United States: Could Your Timeshare Resort Be Subject To The Fair Housing Act Accessibility Requirements?

Co written by Kelly D. Lodde

If the answer is yes, then the resort developer may be in for a surprise. Not only does the federal Fair Housing Act (FHA) prohibit housing discrimination based on race, color, national origin, sex, religion, and disability in all housing related transactions, including selling, rentals, advertising, and lending, it also contains stringent accessibility and design requirements pertaining to people with disabilities.

Developers may be familiar with the ADA (American with Disabilities Act) accessibility requirements, which require only a small percentage of units be accessible to persons with disabilities (roughly one unit per 25 ) and only applies to so-called "public accommodations" which are defined to include mainly hotels as to sleeping unit requirements but have other accessibility requirements which apply to office buildings, sports complexes, convention centers and other buildings open to the public.

Fair Housing Act Coverage

However, timeshare developers may not be familiar with the more burdensome FHA, which applies to most multifamily residential dwellings such as apartments and condominiums. The FHA requires every unit be made accessible or adaptable to persons with disabilities if the covered dwelling was constructed after March 13, 1991. Moreover, it is possible that if a covered property was constructed after March 13, 1991, but does not meet FHA accessibility requirements, that project may need modified to come into compliance. Accordingly, a purchaser of a project constructed after March 13, 1991 may have exposure if that project is subject to, but not constructed in accordance with the FHA. The FHA identifies several general areas of compliance as follows: public and common use areas, doors and passages, accessible routes, light switches, electrical outlets, thermostats, and other environmental controls, reinforcement of bathroom walls to permit installation of grab bars and manoeuvering of clearance space for wheelchairs in bathrooms and kitchens.

Although, the FHA does not expressly refer to timeshares or declare timeshare ownership property subject to the FHA, commentary from HUD (the FHA enforcement agency) and case precedent indicate timeshare property may be subject to the FHA.

In 1989, HUD commented that the scope of a covered dwelling under the FHA is broad enough to cover condominiums, corporations and time-sharing properties (Fed. Reg. 3238). Additional HUD commentary in 1991 indicates that whether a timeshare project is subject to the FHA will be made on a case by case basis. Hence, the more residential characteristics a timeshare project has, the more likely that project will be deemed a dwelling subject to the FHA. On the other hand, the more hotel-like characteristics a project has, the more likely that project will not be deemed a dwelling subject to the FHA.

For example, if a timeshare resort offers fixed time, fixed unit deeded timeshare interests, in which the consumer owners have the right to return to the same unit at the same time each year for a week or more, the project might possibly be determined a dwelling subject to the FHA. For example, the only case applying the FHA to a time share project, arising from allegations of discrimination against individuals and protected classes, noted that the most important factor in determining whether the project was a dwelling was whether the owners posses the right to return to their specific individual unit. (Louisiana Acorn Fair Housing v. Quarter House Oak Ridge Park, Inc. 952 F. Supp. 352 (E.D. La 1997)).

On the other hand, if you sell right to use interests in which the owner has the right to return only during a particular season and does not have a right to any particular unit for a period of a week or less, your project could possibly be deemed transient lodging and not a dwelling subject to the FHA. Additionally, although not determinative, the US Department of Justice expressed the view that timeshare interests sold in increments of one week or less, in which deeded restrictive covenants only permit purchasers to use one of several units of the type in which an interest was purchased (and not one specific unit), are public accommodations subject to the ADA and not dwellings covered by the FHA.

Lets face it, if a resort developer could choose between complying with the ADA or the FHA, ADA would be chosen since compliance with it is generally less burdensome as only a small percentage of units must meet accessibility standards, whereas the FHA is more burdensome and expensive applying to all units and may be particularly burdensome if a project requires retro-fitting in order to comply. Nonetheless, a resort property will either be subject to the ADA or FHA, and in certain circumstances might be subject to both. One tip: if careful internal evaluation points towards FHA jurisdiction, the developer should attempt to comply with its requirements even if complying means retrofitting a property built after March 13, 1991. The developer may only be able to undertake gradual compliance; however, gradual compliance is, still better than continued non-compliance, particularly in light of penalty provisions for non-compliance, which can result in escalating fines, civil penalties, compensation and punitive damages.

Mr. Chasnow acknowledges with appreciation the contribution to this article of Holland & Knight attorney, Kelly Lodde, who also practices timeshare and resort development law.