HOA/COA: Can Associations Screen Potential Buyers/Tenants?

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Introduction

All too often, homeowners who are a part of associations find themselves among non-compliant neighbors. In order to limit these potential non-compliant or nuisance neighbors, some associations implement screening or background checks on potential buyers or tenants

Can my HOA Screen a Potential Buyer or Tenant?

Many issues which may arise for condominium and homeowners’ associations are governed in the Louisiana Revised Statutes under the Louisiana Condominium Act and the Louisiana Homeowners Association Act.  However, there is one notable absence: the potential screening of new buyers.

There are currently no provisions regulating the practice of screening potential residents in Louisiana; however, the federal Fair Housing Act still holds that associations cannot discriminate against potential buyers who fall into certain protected classes.

The Federal Fair Housing Act protects people from discrimination when they are renting or buying a home, getting a mortgage, seeking housing assistance, or engaging in other housing-related activities.

Who Are the Protected Classes?

The Fair Housing Act prohibits discrimination in housing because of:

  • Race
  • Color
  • National Origin
  • Religion
  • Sex
  • Familial Status
  • Disability

What is Prohibited?

The Fair Housing Act makes it illegal to take any of the following actions because of race, color, national origin, religion, sex, familial status, or disability:

  • Refuse to rent or sell housing
  • Refuse to negotiate for housing
  • Otherwise make housing unavailable
  • Set different terms, conditions or privileges for sale or rental
  • Provide different housing services
  • Falsely deny that housing is available

The above list includes the most common discriminatory methods, but a full list can be found here.

One set of people who are not protected under the Fair Housing Act are those with criminal backgrounds.  Since the Fair Housing Act does not include criminal history protections, those with a criminal background are not safe from discrimination.  However, the federal government has taken steps to reduce the disparate impact of discrimination in housing due to criminal background.  It is now forbidden to issue blanket statements regarding the denial of criminal applicants.

New Resident Screening

The relevant section of the Fair Housing Act to new resident screening is located at 42 U.S.C. §3604(a) and provides that it is unlawful to refuse to sell or rent after the making of a bona fide offer, or refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin.

At the same time that HOA’s have a duty not to discriminate, they also have a fiduciary duty to protect the health, safety, and welfare of the members and association property.  There is no guidance from the federal government as to denials based on prior rental history or credit reports; but, with the way that the laws are changing to address disparate impacts from historical discrimination, it is probably not prudent to have a credit score requirement.

The bottom line is, so long as an HOA or Condominium Regime has proof that its screening policies are not in place in order to discriminate against a protected class, the screening can carry forward, but as the law continues to change in light of historical discrimination, intensive resident screening could lead to significant negative consequences.

Should you have any questions or you would like to discuss this issue in further detail, please do not hesitate to contact us to schedule a free consultation.

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