Homeowner Association Application Process
By: Lance T. Denha, Esq.
The tenant application process to a condominium association can be long, arduous, and sometimes, expensive. Associations often require that prospective tenants submit pages and pages of paperwork, undergo background and credit checks, and pay application fees. However, what information may the Association actually rely upon in making its decision to accept or deny a prospective tenant’s application? The answer is more complicated than you may think. When weighing the information discovered during the application process, the Association must consider: (i) whether the Association’s process for approving and/or rejecting prospective tenant applications complies with the Association’s governing documents and current laws; (ii) whether the evaluation criteria used by the Association will have a disparate impact on a minority group; and (iii) whether the Association can provide a prospective tenant with a specific and appropriate reason for rejection.
As a preliminary matter, the Association’s governing documents may not even grant the Association the power to approve or deny prospective tenants. Rather, such a decision may be left up solely to the unit owner/landlord. Additionally, the Association’s governing documents may or may not include the power to accept or reject a tenant for any reason or without having to provide an explanation. The Association should consult with its legal counsel before utilizing certain powers provided for in the governing documents, as sometimes, the very powers articulated in the those documents may be in violation of applicable laws.
If the Association does have tenant approval power, whatever the reason for rejecting the tenant, the Association must be prepared to explain. Additionally, the federal Fair Housing Act (more commonly referred to as the “FHA”) provide numerous protections from discrimination by housing providers, including condominium associations. Prior to denying an application, and prior to offering a “reason” for the denial, the Association must ensure compliance with these laws, the reach of which was recently expanded by the United States Supreme Court.
The FHA prohibits housing providers from refusing to “otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin.” Despite the FHA’s language, which provides protections for minority groups based on race, color, religion, sex, familial status, or national origin, the FHA’s reach has been expanded to protect other minority groups not specifically listed in the statute. Specifically, the Department of Housing and Urban Development has warned housing providers of potential FHA liability for denying tenant applications based on requests by individuals with disabilities to reside with assistance animals. Associations must be careful to ensure that their tenant application policy and reasons for denying tenant applications do not have a “disparate impact” on any particular race, sex, or people of any particular national origin or familial status, or for that matter, on people with disabilities.
It is dangerous for Associations to deny tenant applications without having a specific, justifiable basis, as such a rejection may open the Association up to potential liability. Reliance on outdated governing documents to reject “undesirable” tenants could lead to liability under the FHA and/or violation of local ordinances. Whenever a tenant application is about to be denied, the Association must be ready to provide the specific reason for the denial, with such reason having its basis in a counsel-reviewed, tenant application policy. Although nothing will completely prevent challenges by applicants and potential liability in this process, the Association should consult with legal counsel, and carefully evaluate whether any changes to its tenant application process are necessary to prevent discrimination against a minority group or to ensure compliance with applicable laws and the Association’s governing documents. Addressing any flaws in the Association’s tenant application process now may help to prevent or reduce litigation down the road.
