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or agent, where the person knew or should have known of the discriminatory conduct.


2. Vicarious liability applies for a discriminatory housing practice by the person’s agent or employee, regardless of whether the person knew or should have known of the conduct that resulted in a discriminatory housing practice, consistent with agency law.


3. Failing to take prompt action to correct and end a discriminatory housing practice by a third-party, where the person knew or should have known of the discriminatory conduct and had the power to correct it.


So, under these new rules, if the association should have known of harassment by any employee or agent and fails to take action, the association can be liable. If an employee of the association conducts a “discriminatory housing practice”, the association can be vicariously liable for the employee’s violation.


The most troubling aspect of these new rules, is the liability imposed for harassment by third parties (non-employees or agents) if the association knew or should have known of harassing behavior and had the “power to correct it.” HUD has commented that “community associations generally have power to respond to third-party harassment by imposing conditions authorized by the association’s CC&Rs or by other legal authority”; and that associations must “take whatever actions it legally can to end the harassing conduct.”


Most condominium associations’ governing documents grant associations the power to: (1) ban conduct that is a nuisance or is not lawful; and (2) seek injunctive relief (shutting down an illegal action) or impose fines punishing an illegal action. This means that many condominium associations arguably have the power to take action against harassment by unit owners, and if an association does not do what is in its power (think notices of violations, threats of fines, and fines) to stop the harassing behavior, the association theoretically could be liable.


CAI has strongly criticized imposing liability on associations for an individual unit owner’s harassing activity:


CAI members believe the proposed new § 100.7(a)(iii) ascribes to community associations a liability for the actions of individuals over whom they have no control. CAI


members strongly believe such a new liability standard exposes community associations to unknowable and unmanageable risks.


Most community association homeowners would react with horror to the notion that association board members, employees, or agents would inject themselves into the interpersonal relationships of homeowners and residents to investigate these interactions and relationships for discriminatory elements.


We agree with CAI that HUD’s third party liability rule is problematic if it imposes a duty for associations to be involved in residents’ personal lives. Under the new rules, there is at least a question of whether associations must take action in situations associations may not have had to before, such as:


• Owner says in a meeting that another owner should not be listened to because he is too old.


• A racist remark is made at the pool and overheard by an employee of the association.


Because the rules were issued recently, there have been almost no Court decisions interpreting the impact of HUD’s third-party liability rule on condominium associations. One Illinois District Court has ruled that a condominium association was not liable for alleged harassment by a unit owner, in part because HUD’s rules were not intended to change traditional liability analysis, and the owner was neither an employee, nor supervised or controlled by the association. However, this one case is not dispositive of the issue and uncertainty remains.


In order to minimize harassment in condominium associations and avoid liability in uncertain times, we recommend that associations take the following steps:


• Have an education program in place for community association managers, board members, and employees to help avoid discriminatory action.


• Publish association policies against discrimination so that unit owners will be informed.


• Consult with general counsel.


• Do not bury your head in the sand! Take prompt action on complaints from owners that relate to a protected class such as race, sex, age, or national origin.


www.wscai.org 19


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