As all of us in the property ownership/management business know, communities get bought and sold from time to time. Indeed, a property can be sold many years (even decades) after it was first designed and constructed. Effective in properties designed and/or constructed from 1991 on, the Fair Housing Act (FHA) requires that all multifamily construction meet a specified level of accessibility for individuals with disabilities. As a part of the law, the FHA has seven “safe harbors” that design and construction firms must follow. Notably, while the Americans With Disability Act (ADA) and the FHA share some elements, simply following the ADA may not be enough to ensure your project is in compliance with the FHA.
So, what happens to a subsequent owner or purchaser of a property built after the effective date of the statute? Are they on the hook for deficiencies in the design and/or construction that took place long before they bought the property? Most likely not.
There is a very strong appellate opinion from the 11th Circuit Court of Appeals as well as guidance from the U.S. Department of Justice and the U.S. Department of Housing & Urban Development noting that a subsequent property owner who had no involvement in the initial design and construction should not have liability arising from the improper design and/or constructions. That is the good news. The less good news is that in the event the property faces a FHA accessibility lawsuit, the new owner will most likely be named as a nominal defendant required to provide access to the property for what can be costly repairs and/or retrofits. Even if those repairs are funded by someone else.
What should an individual or entity contemplating buying a community built after 1991 do? My recommendation is to do a FHA accessibility review as a part of your due diligence process. And if you are buying from the original owner/developer, check on the status of their insurance for these types of claims. You will be glad you did.
Just A Thought.
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