It’s a bright spring morning and the market is beginning to defrost from its long winter chill. Spring purchasers are out, including Polly Purchaser who is looking to move her family to a new community. While looking at the community, Polly asks a board member what the community is like. The Board member responds by saying, “it is a great neighborhood, very quiet. Not too many kids though.”
Polly moves on and looks at the community next door. While speaking to the board president, he states that the community is a great area and very quiet because we encourage our owners to sell to families without kids.
While the comments from the first Association are fine, the comments by the second exposes that Association to liability for discrimination. The Fair Housing Act (“FHA”) establishes a number of protected classes that an association may not discriminate against. These classes include familial status, race, age, sex, religion, national origin and disability. Even if an association may not have a formal policy to discriminate, that association may be subject to a discrimination claim based upon the informal actions of the board or a committee with apparent authority to govern the association.
If an association’s board expresses a preference for owners to sell to families without children, that board has discriminated even though there was no formal discrimination policy. Another example of discrimination is if there is a pattern in a community of requiring owners of a certain national origin to complete more paper work then other owners, this pattern could be determined to be discriminatory in nature even though no formal policy exists to require that paperwork.
As demonstrated by the examples, the FHA not only applies to the formal actions of an association, but also to the informal actions of the board. Any actions that have a discriminatory affect on a protected class could result in liability exposure. In the examples, each board member was merely describing the neighborhood; however, one board described a policy to discourage sales to families with children. This simple difference could expose that association to liability.
In a recent case, an association, was required to pay $112,500 to a victim of familial discrimination and an additional fine of $15,000 (United States v. Latvian Tower Condominium Association, Inc.,) as a civil penalty for the systematic efforts to prevent sales to families with children. So you see, discrimination claims are not taken lightly and can result in severe penalties to an association.
In conclusion, an association must treat all owners and prospective owners the same. This means in both written policies as well as in Board actions. Treating a member of a protected class differently than others could result in a significant price for an association to pay.