FHA Issues New Rules On Discriminatory Treatment Between Owners


It is not unusual for owners to try to enlist the help of the board of directors to resolve disputes with their neighbors. Sometimes, the board is required to assist because a violation of the declaration or rules and regulations has occurred. In many instances, the board tries to stay out of the dispute and asks those involved to resolve it amongst themselves. New rules adopted by the United States Department of Housing and Urban Development (“HUD”), which became effective on October 14, 2016, has made it mandatory for associations to take action to bring a dispute to an end if it involves discriminatory conduct by one of the owners or occupants.

The Fair Housing Act (“FHA”) prohibits associations from engaging in discriminatory treatment based on race, color, religion, sex, handicap, familial status or national origin, which are often called protected classes. The FHA has, for years, prevented associations from targeting protected classes or treating them differently. If an association were to do so, it would be directly liable for it discriminatory conduct. Likewise, associations have long been held responsible for the actions of their employees and agents. This means that an association can be responsible for discriminatory conduct by its property manager.

Under the new rules, associations can be responsible for quid pro quo (this for that) harassment, where the association or its agents condition receipt of any of the benefits of ownership in the association based on an unwelcome request or demand. For example, an association board member cannot request an owner to engage in sexual relations in exchange for reducing fines levied against the owner’s account. While we hope this is unlikely, it can lead to discrimination.

The more likely issue for associations is the interpretation of what constitutes hostile environment harassment. The new rules define hostile environment harassment as unwelcome conduct because of an individual’s membership in a protected class, which is so sufficiently severe or pervasive that it unreasonably interferes with the availability, terms and/or privileges of living in a unit within the association. Beyond being liable for its own conduct and that of its agents and employees, an association can be liable for failing to take prompt action to correct the conduct of third-parties, including owners and occupants.

Before an association could be found liable for the actions of a third party, it must be shown that it knew or should have reasonably known about the discriminatory conduct and had the power to correct it. HUD makes it clear that a court must consider the amount of control the association has over the third party and what legal responsibility it has to correct the conduct. While it can always be argued that an association does not have the power to stop the conduct of its unit owners, it is clear that almost every association does have enforcement remedies that it can use when owners overstep their bounds such as fines for noxious and offensive behavior. The rare exception would be a homeowners association that was developed before 1985 and which has never adopted the Forcible Entry and Detainer Act.

HUD states that a totality of the circumstances test must be used to determine whether hostile environment harassment exists. This means that a court must consider all of the facts of an event to determine whether harassment is occurring. The factors, include, among others, the nature of the conduct, the context in which the incident or incidents occurred, the severity, scope, frequency, duration, and location of the conduct, and the relationships of the persons involved. The conduct can include written, oral or other conduct. Moreover, it does not have to involve multiple incidents in order to be actionable. To determine whether conduct is sufficiently severe or pervasive, a court will look at a reasonable person in the victim’s shoes.

What does all of this mean for associations? Since associations can be responsible for actions by third-parties if they knew or should have known about the discriminatory conduct, they must be more willing to take sides in disputes when discrimination is clearly or appears to be involved. Evidence of discrimination can manifest itself in many forms. If an owner versus owner dispute has any hints of being motivated by a protected class (race, color, religion, sex, handicap, familial status or national origin), the association should consult with its attorney to ensure that it is properly informed on how it must proceed. 

Robert M. Prince, Chatt & Prince P.C.

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