Development Law Group Update: Ninth Circuit Limits Statute of Limitations on Design and Construction Claims Under Fair Housing Act

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In a victory for multifamily developers, the U.S. Supreme Court has declined to review a ruling by the Ninth Circuit that limited the statute of limitations on claims against developers for accessibility design and construction under the Fair Housing Act.

The Fair Housing Act is commonly understood to prohibit discrimination in the advertising, sale and rental of housing. Since 1988, it has also prohibited the design and construction of multifamily dwellings that do not have accessibility features including accessible entries and accessible interior routes. Many developers depend entirely on those they hire to comply with these requirements, yet many architects and contractors do not take appropriate care in designing and constructing FHA-required details. It is a common practice for "testers" to visit multifamily buildings to look for violations of the accessibility features, and to sue the developer, contractor and architect for damages based on the Fair Housing Act.

The Fair Housing Act requires private civil claims to be brought within two years of the "occurrence or the termination of an alleged discriminatory practice." Advocates for the disabled and HUD have argued that, as to design and construction claims, "the termination" of the discriminatory practice means elimination of the design violation. The Fair Housing Act Design Manual, published by HUD, states that design and construction claims can be brought at any time that a design or construction violation exists. Under this interpretation, only demolition or retrofitting of the building would start the two-year statute of limitations. Given the long useful life of buildings and the unintentional nature of such violations, this interpretation opens developers to decades of potential liability.

In Garcia v. Brockway, the court addressed design and construction claims that were filed ten years after the buildings were built. The court dismissed the suit, ruling that the statute of limitations for design and construction claims begins to run on the date that the last certificate of occupancy is issued. Distinguishing between the acts of design and construction and the effect of a violation, the court stated:

Although the ill effects of a failure to properly design and construct may continue to be felt decades after construction is complete, failing to design and construct is a single instance of unlawful conduct. Here, this occurred long before plaintiffs brought suit. Were we to now hold the contrary, the FHA's statute of limitations would provide little finality for developers, who would be required to repurchase and modify (or destroy) buildings containing inaccessible features in order to avoid design-and-construction liability for every aggrieved person who solicits tenancy from subsequent owners and managers. Indeed, now that we have recognized tester standing, an aggrieved person wouldn't even need to solicit tenancy, but merely observe the violation. This is not what Congress provided in erecting a two-year statute of limitations for FHA design-and-construction claims.

This case closes a huge window of potential liability for developers under the Fair Housing Act. Developers should, however, contractually require their architects and contractors to design and build multifamily buildings to comply with the accessibility requirements of the Fair Housing Act since the act imposes strict liability on the developer for failure to comply and grants attorney fees to successful plaintiffs.

Key Contributors

Eric A. Grasberger
Joseph P. McCarthy
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