Article Courtesy of  The Daily Business Review

By Jonathan S. Goldstein

Published September 4, 2020

As Americans throughout the country protest systemic discrimination in the aftermath of George Floyd’s tragic death, it is important for communities to also combat the pernicious practice of housing discrimination. Multi-family housing, condominium associations, and homeowners associations, along with other types of housing providers, are bound to comply with the “Fair Housing Act” (FHA), Title VIII of the Civil Rights Act of 1968, as amended, which prohibits discrimination in the sale, rental and financing of dwellings, and in other housing-related transactions, because of race, color, religion, sex, familial status, national origin and disability. Over the last 10 years, FHA legal opinions in court cases and administrative regulations have begun to ask more of all housing providers and community associations.

In 2013, the Department of Housing and Urban Development (HUD) adopted a rule that defined potential liability based upon a housing policy’s discriminatory effect. See 24 CFR Section 100.500 (2013). A disparate impact test means that even in the absence of any discriminatory intent, policies appearing neutral on their face can be challenged based on their potential discriminatory effect. Specifically, practices such as criminal background checks and credit screenings are under increased scrutiny and threaten potential liability, depending on how the screening criteria is applied, the circumstances, and whether the defendant can prove a substantial and legitimate non-discriminatory interest furthered by the policy. In 2015, the U.S. Supreme Court issued a decision, Texas Department of Housing & Community Affairs v. Inclusive Communities Project, applying a disparate impact test that made it easier to bring lawsuits against housing providers and community associations in relation to leasing and sale restrictions. The case, which involved the allocation of tax credits to housing providers, referenced but also buttressed the new 2013 regulations.

On April 4, 2016, the Department of Housing and Urban Development (HUD) issued guidance from its Office of the General Counsel regarding the application of the FHA on the use of criminal arrests and convictions by housing providers. HUD’s position is that restrictions to housing based on criminal records are likely to have a disproportionate impact on minorities. While the FHA does not ban housing providers from considering criminal history in applications, associations and housing using criminal background checks must be able to prove the policy is necessary to achieve a substantial, legitimate, nondiscriminatory interest. HUD advises that a policy or practice that fails to consider the nature, severity, and recency of criminal conduct is unlikely to satisfy the requirement.

In 2016, HUD also approved regulations recognizing and codifying definitions relating to several types of harassment claims under the FHA, including claims alleging hostile environment and quid pro quo harassment. See 24 CFR Section 100.600 (2016). Hostile environment harassment refers to unwelcome conduct in a housing environment that is severe enough to interfere with the enjoyment of a home. Quid pro quo harassment refers to unwelcome requests or demands to engage in conduct made a condition to the enjoyment of housing benefits. The regulation created definitions in an attempt to formalize and bring clarity to claims arising from these forms of discrimination. The regulations further formalized the standards and factors involved in the investigation and resolution of such claims. Additionally, liability was expanded for failing to control discriminatory actions by a third party, which affects associations because it increases the potential for liability for failing to enforce governing restrictions and laws that would prevent discriminatory harassment, such as the case where a resident harasses another resident within a protected class. See 24 CFR Section 100.7(a)(1)(iii).

Although the Fair Housing Act is federal law and binding on all United States jurisdictions, Florida has its own version of the Fair Housing Act. See Sections 760.20-760.37, et. seq., Fla. Stat. While sections of the Florida Fair Housing Act could encompass aspects of disparate impact, hostile environment, and quid pro quo harassment claims, it is still unclear to what extent that Florida Courts will embrace these causes of action. Additionally, the agency rulemaking authority of the Florida Commission on Human Relations is narrower than that of HUD. Amendments to the Florida Fair Housing Act that recently took effect require reasonable accommodations for emotional support animals of individuals with disabilities, while correspondingly clarifying what documentation or evidence of such need can be sought and creating criminal penalties for false claims of disabilities and false documentation supporting an accommodation request. See Ch. 20-76, Laws of Florida. Other changes this year make it easier to obtain an exemption from the Florida Fair Housing Act for older person housing by removing periodic reporting requirements.

In 2019, HUD issued proposed rulemaking that would modify the disparate impact test as codified in HUD regulations. See Section 84 FR 42854. Among other changes, these proposed amendments would modify remedies, create a new burden-shifting framework for claims, and narrow vicarious liability claim based upon a disparate impact to principal and agent relationships. This proposed rulemaking, which threatens to make it more difficult to prove disparate impact claims, is not adopted at time of writing. Recently, HUD issued a rule to repeal a 2015 Affirmatively Furthering Fair Housing rule, which placed requirements on local governments to monitor and identify impediments to fair housing as a condition for receipt of federal funds, and to come up with plans to combat such barriers.

Given these developments, laws that combat discrimination in housing are at a crossroads. Even as society’s consciousness expands in the fight against discrimination, housing providers must grasp the paradigm shift from a more limited focus on intentional discrimination to an appreciation that societal forces have also had a disparate discriminatory effect on protected classes; that it is no longer sufficient to stand idly by to allow discriminatory harassment or effects to occur when one has the power to do something about it.