Boards Have a New Obligation to Stop Discrimination

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What’s the Fair Housing Act?

The Fair Housing Act protects people from discrimination. HOAs are “housing providers” under the Act - they may not discriminate against certain classes of people. Associations who do discriminate risk lawsuits and large fines.

Few associations discriminate on purpose, but some HOAs break the law by accident. The most common Fair Housing violations involve:

  • Making rules that target children
  • Refusing to bend parking rules for the physically disabled
  • Harassing the mentally ill

For more on the Fair Housing Act and HOAs, look here.

What are the New Rules?

In 2016 the government changed some of the rules for housing providers. The new rules say:

a person is directly liable for "failing to fulfill a duty to take prompt action to correct and end a discriminatory housing practice by a third-party, where the person knew or should have known of the discriminatory conduct."

Under these rules, associations must step in when a “third party” discriminates against one of its members. Examples might include:

  • Disputes between homeowners. If one member discriminates against another member, the association must act.
  • Disputes between vendors and homeowners. If an employee or contractor discriminates against a homeowner, the association must act.

In the past, the Act said only that boards must not discriminate. Now, the Act requires that boards prevent others from discriminating.

What Should Boards Do?

The new rule has confused a number of associations and management companies. In some places, managers have told boards to intervene in any dispute that involves a protected class (a very broad group). We feel that this advice is too extreme.

Instead, many association attorneys believe that a board must intervene only when there is evidence of discrimination. Of course, boards must still respond to nuisance complaints. But the Act applies only when there is discrimination.

With this change, boards should be cautious when they learn about problems between owners. If the problem involves discrimination against a protected person, the Act demands that boards step in.

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Comments

I am a board member.  I believe our current management company and a vendor has a very unhealthy business relationship. Recently we hired the vendor to renovate a pool building about 300' sqft consists of two restrooms. The project should have taken only a week at this point it been four months and still going. There were full weeks the vendor wasn't on the work site. Our homeowners didn't have access to the pool and spa for three months.  Some homeowners were really upset and called for the vendor to no longer work on our property.  That didn't sit well with our management company.  Our management company had the vendor address a letter to the Board and homeowners pointing me and another formal board member as the problem for the delay. 
Acting in a President capacity I inquired with some of the vendor's workers to their employment. Our vendor is licensed as a sole proprietor with no employees and workman comp insurance.  It was explained to our management company if the vendor uses subs they must be verified and listed on the contract.  This wasn't done.  Doing past HOA executive meetings our management company defended the vendor for not having workman comp insurance clearly when the contract called for it.
At this point, the vendor's letter was distributed during our monthly HOA meeting without the Board's approval and no rebuttal on my behalf. It pointed out harassment on my behalf as the reason for the long delay. Doing the four months I visited the work site three times no more than two minutes. During the same meeting, our management company presented new bids on behalf of the vendors for work totaling over $175,000.00. for a building 200 times larger than the pool building.
What can be done? Was my due process denied?  Should any management company be communicating with homeowners other than standard communication without the Board's approval? Should the vendor's alleged harassment be investigated by the Board before notifying homeowners?

 
 

This sounds like an ugly situation. While I can't comment on the specifics of the project, I can say that the board (collectively) employs the management company. It is very unusual for a management company to communicate with homeowners about a controversial matter without the approval of the board. However, if the remaining board majority do support this communication, I'm not sure there's much you can do about it.

If a majority of the board agrees, the board should provide clear guidelines to management about member communications. And if the board believes that there is illegal activity, it should hire an attorney very soon.