How HOAs can Deny a Sale or Rental
Homeowners Associations (HOAs) are made up of board members who are elected by the owners in a community. The HOA then serves as a governing body with the authority to make and enforce rules and regulations that affect the community at large. One of the HOA’s duties is to determine whether potential buyers and tenants meet the resident criteria outlined in the association’s governing documents.
As a result of this duty, in particular, HOAs have the right to deny or approve real estate transactions in their community. In particular, HOA and Condo Owners Association (COA) laws in Florida allow the associations wide-reaching capabilities to either approve or disapprove rental or purchasing contracts. Still, certain limitations on this power do exist. In Florida, HOAs are expected to comply with the Federal Fair Housing Act, Florida statute and local codes and ordinances, and their own governing documents. Furthermore, HOAs and COAs must apply these laws and regulations fairly.
The Fair Housing Act
The Federal Fair Housing Act makes it unlawful to discriminate in any housing situation due to the race, religion, skin color, sex, age, disability, familial status or national origin of the people involved. This means that housing cannot be made exclusively, for example, for people over 55 or for people of a certain faith. Many states, including Florida, have enacted similar statutes that prohibit discrimination based on a buyer or seller being a member of a protected class such as race, national origin, veteran status or gender.
Violations of the Fair Housing Act and the various state equivalents are considered very serious and could result in severe consequences for an association and its individual board members.
Fair Application of Criteria
Associations can create a screening process that denies certain potential buyers and renters the privilege of becoming a resident of their communities. However, the criteria must be applied fairly. This means that an association cannot apply rules to some and waive those same rules for others as that would be considered discriminatory.
For example, an association’s governing document may prohibit tenants with a monthly income that is lower than a third of the monthly rental rate. If so, the association may be required to show that all tenants in the community have been screened using these criteria and that no exceptions have been made. Failure to prove that this screening process has been applied evenly exposes the association, and perhaps even its individual board members, to potential legal action.
“Violations of the Fair Housing Act and the various state equivalents are considered very serious and could result in severe consequences for an association and its individual board members.”
There are three ways an association can protect itself from discriminatory lawsuits through careful research and documentation. The first is to reassure that any basis for rejecting a potential buyer or tenant, as written in the association’s governing documents, does not violate the Fair Housing Act or its state and local equivalents.
The second is to ensure that any potential basis for rejecting a potential buyer or tenant is documented in writing within the association’s governing documents. Working with unwritten rules or case-by-case decisions that are not based on written rules can lead to discrimination lawsuits.
The third and final way an association can protect itself from discriminatory lawsuits is to explain in writing the reason or reasoning why a rejection has been made. Failure to do so invites the rejected party to claim that discrimination may be a factor in the rejection.
Legitimate Reasons for Rejection
When well documented and supported by written rules within an association’s governing documents, it is unlikely that rejections based on the following reasons would incur a successful legal challenge:
- An evenly applied rule within the associations governing documents supports the rejection
- The rejected party has violated the community’s rules in the past
- The rejected party lied about a criminal history or other background items
- The rejected party is a felon who has not had their civil rights restored
Taking Legal Action Against an Association
Are you the rejected party who has attempted to buy or rent a property within an association’s community? If so, work with your legal counsel to determine whether the given reasons for the rejection are outlined clearly within the association’s governing documents. If no reasons have been given for the rejection, note that this is a red flag that there could be a basis for legal action based on discrimination or an unfair application of the association’s rules.
Associations, whether HOAs or COAs, have certain protections in Florida that may make it difficult for rejected parties to proceed directly to litigation. Hiring a Florida attorney with extensive experience in association matters can help considerably in navigating the complex legal landscape that governs HOAs and COAs in this state.
Always remember that associations will have legal representation and it may be incredibly difficult to “go it alone” in taking legal action against them without your own experienced legal counsel.
South Florida Law
South Florida Law has local experience in homeowners association (HOA) and condominium owners association (COA) law. Our boutique size allows us to provide partner-level attention to detail on all of our cases. At the same time, we have the resources of a large law firm to ensure that, if needed, you have the backing to take your issue to mediation, arbitration or litigation. With offices in Hallandale and Coral Gables, South Florida Law is able to serve HOA residents throughout Broward County, Miami-Dade and Palm Beach County.
Have you been denied the right to purchase or rent within an HOA and believe it may have been done unfairly? Are you encountering other issues as you consider buying a house in an HOA-managed community and looking for experienced legal advice? Contact us today at (954) 900-8885 or reach out via our contact form.