Hatfields and McCoys revisited: How the Fair Housing Act may obligate Associations to intervene

The federal Fair Housing Act (FHA), administered by the Department of Housing and Urban Development (HUD), has long been a part of a manager’s or Board Member’s vocabulary, mainly as a reminder that liability exists for improper denial of housing access based on certain protected categories. Generally, managers and Boards are careful to avoid discriminatory results and intent from their actions, rules and procedures.

Effective Oct. 14, 2016, the FHA rules were amended to include provisions that formalize certain standards for liability that may impact managers and Boards, creating a source of potential liability for not taking action in certain circumstances. Though these changes are logical where they impose liability for uncorrected discriminatory acts by employees or agents, some go further and create vicarious liability for discriminatory housing practices by agents or employees regardless of notice and liability for failure to correct a discriminatory housing practice by a third party where the Association knew or should have known of the discriminatory conduct and had the power to correct the HUD rules.

Changes were also made to 24 CFR Section 100.600 to add new quid pro quo and hostile environment claims under the FHA and to add new liability rules for housing providers and property managers that include liability for failing to correct or end improper employee or agent behavior, including vicarious liability for employee or agent acts under 24 CFR Section 100.7. At their core, the amendments are logical in that there should not be conduct where the terms of housing are conditioned on compliance with an unwelcome personal demand and the equal use of housing facilities should not be denied as a result. It is also logical that employers may be responsible for the uncorrected discriminatory actions of their employees or agents where the responsible party knows (or should know) and fails to take corrective action. However, the amendment also went a step further as it relates to Associations and may create some potential pitfalls for Associations and managers.

The extension in 24 CFR Section 100.7 is creating liability for failing to correct or end a discriminatory housing practice by a third party where the Association or manager knew or should have known of the discriminatory conduct and had the power to correct it. This means that there is potential liability for an Association and its manager when there is a discriminatory housing practice by a third party for which the Association or manager has the power to correct their wrongful action. Housing providers, a group in which an Association could be included, must take prompt action to correct and end a discriminatory housing practice until the discrimination stops, using the powers available to it. For an Association, this likely means using the avenues available in the governing documents, including rules, regulations and the Declaration.

The problem with this concept is that few, if any, Community Association governing documents have rules or covenants that prohibit discriminatory acts by neighbors upon each other. There is no dispute that an Association would have the requisite authority to address such improper conduct by its manager or on-site employee but the law is somewhat unclear and without further court guidance as to what an Association must do if it has no anti-discrimination covenants or specific rules.

Ostensibly, an Association may have to consider getting involved in a neighbor-to-neighbor dispute if there is an allegation of housing discrimination. This could mean issuing notices of violation or even seeking court enforcement, including injunctive relief or eviction remedies if needed. This is one extreme of the many views lawyers now take on this issue. On the other extreme, if an Association’s governing documents have no anti-discrimination and no anti-nuisance provisions there may be little that an Association can do to intervene in such a dispute.

The bottom line is that most Associations have some form of anti-nuisance provision in their governing documents that may obligate them to take some action, of some kind, in the event that there is a pending discrimination situation between neighbors. What specific action is necessary depends wholly on the circumstances and the available remedies in that Association’s declaration. Due to the potentially stiff penalties for housing discrimination, any Association with questions or pending discrimination issues should work with counsel. 

This Chuhak & Tecson, P.C. communication is intended only to provide information regarding developments in the law and information of general interest. It is not intended to constitute advice regarding legal problems and should not be relied upon as such.

Client alert authored by: Steven P. Bloomberg, Principal and James R. Stevens, Principal

This alert originally appeared in the Condominium & Community Association Focus newsletter.