Discrimination at the Condo - Part II

Last column was a very legalistic and technical one that laid out the new possibility that condominium associations which normally do not fall under the guidelines of the Federal Housing Administration (the “FHA), now may be subject to discrimination claims under the FHA as a result of new rules passed in 2016. This column will be a little less technical, but just as important.

How do such concepts as Quid Pro Quo harassment, Hostile Environment harassment and Third Party/Vicarious Liability apply to condo associations and HOAs? Well, for years, HUD claimed the FHA rules did not apply to community associations, and they made a point of this when the Rules were passed. However, and despite HUD's protestations that these new rules do not change community associations' liability under the FHA, it is difficult not to see these changes as opening the door to a significant number of new claims against community associations. To date, associations have almost exclusively dealt with FHA claims related to facially discriminatory rules they adopted or to improperly handling a request for a reasonable accommodation or modification for a disabled owner. For instance, associations have been sanctioned under the FHA for not helping to accommodate fair requests for disabled persons. But the FHA was limited to these rather narrow areas.

Under the new rules, associations now need to be prepared for claims that their board members, agents, owners, or employees have created a hostile environment thateffectively harasses a resident who is a member of a protected class.If, for example, the Board of Directors enforces the rules governing use of the common area more strictly against children, the association will be open to a claim.

If an owner believes that s/he is being treated in a hostile manner because residents of another race are getting preferences s/he is not getting, the Association might face a claim. The real danger of a harassment cause of action for associations is not that their board members, agents or employees are actually creating a hostile environment, but that disgruntled residents may use this type of FHA claim as a way to protest a policy, rule or enforcement procedure of the association that they dislike. It should be noted, however, that the conduct complained of cannot be simply unfriendliness or even shunning of the disgruntled resident, the conduct must “be of sufficient magnitude to permit a finding of intimidation, coercion, threats or interference” in order to sustain a claim of harassment.

Putting these principles into more practical settings, an association can be held responsible if one resident is harassing another resident at the pool on the basis of race, the Board of Directors knows of this, and it fails to promptly correct and end discrimination.

It should be noted, however, that not every dispute between residents rises to the level of a fair housing complaint. If the harassment does not relate to the protected status of one of the parties, then there is no claim under the FHA.

Actions by an association to correct and end the discrimination by a third party must be prompt, and the association must use all means available to it to end the discrimination. For community associations this can include notices of violation, fines, suspension of privileges, and litigation to seek injunctive relief, and possible removal of the offending resident. In order to avoid liability under the FHA, an association may have to involve itself in disputes between owners and it may have to file an injunctive lawsuit to stop the discriminatory conduct of one resident towards another. Properly drafted documents that contain language that allow a Board to assess all enforcement costs against an offending Owner, can help keep litigation costs low and help end problems much sooner than through a long litigation journey.

If there is good news, it is that the association is only responsible for third parties over which it has some control or other legal responsibility. The bad news is all residents in the community and all contractors hired by the association will arguably fall into the “control” category.

So, how then do associations protect themselves from claims under these new rules? HUD offers some guidance. It recommends that housing providers do the following:

• Educate board members, employees and managers about the FHA and the types of discrimination about which they should be aware and on the look out for;

• Develop and publish anti-discrimination policies for the association;

• Act promptly to address complaints from residents, particularly when the

complaints potentially relate to a resident's status as a protected class;

• Mediate disputes between residents; and,

• Use enforcement provisions under bylaws to correct and end discriminatory

conduct.

And aside from all of the legalese, Board members and other community members have a duty to stop harassment and discrimination, not even as “community association” members, but as people.

Finally, thanks so much to CAI in general and Marla J. Diaz, Esq. for her very timely and helpful presentation on this at the 2018 Communicate Association Law Seminar. Hopefully that presentation and this column will help a lot of community associations stay out of trouble.