Federal laws that impact small HOAs
Homeowners associations are primarily governed by state law. State legislatures enact the statutes that authorize HOAs, and for the most part state law and regulation govern how an association operates.
But a handful of federal statutes apply to every association regardless of state, and violating one carries serious consequences even when the violation was unintentional. These are worth knowing before they come up.
Fair Housing Act
The Fair Housing Act (FHA) prohibits discrimination in housing based on race, color, religion, sex, familial status, and national origin. A later amendment added disability to the protected classes the FHA lists. 42 U.S.C. §3604.
Under the law, an HOA cannot take any adverse action affecting a person’s right to buy, rent, or enjoy the use of real estate based on that person’s membership in a protected class.
Exclusionary covenants preventing sales or leases to anyone in a protected class would obviously violate the FHA — but the law also prohibits things that are far less apparent on the surface, which is where most associations get into trouble. More on the Fair Housing Act and HOAs.
Fair Debt Collection Practices Act
Both state and federal law govern how an HOA collects delinquent payments.
The Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §1692 et seq., regulates “debt collectors” who regularly attempt to collect debts owed to third parties by consumers. 15 U.S.C. §1692a(6). The law requires certain notices to debtors, prohibits certain forms of communication, and generally bans harassment or abusive conduct toward consumers. 15 U.S.C. §1692b and c.
More on the FDCPA, and the collections specialist Axela keeps an organized guide to federal and state collection regulations.
Freedom to Display the American Flag Act
The Freedom to Display the American Flag Act of 2005 is unusual among federal laws affecting HOAs: it is addressed to community associations directly, by name.
It prohibits common interest communities from adopting or enforcing policies — or entering into agreements — “that would restrict or prevent a member of the association from displaying the flag of the United States on residential property within the association.” Complete guidelines for HOAs.
Over-the-Air Reception Devices Rule
The OTARD rule, 47 CFR §1.4000, has been in effect since October 1996. It prohibits restrictions that impair the installation, maintenance, or use of antennas used to receive video programming.
An association cannot adopt or enforce restrictions that unreasonably delay or prevent installation, maintenance, or use of an antenna; unreasonably increase the cost of any of those; or preclude reception of an acceptable quality signal.
The U.S. Bankruptcy Code
The bankruptcy code is immensely complicated, but for an association the important part is narrow: if a member files bankruptcy, the association cannot take any action to collect assessments subject to the bankruptcy case — including filing liens or civil complaints — while the case is pending, or until the court lifts the “automatic stay.” 11 U.S.C. §362.
Violating the automatic stay can bring penalties from the bankruptcy court. At minimum that means returning money or releasing a lien.
The Servicemembers Civil Relief Act
The Servicemembers Civil Relief Act (SCRA), 50 U.S.C. §§3901 through 4043, protects members of the Army, Navy, Air Force, Coast Guard, and Marine Corps from collections actions and foreclosures during their service.
It covers servicemembers on active duty, activated reservists, and National Guard members active for more than 30 consecutive days. Unlike the FDCPA, the SCRA applies to all creditors — not only to “debt collectors.”
Keeping up
Federal rules move, and so do the state statutes layered on top of them. The Community Associations Institute maintains an advocacy blog tracking national and state legislative issues that affect community associations, which is the easiest place to watch for changes without following it full-time.
For what applies in your own state, start with your state’s page — every one of them carries the governing statute and where to read it.
This is general information about federal law, not legal advice, and it doesn’t create any professional relationship. How any of it applies depends on your association’s own recorded documents. For a decision that matters, talk to an attorney licensed in your state.
