Ct. Rules that Absent Individual Injury, Members Cannot Enforce Restrictions that the HOA Waives its Right to Enforce

This case involved an interesting set of facts where an individual member of a homeowners association (“Association”), who also was a member of Association’s Board of Directors and served as the Secretary of Association, sued two other members of Association (“Owners”) on the ground that they had leased out their home in violation of leasing restrictions contained in Association’s Bylaws. The restrictions at issue include a rule prohibiting occupants not named in the lease and a prohibition against subletting. Notwithstanding these restrictions, Association’s Bylaws empower the Board of Directors to approve leases that do not meet the requirements contained in the Bylaws by a 2/3 vote. The Bylaws also contained a provision that granted individual members of Association the same rights as Association to enforce any provision of the Bylaws other than the right to collect delinquent assessments. Thus, the suing board member contended that he had standing as a member of Association to sue Owners. After the lawsuit was filed, Association’s Board of Directors, acting through its President, approved Owner’s lease. Notwithstanding Association’s approval of the lease, the individual board member continued with his lawsuit based on a contention that the approval by the Board of Directors was improper under Association’s Bylaws.

In response to the lawsuit filed against them, Owners filed counterclaims based on alleged violations of both federal and state anti-discrimination laws (the Federal Fair Housing Act and the District of Columbia Human Rights Act). Owners intended to rent their townhouse to a group of recovering alcoholics and substance abusers as a residence pursuant to an agreement that did not comply with requirements contained in the association’s bylaws relative to the leasing of units, and prior to entering into the lease, Owners had requested a reasonable accommodation in the form of Board approval of their rental agreement in order for them to provide a dwelling to persons with disabilities.

The trial court granted both sides of the dispute summary judgment against the other side’s claims in the lawsuit after ruling that neither of the parties had the requisite standing to maintain their claims. The trial court ruled that, because Association’s Board of Directors approved Owners’ lease after the lawsuit was filed, there was no longer a dispute for the court to resolve. The trial court also ruled against Owners on their counterclaim after finding that a single board member who lacks the power on his or her own accord to grant or deny a requested reasonable accommodation could not be liable for violations of the Fair Housing and Human Rights Acts. Both sides appealed the trial court’s decision.

The issues addressed on appeal involved the problems inherent in a situation where a homeowners association and its members both have the power to enforce the association’s bylaws and there is disagreement on enforcement. The court recognized that inaction by an association does not foreclose an individual member from taking enforcement action because there is no conflict with a decision by the association, whereas a decision by an association that does take action and decides not to enforce its bylaws, does foreclose individual action to enforce the provision in question. Thus, the appellate court ruled that, if an association takes action on a matter and decides to waive its right to enforce a provision in its bylaws, the individual members of the association lose their right to enforce it, absent claims by the individual member of injury caused to them individually, as opposed to injury suffered in common with the other homeowners. The appellate court also ruled that the director / secretary’s individual actions could subject him to liability for violations of the federal and state laws that protect disabled persons from discrimination in housing.

This case also involved additional issues concerning the authority of Association’s President to issue a letter to Owners that informed them that Association’s Board of Directors had met and voted to approve the requested accommodation. The appellate court found that whether his actions were based on actual authority, or apparent authority, the letter written by Association’s President effected a legally binding relinquishment of Association’s right to enforce its Bylaws against Owners and the President’s letter amounted to a waiver of Association’s claim against Owners for leasing their unit in violation of Association’s Bylaws. This waiver bound the Association and all of its individual members.

Finally, the appellate court ruled that, even if an individual director does not have the power on his or her own accord, to grant or deny a request for a reasonable accommodation, if he or she engages in discriminatory actions that are in violation of the Fair Housing Act and the Human Rights Act , they are subjected to liability for violations under the Acts.

District of Columbia Appellate Court decision (June 29, 2017).

See case decision: Welsh_v._McNeil_(DC_2017)1