Construction Risk

The Fair Housing Act: Discrimination in Multi-Family Residential Development, Construction, and Design

By: R. Carson Fisk

The Department of Justice has stepped up its enforcement efforts in recent years battling discrimination in housing. However, the DOJ’s efforts focus not only on discriminatory actions based on race, color, religion, sex, familial status, and national origin. The Fair Housing Act (“the FHA”), in part, prohibits discrimination against disabled individuals. Under the FHA, it is unlawful to discriminate in the sale or rental, or to otherwise make unavailable or deny, a dwelling to any buyer or renter because of a handicap. Additionally, under the FHA it is unlawful to discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling or in the provision of services or facilities in connection with such dwelling due to a handicap. This can have a direct effect on property developers and those involved in the design or construction of multi-family dwellings as discrimination includes a failure to follow certain accessibility and design requirements.

Some of the accessibility and design requirements of the FHA include: (i) public use and common use portions that are readily accessible to and usable by handicapped persons; (ii) doors designed to be sufficiently wide to allow passage by handicapped persons in wheelchairs; (iii) an accessible route provided into and through the dwelling; (iv) light switches, electrical outlets, thermostats, and other environmental controls in accessible locations; (v) reinforcements in the bathroom walls to allow later installation of grab bars; and (vi) usable kitchens and bathrooms such that an individual in a wheelchair can maneuver about the space. The failure to comply with these requirements subjects the violating parties to civil penalties in an amount not exceeding $55,000 for the first violation and in an amount not exceeding $110,000 for any subsequent violation. Monetary damages may be awarded to aggrieved persons and the court may award injunctive relief on a temporary or permanent basis.

These requirements apply to the design and construction of all ground floor units in non-elevator buildings and all units in buildings with elevators in “covered multi-family dwellings.” The FHA is effective for all covered dwellings built in or after March of 1991. Covered multi-family dwellings include apartments, condominiums, and townhomes with four or more units that are for sale or lease. The failure to design and construct buildings covered by the FHA in accordance with the requirements has resulted in significant monetary awards and penalties assessed against those involved in such construction projects.

Although recent increases in enforcement and educational efforts concerning the FHA have resulted in a greater awareness, those formerly and currently involved in the construction of multi-family buildings should understand that the FHA applies to any such building built in or after 1991. Enforcement efforts may be brought by the Department of Housing and Urban Development, private persons, or the Department of Justice. When the Attorney General has reasonable cause to believe that a pattern or practice of discrimination is being engaged in or that any group of persons has been discriminated against to a degree that raises an issue of general public importance, the Attorney General may commence a civil action.

A possible violation of the FHA is sometimes identified upon notification by the DOJ that a subject property is under investigation for failure to comply with the FHA. Generally, the DOJ will seek to obtain contract documents such as plans and specifications for review. Additionally, the DOJ will generally seek information concerning all parties involved in design or construction of the subject property, certificates of occupancy, and other general information concerning the property. Following this initial investigation, the DOJ may proceed to inform certain parties that it has been authorized to file a complaint. Any complaint filed will generally include the owner, developer, architect, engineer, and contractor as parties. The DOJ will generally allow some time for negotiation but will likely forward a proposed consent decree to the parties setting forth settlement terms. Often these terms are harsh and generally include items such as a general injunction against discriminatory practices, non-discrimination in future design and construction, modifications of existing properties, educational programs, public notice of a non-discrimination policy, damages for aggrieved persons, and civil penalties. Due to issues surrounding exposure to damages, often the main concern for defendants in an FHA action is minimizing damages. However, contesting the claims may be a viable option for certain parties and under certain facts.

HUD adopted the Fair Housing Accessibility Guidelines to provide builders and developers with technical guidance on how to comply with the specific accessibility requirements of the FHA. However, the DOJ has, on more than one occasion, characterized compliance with these guidelines as mandatory. Design professionals and builders should be well versed as to the guidelines and any acceptable alternatives. For example, compliance with the American National Standard for buildings and facilities providing accessibility and usability for physically handicapped people, commonly cited as “ANSI A117.1,” satisfies the requirements of the FHA.

Due to the recent enforcement of the FHA accessibility and design requirements, case law on such is relatively sparse. This provides some latitude in formulating creative defenses and arguments on behalf of all parties involved in the design and construction of a multi-family building. Counsel should be consulted immediately upon notice of a possible FHA violation. Given the significant exposure and liability for all parties involved in the particular construction transaction, an attorney knowledgeable in the defense of FHA claims will provide invaluable assistance.

About the Author: R. Carson Fisk is an attorney at Ford Nassen & Baldwin P.C. in Austin . The firm specializes in the representation of owners, developers, general contractors, subcontractors, major suppliers, and sureties in both the public and private sectors. He may be reached at 512-236-0009 or by e-mail at rcfisk@fordnassen.com.

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