U.S. Supreme Court Ruling on Fair Housing Law Could Have Wide-Ranging Impact on Community Associations
The U.S. Supreme Court has been in the news a lot which is not surprising given its recent newsworthy rulings. However, there is one ruling that could impact the community association industry profoundly. The 5-4 Supreme Court holding in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, could have wide-ranging impact on community association boards. Previously, a board was diving into dangerous waters when it passed rules and restrictions with the intent to treat people differently. Under the new Supreme Court ruling, a board can be held liable for housing discrimination whether or not anyone on the board intended to discriminate so long as the rule or restriction has a disparate impact on a legally protected group of people.
Boards will have to show that (a) they had a good reason for the rule or restriction and (b) there was no way in which to accomplish their reasonable goal in a manner which had a less disparate impact.
So how could this impact your community?
Many members wish to ensure the continued success of their community by regularly amending the documents. Often those amendments allow their boards to thoroughly screen new tenants and new purchasers to ensure that newcomers will not present a financial burden on association (if a member cannot pay assessments, the remaining members must make up the deficit) nor will they present a threat to the health, safety or welfare of the community.
Do the following restrictions which are fairly standard in the community association arena create disparate impact concerns?
- Screening applications which inquire about previous criminal background?
- Screening applications which inquire about credit score, employment status and other indicators of financial stability.
- Requirements that a new purchaser have a certain equity interest in the property being purchased.
- Rules involving access to an association’s pool and other common areas that may impact families with children
While the ruling isn’t a reason to panic or to abandon any attempt to pass and enforce reasonable rules in your community, it does make it more important than ever that you discuss your restrictions with your association attorney prior to implementing same in order to decide whether or not there will be a disparate impact and whether or not there is a way to accomplish your goals without creating a disparate impact.
The four dissenting justices voiced their concerns that the majority decision is based on the Griggs v. Duke Power Co. case rather than focusing on the actual intent and text of the Fair Housing Act. In the Griggs case, 401 U.S. 424 (1971), the Court held that black employees could recover from their employer under Section 703(a)(2) of Title VII of the Civil Rights Act of 18-964 without proving that the employer’s conduct (the employer required a high school diploma or a qualifying grade on a standardized test as a condition for certain jobs) was motivated by a discriminatory intent.
Disparate impact is a much different threshold than disparate intent.