All associations should be aware of a regulation promulgated by the Department of Housing and Urban Development (HUD), which directly impacts community association with no exemptions. The regulation went into effect on October 14, 2016 and pertains to liability for discriminatory housing practices, found at 24 C.F.R. §100.7, which is now part of the Fair Housing Act (“Act”) and states as follows:
§ 100.7 Liability for discriminatory housing practices.
(a) Direct liability.
(1) A person is directly liable for:
(i) The person's own conduct that results in a discriminatory housing practice.
(ii) Failing to take prompt action to correct and end a discriminatory housing practice by that person's employee or agent, where the person knew or should have known of the discriminatory conduct.
(iii) Failing 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 and had the power to correct it. The power to take prompt action to correct and end a discriminatory housing practice by a third-party depends upon the extent of the person's control or any other legal responsibility the person may have with respect to the conduct of such third-party.
(2) For purposes of determining liability under paragraphs (a)(1)(ii) and (iii) of this section, prompt action to correct and end the discriminatory housing practice may not include any action that penalizes or harms the aggrieved person, such as eviction of the aggrieved person.
(b) Vicarious liability. A person is vicariously liable for a discriminatory housing practice by the person's agent or employee, regardless of whether the person knew or should have known of the conduct that resulted in a discriminatory housing practice, consistent with agency law.
The new regulation can result in a board member being held directly liable for “[f]ailing 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 and had the power to correct it.”
The type of harassment regulated by the Act includes: (i) quid pro quo harassment, which involves subjecting a person to an unwelcome request or demand and making submission to the request or demand a condition related to the person’s housing; and (ii) hostile environment harassment, which is unwelcome conduct that is sufficiently pervasive or severe as to interfere with the providing of or enjoyment of services or facilities. It should be noted that 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. Further, whether a hostile environment exists against a person of a protected class depends on a “totality of the circumstances” and the following factors: nature of the conduct; the context in which the incident(s) occurred; the severity, scope, frequency, duration, and location of the conduct; and the relationships of the persons involved. The regulation does not require proof of psychological or physical harm in order to determine the existence of the harassment. It also provides that a single incident may constitute a discriminatory housing practice if the incident is sufficiently severe to create a hostile environment or provides evidence of quid pro quo. Finally, it also prohibits retaliation against anyone for reporting a discriminatory housing practice to a housing provider or other authority.
One of the most important aspects of the harassment law involves its creation of a third party liability rule – which provides that an association may be held liable as a “third party” if it can exercise control to try to stop the harassment, but fails to do so. Accordingly, not only may an association be held liable for its own conduct, but also for any failure by employees, agents, property management firms, any contractor performing a task on behalf of the association and even other homeowners, to take prompt action to correct discriminatory practices of third parties where the Association knew or should have known about the discriminatory practice. Based on this concept, an association may be held liable if such a third party creates a hostile environment that harasses a resident who is a member of a protected class and the resident does not even have to complain to the Association for liability to arise.
Under the regulation, for example, a board of directors may be held liable when it fails "to take prompt action to correct and end a discriminatory housing practice by a third-party, where the [board] knew or should have known of the discriminatory conduct and had the power to correct it.”
While most community association documents ban conduct which is a nuisance that is an annoyance to other co-owners, or which is unlawful, governing documents may also grant the association power to impose fines (after notice and a hearing) or to seek injunctive relief. If the association were made aware that one co-owner was harassing another co-owner on the basis of a protected characteristic (race, color, sex, religion, national origin, familial status, or disability), the association now has a clear-cut obligation under the new regulation to intervene to the extent provided by the association documents.
The following are some scenarios in which an association’s duty to intervene might arise: (a) a co-owner blocks a handicapped parking space; (b) a co-owner exposes himself to one or other co-owners; (c) a co-owner makes racist remarks at the annual meeting; and (d) a co-owner defaces or destroys another co-owner’s religious holiday decorations.
Given this new regulation, here are some pointers to help your associations protect itself from liability: (a) do not look the other way. Act promptly on complaints from residents, especially when they relate to discrimination of a protected class; (b) do not wait for the resident to complain if you hear of discriminatory harassment from another source; (c) educate board members and employees/agents about the types of discrimination they should look out for; (d) adopt and publish anti-discrimination policies, which will help educate and put homeowners on notice as well; (e) enforce the association rules to help end discriminatory conduct including, without limitation, taking necessary legal action; (f) consider amending the governing documents, if needed, to address enforcement action against any violating homeowner including fines and legal action and recovery of all costs including, without limitation, legal fees; (g) forward a copy of the relevant correspondence to your insurance agent; (h) contact the association’s attorney to evaluate the claim; (i) investigate and interview the parties involved and any others who may be witnesses or have some knowledge of the alleged incident; and (j) document all efforts and discuss the process with the association’s attorney.
Further information regarding this topic may be found at:
In addition, one of our community association attorneys are happy to discuss this subject in more detail with you.