Community Association Liability for Resident Discrimination

Stephen G. Davis
Associate at Carmody MacDonald P.C.

St. Louis, MO, November 8, 2016 – On October 14, 2016, the U.S. Department of Housing and Urban Development’s new rules related to the Fair Housing Act (the “Act”) became effective.  The new rules, detailed in part below, may create liability for community associations resulting from a resident’s discriminatory, harassing or hostile actions toward another resident, and from the discriminatory acts of the property management company’s or board of directors’ agents or employees.

The Act, initially passed as part of the Civil Rights Act of 1964, prohibits harassment and discrimination in housing and housing-related transactions based upon race, color, religion, sex, national origin, disability and familial status.  The Act prohibits activities such as:  making discriminatory statements, refusing to rent or sell, denying access to services, setting different terms or conditions, refusing to make reasonable modifications or accommodations, discriminating in residential real estate-related transaction, retaliating and interfering with persons in their enjoyment of a dwelling.  The new rules provide formal standards for assessing claims of harassment under the Act for quid pro quo (“this for that”) and hostile environment harassment.  Before this rule, no formal standards existed for housing discrimination as they do for employment discrimination.  The rules provide guidance for providers of housing-related services, such as community associations and property management companies, to ensure that their properties are free of unlawful harassment, and to avoid any potential sources of liability.

Under the new rules, a community association may be found liable for “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.”  Thus, a community association does not have a general duty to end housing discrimination in its community, but does have an obligation to take “prompt action” when the community association has the power to act under the governing law or its own governing documents and should have known of the discrimination occurring in the community.  A prudent community association manager and board member will be sure to vigilantly respond to complaints raised by residents in conflict with other residents to avoid liability for failing to take prompt action in response to discriminatory housing practices.

In addition, a community association management company or board of directors may be found liable for the discriminatory housing practices by its agent or employee, even if that person was unaware that their conduct was a discriminatory housing practice.  A prudent community association management company and board of directors will take steps to educate its agents and employees about unlawful forms of discrimination, and will otherwise secure applicable insurance policies to provide coverage in the event of a violation.

The full text of the U.S. Department of Housing and Urban Development’s new rules is available here.


This post is for informational purposes only and does not constitute legal advice.

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