HUD Proposes to Restore Discriminatory Effects Rule for Housing Discrimination Claims

Although the Fair Housing Act does not specifically mention the housing practices, policies and services of condominiums, homeowners associations, and housing cooperatives, the courts and United Stated Department of Housing and Urban Development (HUD) have long-recognized that the Fair Housing Act applies to prohibit discrimination with respect to owners and residents of such communities. The federal fair housing law prohibits discrimination based on race, color, national origin, religion, sex, disability, and familial status. Community association boards are also required to affirmatively take action to prevent harassment and a hostile housing environment caused by the conduct of owners, residents and managers.

In the final months of the Trump Administration, HUD issued a rule which made it more difficult to establish a violation of the Fair Housing Act based on the discriminatory effects, or disparate impact, of a facially-neutral housing policy or practice.  The 2020 rule would have superseded a 2013 HUD rule regarding the proof necessary for such a fair housing violation. However, the 2020 rule never went into effect due to a federal court ruling that the rule was not consistent with a 2015 U.S Supreme Court decision, Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc., which recognized housing discrimination claims based on discriminatory effects even if a policy or practice was not intended to be discriminatory.

In June, 2021, HUD proposed to rescind the 2020 rule and restore a 2013 HUD rule regarding the burden of proof for housing discrimination claims based on the disparate impact of a facially-neutral housing policy or practice such as occupancy restrictions, no-pet policies and English-only policies.

HUD’s current position is that the 2013 rule established the proper evidentiary standard and procedure to show that a policy or practice that has a discriminatory effect on a protected class of persons is unlawful if it does not serve a substantial, legitimate, nondiscriminatory interest or if a less discriminatory alternative could also serve that interest. According to HUD, the Trump-era rule complicated that analysis by adding new pleading requirements, and new defenses, which make it harder to establish that a housing policy or practice has discriminatory effects in violation of the Fair Housing Act.

The proposed HUD rule has been supported by the Maryland Attorney General, District of Columbia Attorney General and attorneys general in 21 other states in comments submitted to HUD in August, 2021. They jointly advised HUD that discriminatory effects liability provide state fair housing enforcement agencies with “a critical tool to combat this form of discrimination where direct proof of overt bias is hidden or impossible to ferret out”.

Because a federal court has prevented the 2020 HUD rule from taking effect, the 2013 standards for claims based on discriminatory effects of a policy or practice remains in effect. And, it seems likely that HUD will soon formally rescind the 2020 rule.

Posted by Thomas Schild Law Group, LLC which represents condominiums, homeowner associations, and housing cooperatives throughout Maryland (including Montgomery County, Prince George’s County, Howard County, Frederick County, and Baltimore) and Washington, D.C.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.