New HUD Rules Expand Association Liability to Acts of Owners/Tenants

On September 14, 2016, the Department of Housing & Urban Development (HUD) adopted new rules that expand the scope of the Fair Housing Act (FHA) and further solidifies concerns that community associations can be held liable for the discriminatory acts of third parties, including owners, tenants, managers, and regular visitors.

The FHA prohibits housing providers – including community associations – from discriminating on the basis of race, sex, religion, national origin, familial status, disability, and retaliation for opposing conduct prohibited by the FHA.

The new HUD rule adopts several frameworks to prove discrimination on the bases of harassment (unwelcome and unsolicited conduct because of a person’s race, color, religion, sex, national origin, or disability) and “quid pro quo” (an exchange that is based on or involves discriminatory treatment). The rule goes on to impose direct liability on condo and homeowner associations where the association “knew or should have known of the discriminatory conduct and had the power to correct it.”

What does this mean for our community association clients who, for example, are aware of the peeping tom, the neighbor who makes regular racist comments, or complaints of indecent exposure at the community swimming pool? There may be an obligation to: a) impose a rule; b) enforce an existing rule; and c) file a lawsuit if the discriminating party fails to comply with the FHA.

Despite the new HUD rule, there is not a lot of guidance out there and we do not want our association clients to become case studies. If you identify potential discrimination within your community, we encourage you to reach out to counsel. Regular review of an association’s governing documents for FHA compliance could go a long way to preventing litigation in light of the ever-changing landscape of discrimination in the housing context.