rehousing policy.

Court filings also cite a number emails between company executives that outlined the intent to block applicants with Section 8 vouchers.

One email cited in court filings was sent in late 2018 from a DARO Management regional portfolio manager to a senior DARO Management employee noting the portfolio manager’s concern over a housing application that was offered to a rapid rehousing participant.

“OMG. Carissa is going to kill us,” the email stated. “[The applicant] doesn’t have a voucher and we don’t do rapid rehousing program. Call me please!” 

The portfolio manager sent a second email the following day, stating: “Carissa is going to say she has to take [the voucher program] over and I’m incompetent.”

The court filings also cite an email exchange between Barry and Jared Engel, who worked with Infinity’s investments, as evidence of the companies’ discriminatory policies.

“No voucher/sec-8 — find ways to reject, applicant must meet every requirement (credit, security deposit, income etc), in the case that we have to lease to them which we should find every way out of, don’t put in renovated units,” the email stated.

Racine’s office also found that the companies violated the settlement terms for a prior violation of the District’s consumer protection laws. 

In addition to the $10 million civil penalty, the companies agreed as part of the settlement to halt the management of residential properties in Washington and hand over management of the properties within 18 months. Barry will also relinquish her real estate license for a period of 15 years.

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