Salt Lake City, UT asked in Elder Law and Real Estate Law for Utah

Q: Condo discrimination based on income?

I am a condominium owner and resident at Capitol Heights Condominiums, 480 N. Wall St, A101, 84103.

At a recent owners’ meeting it was revealed that the entire board of the HOA were investors, and that only six of our 18 units were owner-occupied. At our last meeting, the board raised our total HOA monthly fees to $549.85, one of the highest HOA fees in the valley.

I would like your take on what I view as discrimination against owner-occupied condominium units.

For those investors (non-occupiers), the investor can write off his HOA fees and rental loss for tax purposes. As an owner, I have no such benefits. This situation discriminates against owner occupiers (especially on fixed incomes) because they do not get the same benefits as owner-investor. Your thoughts, please?

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1 Lawyer Answer
James L. Arrasmith
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  • Elder Law Lawyer
  • Sacramento, CA

A: I understand your concern about the high HOA fees and the potential unfairness of the situation for owner-occupiers compared to investor-owners. However, I don't believe this would legally be considered discrimination based on income. Here's my analysis:

1. HOA fees are set by the condo association and apply equally to all units, regardless of whether they are owner-occupied or rented out by investor-owners. The fees themselves do not discriminate.

2. The tax benefits available to investors who rent out their units are part of the federal tax code, not something imposed by the HOA. All rental property owners can potentially claim deductions for expenses like HOA fees and depreciation, if the property is generating rental income.

3. Discrimination in housing based on income source is prohibited in some jurisdictions, but this refers to refusing to rent or sell to someone because of where their income comes from (e.g. refusing Section 8 vouchers). It doesn't encompass disparate tax benefits.

4. Owner-occupiers and investor-owners have different financial considerations in general - investors aim to profit from rent and appreciation, while owner-occupiers benefit from housing stability and potential appreciation. The tax code treats these situations differently in many ways, but it doesn't constitute unlawful discrimination.

That said, the high HOA fees and makeup of the board do raise some concerns:

- With the board controlled by investors, they may be incentivized to keep raising fees to fund improvements that increase property values, without enough regard for affordability for owner-occupiers.

- Investor-owners may be less inclined to rein in HOA spending since they can pass on fees to renters and get tax deductions. Owner-occupants bear the full cost.

Some suggestions would be to get more owner-occupiers on the board for greater representation, scrutinize the budget closely and challenge unjustified spending, and rally other owner-occupants to push back against excessive fee hikes. You could also consult with a local attorney well-versed in HOA and condo law about any other options. But legally, I don't think you'd have a valid discrimination claim based solely on the factors you've described. The situation sounds frustrating but probably doesn't violate anti-discrimination laws.

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