Does HUD’s new harassment rule make HOAs, condos, co-ops state actors?

By Deborah Goonan, Independent American Communities

George Staropoli published a fascinating and important blog this week, entitled We don’t want no stinkin’ government protection for HOA members.

It is well worth reading and commenting. You can do so here:

We don’t want no stinkin’ government protection for HOA members

In his blog, regarding a recent newsletter from a California HOA attorney, Staropoli ponders:

This California Adams-Davis-Stirling newsletter (“California’s Leader in Community Associations Law”) says it all. Speaking to a new federal law as of October 2016 (that applies to all states), Code of Fed. Reg. §100.7(a)(1)(iii)),

1. “The law requires that boards take prompt steps to investigate and end harassment.
2. This intrusion by the federal government into the affairs of homeowners associations is unprecedented.
3. The burden the new regulations create will likely outweigh any intended benefits regulators had in mind.
4. Associations are not cities with paid city council members, police forces, and governmental immunities.
5. Making boards an arm of the federal government is going to make it harder to recruit and keep volunteers on boards.”

Items (1) and (5) make the HOA a state actor due to the mandatory “order” to investigate harassment complaints relating to Fair Housing laws. Item 5 deals with one of the fundamental flaws of the HOA legal scheme — unpaid and untrained volunteers with no local government experience to run HOAs. What would you expect? You get what you paid for. That’s a gold mine for HOA attorneys, who have created these pro-HOA state laws and adhesion contract CC&Rs.

 

For the reader’s reference, the federal law referenced above originated with a new rule proposed by U.S. Housing and Urban Development (HUD), meant to curb discrimination and harassment of protected classes under Fair Housing laws.

You can read more about the rule and its critics here:

HUD “Quid Pro Quo” rule clarifies HOA duty to stop discrimination among residents

HUD “Quid Pro Quo” rule clarifies HOA duty to stop discrimination among residents

 

Of course, many attorneys and management companies that serve association-governed communities are opposed to this new policy. They view it as “government interference” by mandate that makes their jobs more difficult.

It’s so much easier to look the other way and allow harassment and discrimination to occur without intervention, and use the worn-out excuse that HOAs, as private corporate organizations, need not bother with adherence to federal law.

But considering the millions of dollars in federal funds that are gifted to real estate developers in the form of tax credits and deductions to construct residential housing, not to mention millions of tax dollars in previous bailouts of the GSEs that extended toxic FHA insured mortgages to the industry’s consumers (home buyers), it seems only fair to expect leaders of association-governed communities to support and uphold Fair Housing laws.

And, thank you, George Staropoli, for pointing out the obvious admission of a prominent California attorney that HUD has just created more than 330,000 state actors in the form of association-governed common interest communities.

Touchè!