What is Your Rental Property's Occupancy Limit?

Most rental property owners have an idea about how many people they believe should be allowed to live in their home. When considering occupancy limits it is important to remember that Fair Housing Laws prohibit any restrictions based upon familial status (aka children). Knowing a property’s legal occupancy limit, if rentals are governed by such ordinances, is also a necessary business practice for any owner. Your rental’s occupancy limit must be the set based on a review of factors that consider physical aspects of the property while not violating any Fair Housing issues and local ordinances. After reading this post, one thing will be clear. The determination of occupancy limits is much more complex than what many simply consider to be a simple two person-per-bedroom guideline.

Legislated Occupancy Limits

Some authorities and municipalities have legislated occupancy limits. If your municipality has a definition to follow regarding occupancy limits, then be sure and start there. When in doubt though, utilizing federal guidelines is a good place to start. Many local ordinances are based on federal guidelines.

HUD and the Keating Memo

So where did the two person-per-bedroom concept originate? This rule likely originates from the Keating Memo, issued by HUD’s General Counsel, Frank Keating, in 1991, and later adopted by HUD. In that memo, Mr. Keating wrote,

“The Department believes that an occupancy policy of two persons in a bedroom, as a general rule, is reasonable under the Fair Housing Act.”

Frank Keating

As an aside from the memo, a quick search of the internet found multiple occupancy cases where owners were prosecuted for discrimination when following this rule with no other consideration for the property’s physical features. Familial status is a Fair Housing protection that may also cause issues. Who hasn’t found a way to have three children in a bedroom and never thought it was over-crowded?

Familial Status

So, the memo continues by addressing this Fair Housing issue and basically confirms that two persons per bedroom is just a starting point.

“In appropriate circumstances, owners and managers may develop and implement reasonable occupancy requirements based on factors such as the number and size of sleeping areas or bedrooms and the overall size of the dwelling unit. In this regard, it must be noted that, in connection with a complaint alleging discrimination on the basis of familial status, the Department will carefully examine any such nongovernmental restriction to determine whether it operates unreasonably to limit or exclude families with children.”

Frank Keating

Bedroom Sizes and Other Special Circumstances

The HUD guidelines continue with the following examples.

“In reviewing occupancy cases, HUD will consider the size and number of bedrooms and other special circumstances. The following principles and hypothetical examples should assist you in determining whether the size of the bedrooms or special circumstances would make an occupancy policy unreasonable.”

Size of bedrooms and unit.

Consider two theoretical situations in which a housing provider refused to permit a family of five to rent a two-bedroom dwelling based on a “two people per bedroom” policy. In the first, the complainants are a family of five who applied to rent an apartment with two large bedrooms and spacious living areas. In the second, the complainants are a family of five who applied to rent a mobile home space on which they planned to live in a small two-bedroom mobile home.

Depending on the other facts, issuance of a charge might be warranted in the first situation, but not in the second. The size of the bedrooms also can be a factor suggesting that a determination of no reasonable cause is appropriate. For example, if a mobile home is advertised as a two-bedroom home, but one bedroom is extremely small, depending on all the facts, it could be reasonable for the park manager to limit occupancy of the home of two people.

Configuration of unit

The following imaginary situations illustrate special circumstances involving unit configuration. Two condominium associations each reject a purchase by a family of two adults and three children based on a rule limiting sales to buyers who satisfy a two people per bedroom occupancy policy. The first association manages a building in which the family of the five sought to purchase a unit consisting of two bedrooms plus a den or study. The second manages a building in which the family of five sought to purchase a two-bedroom unit which did not have a study or den. Depending on the other facts, a charge might be warranted in the first situation, but not in the second.

Other physical limitations of housing

In addition to physical considerations such as the size of each bedroom and the overall size and configuration of the dwelling, the Department will consider limiting factors. These are identified by housing providers, such as the capacity of the septic, sewer, or other building systems.

Safest Option = 2+1 Formula

Based on the subjective interpretations of what are acceptable standards, we prefer to follow the guidelines established in 1998 by the California Department of Fair Employment and Housing. The Department stated:

“they would be disinclined to investigate cases unless the occupancy limits were more restrictive than 2 persons per bedroom plus one. The “plus one” acknowledges, that most dwellings are so configured that it would be reasonable for at least one person to use some non-bedroom space (e.g. a loft, den, or living room) as a sleeping area.”

Like everything else when it comes to occupancy standards, there is no absolute to the 2+1 rule. It seems to provide for that extra person who could sleep in the living room or other extra space in the rental. It moves past the HUD two-per-bedroom guidelines and their associated subjectivity.

The conclusion of all of this is that you do need to be careful in how you define occupancy. Your rule for a property needs to be consistent and it must not mention children. As a guideline, we like the California 2 + 1 rule and would encourage any owner to consider using it.

Share on facebook
Share on twitter
Share on linkedin
WILMOTH Group is headquartered in Indianapolis, Indiana. We focus on providing creative local solutions for a variety of residential real estate needs including, properties for sale, property management services in Central Indiana.