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Cooperatives and fair housing

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Both the Federal Fair Housing Act (“FHA”) and the Minnesota Human Rights Act (“MHRA”) contain provisions that prohibit discrimination in housing on the basis of a person’s membership in a protected class. Protected classes include, race, color, national origin, religion, sex, familial status and disability. Under the MHRA, creed, marital status, status with regard to public assistance and sexual orientation are also deemed protected classes. Both Acts prohibit actions that intend to, or have the effect of discriminating against persons in one or more protected classes. This includes discrimination in the sale, rental or lease of real property or in connection with facilities or services provided in connection therewith.

In the case of disability, it is also deemed discrimination to refuse to make a reasonable accommodation in rules, policies, or procedures for a disabled person or to refuse to allow the person to make a reasonable modification to the property when such accommodation or modification is necessary for that disabled person to equally use and enjoy the property.

All types of community associations are deemed housing providers subject to both of these Acts. However, cooperatives must be particularly aware of fair housing laws. This is because, unlike most condominium, townhome or single family home associations, cooperatives are in a unique position of having vested in the board of directors both the authority and the obligation of determining who can and cannot be members of the cooperative. A person cannot buy a share in or become a member of a cooperative in Minnesota unless the board of directors has approved that person for membership. Additionally, the cooperative can terminate a person’s membership for cause and force them to vacate their unit and sell their share(s). With this added power comes a higher obligation to ensure that these decisions are being made in a fair and non-discriminatory manner. Many cooperatives in Minnesota are set up under the Housing for Older Persons Act (“HOPA”) as 55+ communities. HOPA communities are exempt from the fair housing provisions regarding discrimination based on age and familial status and are permitted to restrict membership to persons that are 55 years of age or older. A community must meet certain criteria in order to be deemed a qualified HOPA community, however, so it is important to ensure that this criteria is met before a cooperative rejects a prospective member based on their age or familial status, or the cooperative will be subject to sanctions and/or damages for violating the FHA and the MHRA.

Even qualified HOPA communities must be careful about how they market their community. We sometimes hear these cooperatives say that they want to attract a younger, more vibrant group of seniors. This is all well and good so long as the board does not reject qualified applicants because of their age or disability (or any of the other protected classes) and doesn’t do anything in its marketing efforts that would express a preference for persons of a certain age group or for persons without disabilities, as that too is prohibited under the fair housing statutes.

When it comes to the application process, all applicants should be screened and approved or rejected based on an established set of criteria that looks at appropriate factors, such as an applicant’s ability to pay the rent and assessments (usually referred to as “carrying charges”) and whether they have a criminal or rental history that would suggest an inability to follow the rules or to otherwise live safely with the other residents.

In the case of HOPA communities, boards can, and must also verify an applicant’s age solely for purposes of determining whether the person meets the age requirements, but should not otherwise consider a person’s age as a factor in determining whether or not to approve them for membership. In other words, the board cannot choose a 60-year old applicant over an otherwise equally qualified 80-year old applicant based solely on age.

Boards should also be careful to only accept applications when there are shares that are available for sale, and to evaluate each application one at a time, and not engage the applicants in a bidding process or evaluate more than one applicant at a time for the same membership. A board that accepts multiple applications for the purchase of one membership and then picks and chooses the “best” of the applicants to approve for that membership is likely not only violating its own bylaws, but is also opening itself up to fair housing and discrimination claims if it rejects qualified applicants that happen to be members of any of the protected classes.

Just as a cooperative board must be careful in how it handles its marketing and the membership application process, it too must be careful in the exercise of its authority to terminate a member’s membership for cause. Again, the board must have objective criteria to determine whether a person is incapable of continuing to live in the community and abiding by the community’s rules. Many communities have in place a “Safety and Well-Being” policy that provides for procedures for ensuring that its residents are able to live safely in the community and are not a danger to themselves or others, and for steps that can be taken if a person does constitute a danger. These are also sometimes referred to as “Independent Living” policies, though that term could itself be deemed discriminatory, since it implies that a person must be able to be completely independent and to live without any sort of assistance. If a resident’s problem or inability to follow the rules is due to a disability the board must consider whether that person could continue to live in the community and abide by the rules with some kind of assistance or a reasonable accommodation, and must grant such an accommodation if requested and if doing so is necessary to afford the person an equal opportunity to enjoy the property.

As with other types of community associations, cooperatives will also deal with disability issues from time to time. Residents can make requests for reasonable modifications to the property to allow for easier access and use. Or they may make requests for reasonable accommodations to the rules and procedures, such as a request for a closer parking space, an exception to the no-pet rule for a service or emotional support animal, a request to have board minutes or other materials printed in large-print or Braille, or even a request that the association refrain from using certain chemicals at the property due to severe allergies.

The fair housing statutes dictate the circumstances under which such requests must be granted, as well as what kind of information or documentation may be requested from a resident to verify that he is disabled and that the accommodation is necessary. A failure to grant a request when necessary is deemed to be discrimination (see protected classes above).

A failure to promptly respond to a request, or a response that seeks inappropriate documentation from the resident before granting a request, can also be deemed a refusal to grant the accommodation and thus discriminatory. As such, boards that are faced with these requests should immediately consult with an attorney that is knowledgeable in this area to ensure that a prompt and appropriate response is provided.

Fair housing issues can be tricky for any association. If you have questions or concerns about how to handle a particular situation, consult with an attorney that practices in this area of law.

*Originally published in CIC Midwest News.