Schanz v. The Village Apartments: Refusal to Rent to Mentally Ill Individual Not Discriminatory

In a case of importance to residential landlords, the U.S. District Court for the Eastern District of Michigan ruled in favor of the landlord. Schanz v. The Village Apartments.

Edward Schanz applied to rent an apartment in The Village Apartments (the “Village”) located in Wixom, Michigan. At the time, Schanz, who has a mental illness, was not employed and his social security benefits fell below the Village’s income requirement. In addition, the Village uses a formula to determine whether an applicant is creditworthy. Schanz, who had several credit problems, did not qualify for a rental under that formula. When informed that his application was rejected due to insufficient income and poor credit, Schanz arranged for a non-profit organization to guarantee his rent for one year. He then asked the Village to reconsider his application and accept the guaranty agreement. The Village refused that arrangement but instead suggested the option of having a blood relative cosign his lease.

Schanz sued, claiming that the Village discriminated against him on the basis of his mental handicap in violation of the Fair Housing Act Amendments (the “FHAA”). Under the FHAA, it is unlawful “to discriminate in the sale or rental, or to otherwise make unavailable or deny, a dwelling to any buyer or renter because of a handicap of that buyer or renter.” Schanz claimed that the Village violated the FHAA in two ways - intentional discrimination (disparate treatment) and a failure to provide reasonable accommodation. The Village moved for summary judgment.

On the claim of intentional discrimination, the Village argued that Schanz was not ready, willing and able to accept its offer to rent an apartment to him since he did not meet the financial criteria. The U.S. District Court for the Eastern District of Michigan agreed with the landlord, holding that the Village’s financial requirements were not discriminatory even though Schanz, a handicapped individual, could not meet them.

Schanz further argued that the Village should have made an exception to its policy and accepted the guaranty agreement as a “reasonable accommodation” under the FHAA, which states that it is unlawful to refuse “to make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford such person equal opportunity to use and enjoy a dwelling.” One element of proving a failure to make a reasonable accommodation is that accommodating the handicap is necessary to “afford plaintiff an equal opportunity to use and enjoy the housing in question.”

The Village asserted that the accommodation requested by Schanz (that it accept the guaranty arrangement) was not related to his handicap The court agreed, finding that it was not the handicap that was preventing Schanz from renting the apartment, rather, it was his financial situation. The FHAA does not require the accommodation of financial circumstances. The court granted the Village’s motion for summary judgment on both of the plaintiff’s claims.

Schanz v. The Village Apartments, 998 F.Supp. 784 (E.D. Mich. 1998)