Can Your Homeowners Association Handle The Fair Housing Act?


As one of the touchier subjects in residential housing, the Fair Housing Act has a huge effect on community association management and homeowners associations. See IKO Community Management's breakdown:

What is the Fair Housing Act?

Under former U.S. president Lyndon B. Johnson, the Fair Housing Act (FHA) of 1968 is also known as Title VIII of the Civil Rights Act of 1968. Congress passed the act in an effort to impose a comprehensive solution to the national problem of unlawful discrimination in housing based on race, color, sex, national origin, class, familial status, and religion.

Your board must take into account that the FHA applies directly to the person who's inquiring about renting, selling, or negotiating housing as well as a person residing in or intending to reside in the dwelling after it's made available, sold, or rented and any person associated with the first person.

According to the U.S. Department of Housing and Urban Development website, "The Fair Housing Act protects people from discrimination when they are renting, buying, or securing financing for any housing," even in HOA communities. 

Because it's unlawful (and punishable by offense) to refuse to sell, rent, or negotiate housing based on the mentioned qualities, the law's goal is to eliminate racial segregation, housing and spatial inequality, and wealth disparities throughout the country. 

What about disabilities and handicaps?

Protected disabilities include if a person or someone associated with that person has a physical or mental disability, has a record of such disability, or is regarded as having such disability.

Who does the FHA apply to?

  • Direct providers of housing
  • Entities and associations that set terms and conditions for housing, including homeowners associations
  • Entities and associations that provide services and facilities in connection with housing, including community association management 

Are there recent developments?

The Equal Credit Opportunity Act of 1974 and Community Reinvestment Act of 1977 helped with discrimination in mortgage lending and credit needs, while the Fair Housing Amendments Act of 1988 was passed to give the federal government the power to enforce the original FHA to correct past problems with enforcement.

The amendment established a system of administrative law judges to hear cases by the U.S. Department of Housing and Urban Development and to levy fines. Because of the relationship between housing discrimination cases and private agencies, the federal government passed two more initiatives. 

The Fair Housing Assistance Program of 1984 was passed to assist public agencies with processing complaints, and the Fair Housing Initiatives program of 1986 supported private and public fair housing agencies in their activities. Between 1990 and 2001, these programs have resulted in more than 1,000 housing discrimination lawsuits and more than $155 million in financial recovery.

How can my HOA board members handle FHA?

Mortgage Lending Approval 

According to SFGate, HOAs that are found administering condominiums that qualify for FHA mortgages must "[feature] the condominium form of ownership...approved by the FHA or lenders can't make FHA-insured mortgage loans for them."

Whether a homeowners association wants to seek approval for FHA-approved mortgages is up to its governing body. 

Community Approval 

Did you know that FHA has strict financial and unit ownership as well as unit rental ratio guidelines to which an HOA must adhere? FHA also requires HOAs that oversee condominium communities to limit the number of units that can be rented out. 

Because of this, certain HOAs decide not to seek FHA approval of its community even though it brings in a larger pool of potential residents. Talk with your board members to see what's best for your community. 

If you do decide to become a Federal Housing Act-approved community, you must submit recertifications periodically. 

Does my HOA have to worry about only federal law?

No, federal regulations regarding fair housing and anti-discrimination requirements are the basis for each housing community and urban development's regulations. Each state can have individual, more expansive regulations.

For example, according to corporate law and litigation experts LeClairRyan, Virginia law includes the elderly (those who are 55 years or older) as a protected class.

For more information about HOA rules and bylaws, download IKO's guide by clicking below:

Guide to HOA Rules