Landlord May Be Liable for Broker's Acts

Facts: Two African-American tenants sued landlord and its real estate broker under the Fair Housing Act for housing discrimination by the broker. The broker had agreed to rent an apartment to tenants. Before tenants moved in, the broker asked them to put down a bigger security deposit than was previously required and said that the downstairs tenant was concerned because tenants were college students. Tenants later found out that the apartment had been rented to someone else and that the downstairs tenant had objected because tenants were African-Americans. Landlord asked the court to dismiss the case, claiming that it couldn't be held responsible for any discrimination by the broker. The court ruled for landlord, and tenants appealed. Court: Tenants win. If proved at trial, landlord could be held responsible for the broker's discrimination, since the broker was landlord's agent. Although landlord's agreement with the broker provided that the broker would be the sole tenant contact, that clause didn't bar landlord from directing the way that the broker dealt with tenants. Without further fact-finding, it was unclear whether landlord exercised control over the broker's dealings with prospective tenants.

Cleveland v. Caplaw Enterprises: NYLJ, 5/23/06, p. 22, col. 1 (U.S. Ct. App. 2d Cir.; McLaughlin, Jacobs, CJJ)