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You probably heard about the HUD memo. Maybe someone on your team forwarded it, maybe you saw a headline. Either way, the instinct to wait and see is understandable, but it’s the wrong call if your properties span multiple states and your ESA process hasn’t been audited recently.
On May 22, 2026, HUD’s Office of Fair Housing and Equal Opportunity released an internal memo that formally separates emotional support animals from service animals at the federal enforcement level. In plain terms: FHEO is no longer going to investigate ESA accommodation complaints the same way it investigates service animal complaints. That sounds like a win for housing providers. In some states, it is. In others, it changes nothing. And in a few, moving too fast could make things worse.
Logan Miller, co-founder of OurPetPolicy, walked through the implications in a webinar on May 28. OurPetPolicy processes ESA requests across hundreds of thousands of units, which means Logan sees the actual pattern data not just the guidance. What follows is a portfolio manager’s read on what this means operationally.
Why Your State Mix Matters More Than the Memo
The most important thing to understand about the May 22 memo is what it does not do. It does not change the Fair Housing Act. It does not override state law. It changes how HUD’s own enforcement arm will prioritize complaints.
More than half of U.S. states have their own statutes that specifically require housing providers to accommodate emotional support animals. Those states incorporated the old HUD guidance into state law. In those states, your civil rights department will still investigate ESA complaints, you are still required to make accommodations, and the federal memo is effectively irrelevant to your day-to-day exposure.
The states where this opens up room are those without ESA-specific statutes. Idaho, Michigan, Texas, and Alaska are examples cited in OurPetPolicy’s webinar. In those states, housing providers now have a more defensible position when treating an ESA request as a standard disability accommodation request rather than a categorical exemption from pet policies.
If your portfolio spans multiple states, the memo creates a split playbook. The same process cannot apply uniformly across all your properties right now. That is the operational problem to solve.
What This Means for NOI and Why You Can’t Ignore Either Direction
The revenue angle here cuts both ways, and both matter to your NOI report.
On one side: in states where the memo creates operational flexibility, properties that previously waived pet fees for a significant portion of their animal-owning residents may now have a path to recover some of that revenue. A 300-unit property with 40% pet ownership, half of whom submitted ESA letters to avoid fees, is looking at a meaningful recapture opportunity in non-ESA states. Run that number for your portfolio before your next NOI review.
On the other side: moving too fast in the wrong state, or without a documented process, creates the kind of complaint exposure that costs far more than the fees you recover. A single Fair Housing complaint that goes to investigation, even one you win is a significant time and legal cost drain. A settlement is worse. The memo does not eliminate that risk; it shifts where it comes from.
Residents typically have two years to file a discrimination complaint. Decisions you make this quarter based on the memo will be evaluated against whatever the law looks like at investigation time. Document everything now.
The Fraud Problem Your Process Probably Isn’t Catching
Separate from the memo, there is a structural problem in the ESA market that affects every portfolio regardless of state: roughly 60% of ESA requests OurPetPolicy processes come in with letters purchased from online letter mills. These are services that charge $50 to $150, run a short questionnaire, and deliver a signed letter within hours. The letters are signed by real licensed providers. They look legitimate. Most site teams have no framework for identifying them.
The May 22 memo actually cites these online services as a primary reason HUD changed its enforcement stance. The fraud volume became unsustainable. But the memo alone doesn’t solve the problem at the property level. Your site teams still need a process for identifying fraudulent letters, documenting the reasoning, and engaging in the interactive process before any denial.
Red flags your teams should know: expiration dates exactly one year from issuance, ESA “verification numbers” or QR codes, language about hotel and airline accommodation rights, no verifiable clinic contact information, and letters that run three to four pages of boilerplate. Legitimate letters are usually short. Legitimate providers don’t register their letters with external databases.
What a Defensible Process Looks Like Right Now
Given the state-by-state complexity and the ongoing legal work being done to map it, here is the approach that protects you operationally today:
- Document every accommodation request regardless of state. The memo can be reversed. A complaint filed today may not be investigated for 18 months. Your documentation record is your defense.
- Do not stop engaging in the interactive process for incomplete submissions. If a letter doesn’t establish a qualifying disability, ask for clarification. Closing that process without engagement is a liability.
- Identify which of your properties are in states with ESA-specific statutes and which are not. Your process should not be uniform across those two categories right now.
- Train your site teams on the specific red flags for fraudulent letters. The decision to push back on a letter needs to be evidence-based and documented.
- Audit your current pet fee capture rate. In non-ESA states, you may have properties with a significant gap between animals on-site and animals paying fees.
OurPetPolicy is hosted a follow-up webinar on June 25 specifically focused on the state-by-state breakdown and what a compliant, portfolio-wide process looks like in the current environment. If you manage properties across multiple states, that session will be worth your time.
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