November 6, 2009

This week's tip is taken from a new article that explains three areas of the federal Fair Housing Act (FHA) that are critical for condo and HOA boards to understand. Here we'll cover just one area: protected classes.

The FHA prohibits all forms of discrimination based on protected classes. With more associations foreclosing on delinquent owners and then renting out the units, you must understand the act's prohibition on rental discrimination. Under the act, discrimination on the basis of protected classes—race, color, national origin, religion, sex, disability, familial status, and age—is barred.

Bob Tankel, principal at Robert L. Tankel PA in Dunedin, Fla., a law firm that advises associations, recommends basing as much of your rental decisions as possible on factors that can be documented on paper, such as financial scores. "Make sure whatever criteria you're using to determine who's going to rent or occupy property the association is renting out is in compliance with state and federal fair housing laws and the U.S. Constitution," he says.

He adds, "You can find out just about everything you need to know on paper. The less physical interaction your association has with the potential occupants, the better. Here in Florida, testers are routinely sent out to properties being rented, and they'll see if there's discriminatory steering going on. This isn't an abstract idea. It goes on."

The issue of discrimination on the basis of protected classes also arises in associations that screen residents. "Most associations in Florida have a screening process where a new purchaser has to complete an application and can be approved or denied by the board," says James Donnelly, president and CEO of Castle Group, a property management company in Plantation, Fla., that manages 55,000 association units. "That's where you have to be incredibly careful. Our advice is that you don't refuse any application unless you've received legal advice."

Bob Tankel goes even further. "Most communities have no authority to physically interview someone," he explains. "I've asked many board members, 'Show me the rule where it says you have that authority,' and they have no answer. More communities have gotten in trouble with screening people than have been well served by it."

Finally, remember that each state has passed its own version of a fair housing or civil rights act that prohibits certain types of discrimination. Some states add such factors as age or sexual orientation to protected classes. Be sure to check with an attorney in your state to know the specific rules.

For more information about the FHA and what you should know, see our new article. Go there now »

Best regards,
Matt Humphrey
President