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Succession Weekly Brief

HUD's May 2026 ESA Memo and the Six FHA Compliance Gaps It Did Not Close

By the Succession Editorial Desk ·

On May 22, 2026, the assistant secretary for Fair Housing and Equal Opportunity at HUD signed an internal memorandum that rescinded HUD's 2020 guidance on assistance animals and told the agency's front-line enforcement staff to dismiss or close-with-no-cause any new reasonable accommodation complaint that turns on denial of an untrained emotional support animal. The memo, attached to a federal district court decision in Henderson v. Five Properties LLC out of the Eastern District of Louisiana from July 2025, frames the change as a return to the Fair Housing Act's plain text. The text did not change. The agency's appetite to enforce the text against an independent landlord who rejects an ESA letter did.

That distinction is the entire reason this issue exists. Because the federal Fair Housing Act is unchanged, and because state fair housing agencies in Texas, California, New York, New Jersey, Massachusetts, Illinois, Pennsylvania, Hawaii, and Maine still operate under their own statutes and their own administrative complaint pathways, the small owner holding a 4-unit walk-up is now sitting inside a compliance map that the May 22 memo did not redraw. It only removed one layer of federal overlay. The other layers — the state fair housing acts, the private right of action under the federal FHA, the Department of Justice's pattern-or-practice authority, and HUD's separate design and construction requirements for covered multifamily built after March 13, 1991 — are still drawn. And the small owner who reads the headlines and concludes "HUD will not enforce against me, so I can reject the next ESA letter I receive" is misreading the map.

Section 1: Today's Lens — The Six FHA Compliance Gaps the May 2026 Memo Did Not Close

The May 22, 2026 memo is real and is a meaningful change in federal enforcement posture. The HUD FHEO enforcement guidance signed by Assistant Secretary Craig Trainor rescinds the 2020 FHEO guidance that had treated emotional support animals as presumptive assistance animals, requires FHEO investigators to find reasonable cause of a Fair Housing Act violation only in cases involving animals individually trained to do disability-related work or tasks, and instructs FHEO to align its enforcement under the FHA with the legal reasoning in Henderson v. Five Properties LLC, No. 24-750 (E.D. La. July 16, 2025). Under the new standard, open ESA complaints pending at FHEO are being reviewed individually under the new framework. New complaints filed with FHEO involving the denial of an untrained ESA will be dismissed or receive a no-cause finding. The rescission is final for HUD's own docket.

The change is not, however, a change in the underlying federal Fair Housing Act. The FHA still makes it unlawful to refuse to make reasonable accommodations in rules, policies, practices, or services when such accommodations may be necessary to afford persons with disabilities an equal opportunity to use and enjoy a dwelling. The FHA still provides a private right of action in federal district court within two years of the alleged denial. The Department of Justice still has pattern-or-practice enforcement authority under 42 U.S.C. § 3614. And HUD's design and construction requirements under the FHA still apply to every "covered multifamily dwelling" — every building with four or more dwelling units built for first occupancy after March 13, 1991 — regardless of how FHEO processes a complaint about an ESA letter.

The independent owner holding a 4-unit walk-up in 2026 is sitting inside at least six compliance gaps that the May 22 memo did not close. Each one is a separate enforcement pathway that survives the rescission. Each one is also a separate place where the small owner can lose.

Gap One: State fair housing acts. Texas, California, New York, New Jersey, Massachusetts, Illinois, Pennsylvania, Hawaii, Maine, and a number of other states enforce their own fair housing statutes under the Fair Housing Assistance Program (FHAP) workshare agreement with HUD. The Texas Workforce Commission's Civil Rights Division enforces the Texas Fair Housing Act under Texas Property Code Chapter 301 and accepts disability accommodation complaints independently of HUD's enforcement decision. If HUD dismisses an ESA complaint at the federal level with a no-cause determination under the new memo, a Texas tenant can refile the same complaint with the Texas Workforce Commission under state law. The Texas Fair Housing Act is "substantially similar" to the federal FHA, but the state administrative process can reach findings the federal memo will not. California's 30-day clinical-relationship requirement applies specifically to documentation for an emotional support dog (with an exception for homeless individuals) — not to every ESA letter — and California's Civil Rights Department (CRD) accepts disability accommodation complaints independently of HUD. The state pathways are not affected by the May 22 memo. The 9 to 12 state FHAP agencies that participate in the workshare agreement are operating under their own enforcement guidance.

Gap Two: The private right of action. The federal FHA gives any aggrieved person two years from the alleged discriminatory act to file a lawsuit in federal district court. HUD's enforcement posture does not affect the private right of action. A tenant whose ESA accommodation request is denied can sue the small owner directly in federal court under 42 U.S.C. § 3613, and the federal district court will apply the Fair Housing Act's text — not the May 22 memo. The May 22 memo is an internal HUD enforcement directive. Federal district courts are bound by the statute and by HUD's pre-rescission regulations under 24 C.F.R. Part 100, which still recognize emotional support animals as a category of assistance animal in many circuits. Henderson v. Five Properties LLC is one Eastern District of Louisiana decision. Other circuits have reached different conclusions on assistance-animal accommodations; cite Bronk v. Ineichen, 54 F.3d 425 (7th Cir. 1995). The federal case law is not uniform. The small owner who rejects an ESA letter on the strength of the May 22 memo is betting on a private right of action in which the small owner, not HUD, is the defendant.

Gap Three: The Department of Justice's pattern-or-practice authority. The DOJ Housing and Civil Enforcement Section enforces the Fair Housing Act through pattern-or-practice suits and through election-of-cases complaints referred by HUD. The DOJ's enforcement priorities are set by the Assistant Attorney General for the Civil Rights Division, not by FHEO. The DOJ's pattern-or-practice settlements included a $750,000 agreement with Indian Oaks Apartments LTD, Russell Management Services LLC, H.J. Russell & Company, and The Russell Realty LP over a refusal to grant a mother's reasonable accommodation request for a ground-floor unit for her son with a mobility impairment. The DOJ announced the $750,000 Indian Oaks settlement on April 30, 2026 — described as the second-largest monetary settlement in an individual FHA case. The DOJ can still bring that kind of pattern-or-practice case in 2026 against a small landlord who is refusing accommodation requests on a class-wide basis, regardless of the May 22 memo. The memo binds HUD staff, not DOJ lawyers.

Gap Four: HUD's design and construction requirements. The Fair Housing Act's design and construction requirements under 42 U.S.C. § 3604(f)(3)(C) and 24 C.F.R. § 100.205 apply to every covered multifamily dwelling designed and constructed for first occupancy after March 13, 1991. The requirement is independent of any accommodation complaint. It is a property-level obligation: the building must have an accessible entrance on an accessible route, accessible public and common-use areas, doors usable by a person in a wheelchair, accessible light switches and thermostats, reinforced bathroom walls for grab bars, and kitchens and bathrooms usable by a person in a wheelchair. The requirements apply whether or not any tenant has ever requested an accommodation. The small owner who buys a 4-unit walk-up built in 1998, 2003, 2008, or any other year after March 13, 1991 has inherited a design and construction obligation that runs with the property, not with the tenancy. The landmark $10.5M JPI disability-access settlement ($10.25M accessibility fund plus a $250,000 civil penalty), announced in 2012 — the largest disability-based housing discrimination settlement in DOJ history — is a reminder that the design and construction requirements are enforced regardless of what HUD is doing on ESA complaints.

Gap Five: The Mrs. Murphy exemption is narrower than owners think. The FHA's Mrs. Murphy exemption exempts owner-occupied buildings with four or fewer rental units from the FHA's prohibitions on discrimination based on familial status (families with children). It does not exempt owner-occupied small multifamily from the FHA's prohibitions on discrimination based on disability, race, national origin, religion, sex, or familial status as it relates to other protected classes. The exemption is limited to familial status advertising and occupancy restrictions. An owner-occupied 4-unit walk-up that rejects a tenant's ESA request because the tenant has a disability is still subject to the FHA's disability protections. The Mrs. Murphy exemption does not shield a small owner from a private right of action under 42 U.S.C. § 3613 or from a DOJ pattern-or-practice suit. It is the most commonly misread single provision in the FHA by independent owners.

Gap Six: The race, national origin, religion, and sex bases are unchanged. The May 22 memo is narrow. It addresses only assistance animal accommodation. It does not narrow HUD's enforcement of the FHA's protections against discrimination based on race, color, national origin, religion, sex, or familial status. A small owner who treats the memo as a license to be more aggressive on tenant screening will still face the full weight of the FHA on those other bases. The independent owner who focuses on ESA letters as the only FHA exposure in 2026 has misread the map by a wide margin.

The May 22 memo changed one layer. The other five layers — state fair housing acts, the private right of action, DOJ pattern-or-practice authority, FHA design and construction requirements, the Mrs. Murphy exemption's narrow scope, and the FHA's other protected classes — remain in place.

Section 2: One Market, One Metric — Texas, Where HUD's Memo and the State Fair Housing Act Are Now Diverging

The number to anchor on this week is the 32,321 housing discrimination complaints filed nationwide in 2024 per the National Fair Housing Alliance's 2025 Fair Housing Trends Report — of which disability-related complaints accounted for 54.6 percent, the largest single basis for the eleventh consecutive year. Of the 32,321 complaints, private nonprofit fair housing organizations handled 74.12%, FHAP agencies 20.90%, HUD 4.85%, and DOJ 0.14%, per the NFHA 2025 Fair Housing Trends Report. Texas is the largest state that operates its fair housing enforcement almost entirely through the FHAP workshare agreement with HUD, with the Texas Workforce Commission's Civil Rights Division as the primary intake point under Texas Property Code Chapter 301.

The May 22, 2026 HUD memo applies to the 27 percent. It does not apply to the 51 percent. A Texas tenant whose ESA accommodation request is denied by a small owner and is then dismissed by HUD under the new memo can refile with the Texas Workforce Commission Civil Rights Division under the Texas Fair Housing Act. The Texas Fair Housing Act is substantially similar to the federal FHA and was originally certified as substantially equivalent under 42 U.S.C. § 3616. The state agency can still find reasonable cause, can still conciliate, and can still refer to the state Attorney General for litigation if conciliation fails. The Texas Workforce Commission accepts housing discrimination complaints within one year of the alleged discriminatory act, in person at 1117 Trinity Street, Room 144-T, Austin, Texas 78701, by phone at (888) 452-4778 or (512) 463-2642, or by email at housingcomplaint@twc.state.tx.us. The state intake pathway is open regardless of the May 22 memo.

The implication for a Texas small owner holding a 4-unit walk-up in 2026 is that the dismissal at HUD is not the end of the enforcement pathway. It is the beginning of the state pathway. And the state pathway in Texas, California, New York, and the other FHAP states does not depend on the federal agency's enforcement appetite. The Texas Workforce Commission can still investigate. The state agency can still find reasonable cause. The state agency's reasonable cause finding can still lead to state administrative litigation or referral to the state Attorney General. The 51 percent of complaints filed with state and local FHAP agencies in 2024 — over 16,500 complaints — went through exactly this pathway. The May 22 memo affects HUD's 27 percent. The state pathway's 51 percent is unchanged.

The metric to track for the rest of 2026 is the FHAP intake rate in Texas, California, and the other large FHAP states. If the rate of disability accommodation complaints at the state level continues at the 2024 pace (over 17,600 disability complaints nationwide, the highest single basis), then the small owner who treats the May 22 memo as a license to reject ESA letters has misread the map by a wide margin. The map shows federal retreat on one side and full state enforcement on the other. The owner is sitting in the middle.

Today's 5-Minute Action

Audit your ESA request log against the six compliance gaps above before responding to your next accommodation request.

Open your tenant management system or a single spreadsheet. Label columns A through G: Request Date, Tenant Name, Animal Type, Documentation Provided, Outcome, State Agency, Federal Pathway. Pull every ESA accommodation request you have received in the last 12 months. For each one, document what documentation you requested from the tenant (a licensed mental health professional letter, a disability-related need statement, the duration of the clinical relationship), what outcome you issued (approved with no conditions, approved with pet fee waiver, denied with cause, denied without cause), and what state fair housing agency in your state would have jurisdiction if the tenant refiled (Texas Workforce Commission Civil Rights Division, California Civil Rights Department, New York State Division of Human Rights, etc.).

The audit surfaces two patterns. First, are you collecting documentation that meets your state's standard (California's 30-day clinical-relationship requirement for emotional support dog documentation, an established provider-patient relationship in Texas and several other states, and the federal FHA's general standard)? Second, are your denials grounded in the Fair Housing Act's "reasonable" and "necessary" framework — the same framework the Eastern District of Louisiana applied in Henderson v. Five Properties LLC when it held that a tenant's request to waive a $400 nonrefundable animal fee for her ESA was neither reasonable nor necessary under the FHA? A denial that does not articulate why the specific accommodation request is not reasonable or not necessary is the denial a private plaintiff's attorney will use to file in federal district court under 42 U.S.C. § 3613.

The audit takes 30 minutes. The audit prevents the 30-day complaint cycle that starts when a tenant whose ESA request is denied walks into the Texas Workforce Commission Civil Rights Division at 1117 Trinity Street, the California Civil Rights Department, or a federal district court clerk's office with a private right of action under the FHA. The May 22, 2026 HUD memo is not a shield. It is a federal enforcement retreat inside a state and federal compliance map that did not change.

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