Occupancy Standards and Fair Housing

Every owner and manager of multifamily properties must develop occupancy standards for their property. It is these standards that determine how many people may live in a unit. When deciding on an occupancy standard, the key question is always – what is reasonable?


The industry standard has long been two people per bedroom. This standard originated from the HUD “Keating memo” in 1991. However, while indicating that the two-person per BR standard may be acceptable the memo made it clear that it was a “guide,” and not a rule or a “safe-harbor”. HUD indicated that factors in determining what is reasonable include:


  • Bedroom size; and
  • Other factors – e.g., age of children.


Recent court cases have challenged the two-person per bedroom standard, especially in areas where state or local occupancy laws allow more people.


Occupancy standards are generally associated with familial status provisions of fair housing law. Courts have been quick to find that overly restrictive standards are a violation of fair housing law if they present artificial impediments to the ability of families with children to find housing.


While fair housing law permits the establishment of occupancy standards, these standards may not unreasonably limit the ability of families with children to find housing.


Owners should avoid a “one size fits all” policy. The characteristics of each property should be considered. Federal law defers to state and local law in the development of such policies. Nothing in federal law “limits the applicability of any reasonable local, state, or Federal restrictions regarding the maximum number of occupants permitted to occupy a dwelling.”


It is worth noting that the Keating Memo was not intended as public guidance – it was internal guidance for HUD enforcement staff. In 1998, Congress ordered HUD to adopt the Keating standard as HUD policy. However, as noted, this is not the only standard HUD will use in determining what is reasonable. For example, if bedrooms are large, more than two people per bedroom may be reasonable. Also, large apartments may have extra rooms such as dens, office, or loft that can be suitable as a bedroom. Other factors to be considered include the age of children, unit design, and utility capacity.


Basic Considerations When Setting Occupancy Standards

  1. Examine Current Standards: Don’t automatically use the two person/bedroom standard. If local law will allow more than two people per bedroom, the more restrictive policy will be hard to defend. If a “rule-of-thumb” policy is used while researching local requirements, I recommend the “2+1” policy; i.e., two people per bedroom plus one (e.g., two-bedroom unit will permit five occupants).
  2. Check State & Local Codes: if there are state or local occupancy codes, they may be based on minimum square footage per person or minimum square footage per bedroom per person. A property will rarely be challenged for following state or local standards. In fact, HUD will review such standards when determining reasonability. Determining the applicability of state or local codes can be difficult. There may be fire codes, building codes, zoning codes, and property maintenance codes – all of which will have separate requirements. Consultation with a local attorney is always recommended when researching local requirements.
  3. Set Limits on the Number of People Not the Number of Children: This was a primary element of the Keating Memo.
  4. Know the “Red Flags” that Fair Housing Agencies Will Look for:
    1. Making discriminatory statements;
    2. Adopting discriminatory rules relating to common areas;
    3. Taking steps to discourage the presence of children;
    4. Enforcing occupancy policies only against families with children; and
    5. Marketing a community as “adults only.”


It is also unlawful to impose special requirements or conditions on families with children, such as limiting access to recreational services.


  1. Be Careful When Considering the Age of Children When Setting Policies: While it may seem “reasonable” to deny a one-bedroom unit to an adult couple with a teenager, a couple with an infant should generally be allowed in a one-bedroom unit. Also, owners may not require male and female children, regardless of age, to have separate bedrooms. In addition, owners should not require adults and children of either gender to have separate bedrooms. Generally, it is best to follow the occupancy policy without regard to family characteristics. In other words, if your policy is to permit three people to live in a one-bedroom unit, you probably should permit any three people to live in the unit.
  2. Consider the Physical Limitations of Building Systems: The limits of a building’s systems may provide a substantial, legitimate, nondiscriminatory reason for limiting the number of occupants. The capacity of septic, sewer, or other building systems can play a role in how an occupancy policy is determined.
  3. Document the Reasons for the Policy: This documentation should demonstrate a review of the following elements:
    1. Size of bedrooms & Unit: E.g., a family of five should be able to live in a unit with two large bedrooms and a large living room, but may not be suitable for a small two-bedroom mobile home; and
    2. Unit Configuration: E.g., two adults and three children apply for a two-bedroom unit. A unit with two bedrooms and a den would certainly be suitable for this family, but a two – bedroom with no other adequate sleeping room may not be.


Ultimately, the goal when establishing an occupancy policy should be to avoid over-crowding units, while not inhibiting the ability of families with children to find suitable housing. As long as an owner can demonstrate a sound reason for any occupancy restrictions, defending these policies – if challenged – is much more likely.