Will Community Associations Get Trumped?

The election of Donald Trump as the President of the United States ushers in uncertainty for a variety of federal housing policies which affect the financing and governance of homes in community associations–condominiums, homeowner associations and housing cooperatives.  During the election campaign, Trump said little about the federal role in promoting homeownership.

But, his support for reduced government regulation and the 2016 Republican Platform provide clues about how a Trump Administration may impact community associations. Continue reading

New Fair Housing Harassment Rules Apply to Community Associations

Condominiums, housing co-ops and homeowner associations may be liable for the conduct of community residents which subjects other residents to “hostile environment harassment” under new rules issued by the United States Department of Housing and Urban Development (HUD).

The new fair housing rules, which apply beginning October 14, 2016, establish nationwide standards which HUD will apply in enforcing the federal Fair Housing Act with respect to alleged harassment based on race, color, religion, national origin, sex, familial status or disability. According to HUD, the rules do not create any new forms of liability under the Fair Housing Act but merely clarify HUD’s enforcement policies on “quid pro quo” and “hostile environment” harassment.  In addition, the rules clarify when a person may have vicarious liability for the actions of agents and employees in the context of discriminatory housing practices.

The new HUD rules define “hostile environment harassment” to mean “unwelcome conduct that is sufficiently severe or pervasive as to interfere with the availability, sale, rental, or use or enjoyment of a dwelling” and other housing-related activity.  Whether hostile environment harassment exists will be evaluated from the totality of the circumstances and from the perspective of a reasonable person in the aggrieved person’s position.

“Quid pro quo” harassment refers to circumstances where submission to an “unwelcome request or demand” is a condition related to housing transactions or services.

In addition to liability for a person’s own conduct and the conduct of that person’s agents and employees, the new fair housing rules also make a person liable for failing to take prompt action to correct and end a discriminatory housing practice by a third-party, where the person knew or should have known of the discriminatory conduct and had the power to correct it.

The HUD explanatory statement accompanying the rules specifically addresses the obligations of condominiums, homeowner associations and housing co-ops to act to correct a discriminatory housing practice by taking “whatever actions it legally can take to end the harassing conduct”.  And, HUD refers to the 2015 decision of the United States Supreme Court in Texas Department of Community v. Inclusive  Communities Project, Inc. in support of its position that a person’s failure to act to correct third-party harassment does not need to be motivated by a discriminatory intent in order to be liable for a Fair Housing Act violation.

Posted by Thomas Schild Law Group, LLC, attorneys for condominiums, homeowners associations and housing co-operatives in Maryland–including Montgomery County, Prince George’s County, Howard County, and Frederick County; and in the District of Columbia.

Congress Directs FHA to Ease Condominium Approval Standards

It took an Act of Congress!

But, more condominiums are soon expected to be approved by the Federal Housing Administration (FHA).  Only condominium owners in FHA-approved condo associations are eligible for loans insured by the FHA.  These loans offer borrowers lower down payments and more lenient credit criteria.

Under the Home Opportunity Through Modernization Act, passed unanimously by Congress and signed into law in late July, 2016,  the number of owner-occupied units allowed will be lowered from 50 percent to 35 percent of units unless the FHA promptly adopts guidance to support a higher number of owner-occupied units in a condominium.

The new law also prohibits FHA from denying approval to a condominium  because the condo imposes transfer fees to fund condominium operations.  Instead, the FHA policy on private transfer fee covenants must conform to the less restrictive standards of the Federal Housing Finance Agency (FHFA) for the purchase of loans by Fannie Mae and Freddie Mac. And, the FHA is encouraged to approve more mixed-use condos with both residential and commercial units.

For condos seeking renewal of its FHA-approved status, the FHA is now required to make condo recertification “substantially less burdensome”.

New FHA rules and guidelines are expected in the coming months in order to implement the congressional directive to make it easier for condominium associations to obtain and keep FHA-approval, making FHA-insured loans available to more condo unit owners and purchasers.

Posted by Thomas Schild Law Group, LLC, attorneys for condominiums, homeowner associations, and housing coops in the Maryland Counties of Montgomery County, Prince George’s County, Howard County, Frederick County, and in Washington, D.C.

Snow Disaster Aid Not Available For Community Associations

The Blizzard of 2016 left over 2 feet of snow blanketing many parts of Maryland, Washington D.C. and other areas from Virginia to New York.   To help with clean-up efforts after the historic storm, the District of Columbia and states throughout the mid-Atlantic region are expected to seek federal disaster funds.

Although many community associations have private roads which are available for public use, no federal snow clearing funds will be available for association roads and other common property.  Condominiums, housing co-ops, and homeowner associations are not eligible to receive federal funds to clean-up and repair common property after a natural disaster.

Under current law, the Federal Emergency Management Agency (FEMA) regards community associations as business entities, and therefore ineligible for most forms of federal disaster response and recovery assistance which is available to state and local governments. And, individual condo and co-op owners are not eligible for funds to repair commonly-owned building components..  That would change if Congress enacts legislation now pending in the United States House of Representatives.

The Disaster Assistance Equity Act of 2015 (HR 3863) would allow all community associations to receive funds for the removal of snow, trees and debris obstructing roads and for repair of critical community infrastructure that provide essential services of a governmental nature.  It would also allow condo and co-op owners to receive funds to repair commonly-owned items such as roofs, exterior walls, and elevators.

With all seats in the House and one-third of Senate seats up for election in 2016, now is the perfect time for community association leaders and residents to let their congressional legislators know the importance of enacting legislation to allow the availability of federal disaster aid funds for clean-up and repairs in community associations.

Posted by: Thomas Schild Law Group, LLC, attorneys for condominiums, homeowner associations, and housing co-operatives in Maryland and Washington, D.C.

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