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Condo | HOA Lawyers

You Can’t Simply Look the Other Way—New HUD/FHA Rules that Affect Your Associations

There are some new HUD (Housing and Urban Development) Rules that went into effect October 2016 which may have a significant impact on Condominium and Homeowners Associations, and although we very much dislike these new Rules for the reasons set forth below, it is important for Associations to be aware of these new liability traps.

The new HUD Rules state that there are two types of harassment (Quid Pro Quo and Hostile Environment) that are now recognized and identified by the FHA (Fair Housing Act).

Quid Pro Quo Harassment is an unwelcome request or demand to engage in conduct, made a condition related to providing services or facilities. For example, say an Association is responsible for replacing porch lights on the premises, and the Association’s handy man says to the owner with a light out:  “I’d be happy to fix that porch light for you, if you____________ for me…”  You can fill in the blank (use your imagination) for the unwelcome conduct.  You get the idea.  Quid Pro Quo Harassment might also arise when a person’s access to services or facilities is interfered with because of a failure to submit to demands.  For example, the Board says to an owner: “We are going to take away your pool key because you won’t go on a date with the Board president…”  If the owner finds the prospect of going on a date with the Board president to be “unwelcome,” this is another example of this kind of harassment now recognized by the FHA.

The second type of harassment now recognized is Hostile Environment Harassment, which is defined as unwelcome conduct that is sufficiently pervasive or severe as to interfere with the providing of or enjoyment of services or facilities.  Hostile Environment Harassment only applies to harassment based on a protected class (sex, religion, race, color, familial status, national origin, or handicap), and the harassment must be on the level of intimidation, threats, coercion, interfering with housing/living to be actionable under the new HUD Rules.  There are two recent cases that nicely encapsulate what an actionable “hostile environment” looks like in a community association context: Halprin v. Prairie Single Family Homes of Dearborn Park Association and Revock v. Cowpet Bay West Condominium Association—these are linked here for your reading pleasure.

The real kicker (and the Rule that we really dislike as Association counsel) is the Third Party Liability Rule, which states that Associations may be held liable as a “third party” if they can exercise control to try and stop the harassment, but fail to do so. With these new Rules, not only is the Association responsible for its own conduct, it is also liable for failing to take prompt action to correct discriminatory practices of employees/agents; and failing to take prompt action to correct discriminatory practices of third parties (could be other owners!), where the Association knew or should have known about the discriminatory practice.

So what does this mean for your Associations? Here are two scary facts you need to know:

  1. Know that THE ASSOCIATION can be in trouble (read: get sued) if a board member, agent, employee, or other owner creates a hostile environment that harasses a resident who is a member of a protected class. AND
  2. The resident doesn’t even have to complain to the Association to put the Association on the hook for liability. Instead, it can fall under the “should have known” category. For example: if the hired lifeguard or a board member observes racial discrimination by the pool of a resident, but takes no action, the Association can be liable.

Given these new Rules, here are some pointers to help your Associations protect themselves from liability:

  • Don’t look the other way. Act promptly on complaints from residents, especially when they relate to discrimination of a protected class.
  • Don’t wait for the resident to complain if you hear of discriminatory harassment from another source.
  • Educate board members and employees/agents about the types of discrimination they should look out for.
  • Adopt and publish Anti-Discrimination Policies—that will help educate and put owners on notice as well.
  • Enforce your rules to help end discriminatory conduct.

Consult your favorite Association lawyer for help with these Rules and Policies to set your Association on a path for success, in the face of these new liability traps.

To learn more about the new HUD/FHA rules and how they affect your associations, listen to this presentation.


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