Federal laws play a significant role in regulating homeowners association (HOA) communities in various ways. For this reason, it is essential for board members and HOA managers to familiarize themselves with these laws to avoid potential liability and ensure compliance.
Federal Laws Governing HOA Communities
Homeowners associations often operate similarly to non-profit corporations. In many states, HOAs are even required to register as such with the Secretary of State. Like other corporations, HOAs must adhere to specific federal laws. Understanding these regulations is crucial to keeping the community and its board members out of legal trouble. Below are the primary federal laws that govern homeowners associations.
Fair Housing Act
The Fair Housing Act (FHA) is a federal law designed to prevent housing providers from discriminating against individuals based on race, color, national origin, sex, familial status, or disability. It applies to both public and private housing providers, including homeowners associations.
Under the FHA, it is illegal for an HOA to take any action that discriminates against a person’s right to buy, rent, or use a property because they belong to a protected class. For example, denying residence to an unmarried couple in the community constitutes discrimination based on familial status and violates the FHA. Even if a rule does not explicitly discriminate, it may still violate the FHA if it disproportionately or subtly impacts a protected class.
Many states also have their own fair housing laws that supplement the FHA. For instance, California’s fair housing laws add additional protected classes, including ancestry, citizenship, sexual orientation, gender identity, military status, and source of income.
Americans With Disabilities Act
The Americans With Disabilities Act (ADA) prohibits discrimination against individuals with disabilities. This law primarily applies to public spaces and facilities, including those managed by homeowners associations. Common areas or elements accessible to the general public—such as spaces rented out for events or used by schools or church groups—fall under the purview of the ADA.
However, spaces exclusively open to HOA members and their guests are generally not subject to ADA requirements. For example, if an HOA sells public membership passes to amenities such as a swimming pool or gym, those areas may be considered public accommodations and must comply with the ADA.
Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act (FDCPA) regulates the behavior of debt collectors, prohibiting unfair, deceptive, and abusive collection practices. Debt collectors are defined as third parties who regularly attempt to collect debts owed by consumers. While HOAs themselves typically do not qualify as debt collectors under this law, they should be familiar with the FDCPA if they hire collection agencies to recover unpaid assessments or dues.
Additionally, if an HOA uses a different name to collect debts, it may be classified as a debt collector under the Act. Several states also have their own debt collection laws that may apply to HOAs.
Servicemembers Civil Relief Act
The Servicemembers Civil Relief Act (SCRA) provides financial and legal protections to active-duty service members, including members of the United States Army, Air Force, Navy, Marine Corps, and Coast Guard. The Act also applies to activated reservists, National Guard members mobilized for more than 30 consecutive days, and commissioned officers of the Public Health Service or National Oceanic and Atmospheric Administration on active duty.
The SCRA protects service members from foreclosure and other collection actions during active duty. Unlike the FDCPA, which applies primarily to debt collectors, the SCRA covers all creditors, including homeowners associations. HOAs must ensure compliance with the SCRA to avoid penalties.
Freedom to Display the American Flag Act
The Freedom to Display the American Flag Act of 2005 ensures that homeowners have the right to fly the U.S. flag on their property. HOAs are prohibited from banning the display of the American flag, provided it is displayed in a manner consistent with the U.S. Code.
While the Act protects homeowners’ rights, it does allow HOAs to impose reasonable restrictions on the time, place, and manner of display. Additionally, some states have their own laws that further protect homeowners’ rights to display the American flag. For instance, Florida law permits homeowners to display flags on flagpoles up to 20 feet tall, and HOAs cannot override this rule.
Over-the-Air Reception Devices Rule
The Over-the-Air Reception Devices Rule (OTARD) prohibits HOAs from enforcing restrictions that unreasonably hinder the installation, use, or maintenance of satellites or antennas used to access video programming. Under this rule, restrictions are considered unenforceable if they:
- Prevent or delay the installation, use, or maintenance of antennas;
- Unreasonably increase the cost of installation, use, or maintenance; or
- Interfere with obtaining an acceptable reception or signal quality.
HOAs must ensure that their rules comply with OTARD to avoid violating this federal regulation.
United States Bankruptcy Code
The United States Bankruptcy Code protects homeowners who have filed for bankruptcy. Under this law, HOAs are prohibited from taking any collection actions while a bankruptcy case is pending or if the court has not lifted the automatic stay. Violating this rule can result in significant consequences for the HOA, such as monetary penalties or the release of liens.
Final Thoughts
There are numerous federal laws that regulate homeowners associations, and violations can lead to severe legal and financial penalties. Therefore, it is crucial for HOA board members and managers to educate themselves about these laws and ensure compliance.
Managing an HOA while juggling federal, state, and local laws can be challenging. If you need assistance, consider reaching out to experts for professional HOA management services.