Supreme Court Says Unintentional Housing Discrimination is Against the Law: What Could This Mean for Your Community Association?

By David A. Kline, Esq.

On Thursday, June 25, 2015 the United States Supreme Court announced its decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc.

The Federal Government provides tax credits to housing developers for the construction of low income housing. Those tax credits are distributed to developers by the states. The Texas Department of Housing and Community Affairs (“Texas”) adopted a system of scoring proposed housing developments that gave additional points to developments in low income neighborhoods.

Inclusive Communities Project (“ICP”) sued Texas alleging that Texas violated the Fair Housing Act (“FHA”). The FHA, as amended, prohibits discrimination in housing because of race, color, religion, national origin, sex, disability, or familial status. ICP used statistical evidence to show that Texas’s scoring system resulted in a disproportionately high percentage of tax credits to developments in minority communities. Texas argued that its scoring system was not adopted “because of race” and does not violate the FHA.

ICP’s argument relies on a “disparate impact” theory of liability. Under that theory, a plaintiff need not show that a housing provider intended to discriminate. Rather, the plaintiff need only show that the housing provider’s facially neutral policy has a disproportionate adverse impact on members of a protected class. The burden would then shift to the housing provider to show that its policy is necessary to achieve its substantial, legitimate, nondiscriminatory interest that cannot be achieved by less discriminatory means.

Although the FHA does not explicitly state that plaintiffs may use this disparate impact, unintentional discrimination, theory to prove their case, numerous courts have allowed these claims. Nevertheless, confusion about this issue has led to inconsistent enforcement of the FHA from one presidential administration to the next.

Today’s decision by the Supreme Court clarifies that a housing provider may be held liable for violations of the FHA even if it did not intend to discriminate, so long as its policy has a disproportionate adverse impact on members of a protected class. This may embolden plaintiffs to file claims that might not otherwise have been filed.

How might this decision affect community associations?

Suppose an association adopts a pet restriction that is more restrictive for tenants than for owners. If that association is located in a community with a low level of minority homeownership, a claim could be made that the pet restriction has a discriminatory effect based on race.

Suppose an association adopts a rule that prohibits the use of skateboards in the common area. If a resident with children can show that children are more likely than adults to use skateboards, she might argue that the rule has a discriminatory effect based on familial status (i.e., the presence of children in the household).

Today’s decision could lead to more claims of unintentional discrimination. Associations should carefully review their governing documents with legal counsel to consider whether any restrictions might disproportionately affect members of a protected class, whether the association has a legitimate interest in enforcing such restrictions, and whether there are alternative nondiscriminatory means of achieving the association’s objectives.