HUD Rule Changes How HOA’s Address Neighbor Disputes
Historically, Associations have avoided interjecting in neighbor-to-neighbor disputes. Heavy walking, loud parties, surround sound systems, and slamming doors were just a few of the commonly voiced resident complaints, and up until now, the response from most Association Boards was that the residents must settle these matters amongst themselves.
Effective October, 2016, The Department of Housing and Urban Development (HUD) issued a rule known as “Quid Pro Quo and Hostile Environment Harassment and Liability for Discriminatory Practices” under the Fair Housing Act. Under this new rule, housing providers, which includes Associations, could be held liable for discriminatory conduct between neighbors if the Association was aware of the conduct and had the power to correct it. HUD’s new rule will likely require Associations to become involved in certain neighbor-to-neighbor disputes and take action based on the details of the complaint.
As you are likely aware, Associations are subject to the Federal Fair Housing Act, which prohibits discrimination in the right to use and enjoy housing based on race, color, religion, sex, familial status, national origin or disability. The new HUD rule defines “hostile environment harassment” as unwelcome conduct towards a person in a protected class such that it interferes with the person’s enjoyment and use of his or her residence. This harassment may be verbal, written or some other disruptive conduct.
At PMP Management, we err on the side of caution when providing our Association clients business advice. Based on the new HUD rule and our strong recommendation to uniformly enforce violations, we advise our Association Board Member clients to take some form of action to address all nuisance complaints. The action the Board determines appropriate is based on a multitude of factors, but the following are a few options, ranging from a friendly letter to legal intervention:
▪Friendly Warning Letter – For alleged nuisances without expressed discriminatory allegations, Boards may determine that a Friendly Warning Letter is appropriate. A friendly warning letter ensures the Association has addressed the matter, in writing, and should be considered the minimum step necessary to address nuisance allegations. If you do nothing else, at least send a friendly warning letter.
▪Violation Letter – If the Friendly Warning Letter does not resolve the nuisance complaint and the Board feels the next step is warranted, an official violation letter may issued. Violation letters may or may not include an official call to hearing before the Board of Directors, depending on the Association’s adopted violation policy.
▪ Call to Hearing – Depending on the Association’s adopted violation policy, the violation letter may have included a call to hearing notice for the accused party to meet with the
Board of Directors. If the violation letter does not include a call to hearing notice and the nuisance is not cured by the issuance of a violation letter, the Board may decide it is necessary to issue a written call to hearing notice. Hearings before the Board provide a great opportunity for the accused party to share their feedback and hearings are a critical step to ensure due process. The Board may also determine it necessary to levy a punitive monetary fine against the offending party at the hearing based on the Association’s adopted violation policy fine structure.
▪ Internal Dispute Resolution (IDR) – When call to hearings and monetary fines do not resolve an on-going nuisance, or if the Board feels that the alleged nuisance requires immediate action, Boards may decide to proceed to IDR, also referred to as “Meet and Confer.” IDRs are in-person meetings that include both the owner alleging the nuisance and the defending owner. An IDR will also typically include one appointed member of the Board who will act as a mediator to try to resolve the nuisance. Some Boards prefer a management representative attend as well to take minutes and assist in drafting the resolution agreement. Any agreement between the two owners to resolve the dispute should be memorialized in writing and executed by both parties. Should the parties elect to bring legal representation they may do so, but we would recommend the Association have legal present as well.
▪ Legal Remedy – When the enforcement options listed above are not successful, the Board will want to consider whether a legal remedy is warranted. Too often Boards are reluctant to engage their attorney for fear that it will be expensive. I have found it is far more expensive in the long run if a Board avoids engaging legal counsel to handle litigious matters. If the Board receives an alleged nuisance complaint that leads to expressed allegations of discrimination, the Board should engage legal counsel immediately. The Association should notify both parties that the matter has been forwarded to the Association’s attorney, who will be the point of contact moving forward.
Ultimately, how to address nuisance allegations is always a Board decision, but we recommend taking action based on the severity of the nuisance, even if it is simply issuing a friendly warning. Doing so will mitigate liability to the Association and ensure that the Board Members are meeting their fiduciary obligation and following the business judgement rule.
If you have questions or additional requests for information, please feel free to e-mail Brad Watson, President of PMP, at mailto:bwatson@PMPmanage.com
Please note: PMP is not a law firm nor are we attorneys. Nothing contained in this DR HOA column should be considered legal advice. Follow up legal questions should be addressed with your Association’s attorney.