HOA Liability for Discriminatory Harassment: A Primer

Title VIII of the Civil Rights of 1968, also known as the Fair Housing Act (“FHA”), is a federal law which prohibits discrimination in housing and housing-related services due to race, color, religion, sex, national origin, disability, and familial status. Because the FHA applies to entities that set terms and conditions for housing and provide services and facilities in connection with housing, it applies to HOAs and other community associations. By now, most HOAs across the country are already aware (or should be aware) that, in 2016, the U.S. Department of Housing and Urban Development (“HUD”) amended its federal housing regulations to firmly establish association liability for discriminatory conduct by its Board, directors, employees, and even by residents. Particularly concerning to HOAs are the new regulations regarding discriminatory harassment and third-party liability, which may also be the most difficult sections to understand for Board members and management.

Quid Pro Quo and Hostile Environment Harassment

Suppose that Happy Acres HOA’s on-site manager Mark has openly expressed his fondness for homeowner Helga by whistling and making cat-calls at her when she passes his office on her way to the gym. He has asked her out on dates several times, even after she declined and explained that she was married with three kids. One day, when Helga emailed Mark to request guest passes for her son’s birthday party, he responded by saying, “come see me in my office in your gym clothes and we’ll see what we can ‘work out.’”

Does Helga have a housing discrimination claim against the HOA? Is the HOA liable for its manager’s conduct?

HUD’s new rule adds 24 C.F.R. § 100.600, which formalizes an HOA’s liability for “quid pro quo” harassment and “hostile environment” harassment in the housing context. Quid pro quo (or “this for that”) harassment refers to an unwelcome request or demand to engage in conduct (due to race, color, religion, sex, national origin, disability, or familial status) where submission to the request or demand, either explicitly or implicitly, is made a condition related to the provision of services or facilities.  In the HOA context, this often occurs when an HOA manager or employee requests or demands sexual favors from a resident in the community in exchange for his/her use of community facilities or services, as depicted in the example above, where Mark, as an agent for the HOA, requested sexual favors from Helga in exchange for the guest passes she requested.

Hostile environment harassment refers to unwelcome conduct (due to race, color, religion, sex, national origin, disability, or familial status) that is sufficiently severe or pervasive as to unreasonably interfere with the provision or enjoyment of services or facilities.  This can occur when, as illustrated in the example above, a resident who is attempting to make use of an association’s services or facilities (e.g., a gym, pool), and is repeatedly subjected to cat-calls, sexual comments or other lewd conduct by an HOA employee or manager. Under the new HUD regulations, an HOA can be held liable for failing to correct the sexually harassing conduct.

Note that the actionable conduct is harassment based on sex, race, religion, and the other protected characteristics under the FHA. For instance, an HOA can be held liable where its security guard utters racial slurs at black and Hispanic residents, or where a Board member requires a Muslim condo owner to leave his backpack outside before attending the annual meeting of the members. But what if the harassing conduct is perpetrated by one resident against another? Can the HOA be held liable for neighbor-to-neighbor harassment? Under the new amendments to the FHA the answer is yes.

Third-Party Harassment Liability: HOA Liability for Harassment by Residents, Guests, and Other Third Parties

Perhaps the most consequential provision in the new regulations is the expansion of HOA liability for the discriminatory conduct of a third party, such as a resident, guest, an outside vendor, etc. Suppose that Helga, from the above example, was also being harassed by her neighbor Nate, who would often yell anti-Semitic comments to Helga and her family and draw swastikas on Helga’s car windows in the middle of the night. Helga complains to management, but the Board refuses to get involved in “neighbor-to-neighbor” disputes. Can the HOA be held liable for failing to take action against Nate?

Under 24 C.F.R § 100.7(iii), an HOA is “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.” (Emphasis added.) In other words, an HOA can be held liable for a resident’s harassment of another resident when:

(1) the harassment is based on race, color, religion, sex, national origin, disability and familial status;
(2) the HOA knew or should have known of the harassment;
(3) the HOA had the power to correct and end the harassment; and
(4) the HOA failed to take prompt action to correct and/or end the conduct.

As applied to our example, Nate’s harassing conduct was clearly based on Helga and her family’s Jewish religion. Helga complained to management, so the HOA knew of Nate’s conduct. But does the HOA have the power to correct Nate’s conduct? As explained by HUD, “a community association generally has the power to respond to third-party harassment by imposing conditions authorized by the association’s CC&Rs or by other legal authority.” For instance, if the HOA’s CC&Rs prohibit nuisances, the HOA could have imposed violation fines against Nate for causing a nuisance to Helga and her family. By failing to do so (or failing to do anything at all), the HOA will likely be found liable for Nate’s discriminatory conduct.

To avoid liability, an HOA Board must take some action to address any alleged discrimination by residents or other people within its authority. If a manager or Board member receives a complaint concerning neighbor-to-neighbor discrimination, some action must be taken. However, what action is appropriate is a fact specific question. Most neighbor-to-neighbor disputes do not really involve “discrimination,” at least not the kind of discrimination that we usually associate with Fair Housing complaints. But determining what is or is not “discrimination” is not always that easy.

This new law makes it clear that HOAs will likely need to look closely at and take action in what appears to be a neighbor-to-neighbor dispute if it appears that there is some sort of discrimination involved. The failure to do this may lead to the association being named in a lawsuit, and potential liability for monetary damages.

What’s an HOA Board to do?

So, you ask, what type of corrective action is required? As stated, that depends on the circumstances. It may include verbal and/or written warnings and demands that the offensive and discriminatory conduct stop, legal action, including harassment restraining orders and/or reporting the offensive conduct to the police. Note that if a Board member is doing the harassing, that Board member must, of course, be kept out of any executive decisions relating to the harassment complaint.

In light of the potential liability and the sensitivity of the situation, if an HOA receives an allegation of discriminatory conduct, it should contact legal counsel for guidance. Moreover, HUD recommends that HOAs do the following:

• Educate board members, employees and managers about the FHA and the types of discrimination about which they should be aware and on the look out for;
• Develop and publish anti-discrimination policies/rules for the association;
• Act promptly to address complaints from residents;
• Mediate disputes between residents;
• Use enforcement provisions under the CC&Rs to correct and end discriminatory conduct.

Sandra L. Gottlieb, Esq. is the managing partner and head of the transactional division of SwedelsonGottlieb, a law firm that exclusively represents homeowners’ association’s throughout California. Nicholas Marfori, Esq. is an associate with SwedelsonGottlieb working with its Association clients on transactional and litigation matters.

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