The real estate development industry has grown by leaps and bounds over the last 50 years. The traditional cookie-cutter communities have evolved into vast lifestyle communities to fit the needs of individuals and families of all ages and sizes. An intriguing aspect of the rise of the lifestyle community has been the growth of age restricted communities. As these communities have evolved, so have the laws to protect them. For real estate developers desiring to develop age restricted communities, it is crucial to have an understanding of the requirements of the federal law known as the Housing for Older Persons Act of 1995 (HOPA) that governs these communities.

What is the Housing for Older Persons Act of 1995?

HOPA is found in the Code of Federal Regulations; Title 24 and comes to us via Title VIII of the Civil Rights Act of 1968. HOPA evolved from the Fair Housing Amendments Act of 1988 which prohibited discrimination based on race, color, religion, sex, national original, handicap, and familial status in housing and real estate related transactions. The provision on discrimination based on familial status became effective in 1989, and, when it became effective, the prohibition contained a provision exempting quote “Senior” housing from the prohibition against familial status discrimination. The 1988 act did not go far enough in protecting housing choices for older persons. Thus, HOPA was signed into law in 1995 to ensure that the Fair Housing Act’s prohibitions did not unfairly limit the housing choices of older persons.

HOPA Exemptions

Real estate developers developing age restricted communities should have knowledge of the following three exemptions from familial status discrimination that come from HOPA:

1. Housing provided under any state or federal program that the secretary of the Department of Housing and Urban Development has determined to be specifically designed and operated to assist elderly persons (as defined in the state or federal program);
2. Housing intended for, and solely occupied by, persons 62 years of age or older; and
3. Housing intended and operated for persons 55 years of age or older.

Housing for persons 62 years of age or older

• To meet the housing for persons 62 years of age or older HOPA exemption, the housing development must be intended for and solely occupied by persons 62 years of age or older.
• HOPA provides the following exceptions from the above requirement:
  • Units within the housing development may be occupied by employees of the housing development (and their family members residing in the same unit) who are under than 62 years of age provided that those persons perform substantial duties directly related to the management and maintenance of the housing development; and
  • Units may be unoccupied so long as they are occupied by persons 62 years of age or older when they finally do become occupied.

Housing for persons 55 years of age or older

• To meet the housing for persons 55 years of age or older exemption, at least 80% of occupied units within a housing facility or community must be occupied by at least one person 55 years of age or older – the 80/20 rule.
  • Things to note:
    • The 80% requirement only applies to the “occupied units” within a housing facility or community; unoccupied units (save and except temporarily vacant units – think vacation homes) are not counted when determining compliance with the 80/20 rule.
    • The 80% requirement applies to occupants of a unit – it does not apply to owners of a unit.
    • HOPA only requires one occupant of a unit to be 55 years of age or older. A housing facility seeking exemption as a 55+ community may allow occupancy of units by families with children, so long as 80% of the units in the housing facility are occupied by at least one individual aged 55 years of age or older.

A section of the HOPA 55+ exemption that real estate developers should pay close attention to is the procedure for verifying occupancy. Real estate developers should work with their team and legal counsel to develop an occupancy verification plan to ensure continued satisfaction of the 80/20 rule within the community. The 55+ community must be able to produce verification of compliance with the 80/20 rule in response to any complaint that it has not done so. When developing the verification procedure, the following should be kept in mind.

• The verification must occur at least once every two years.
  • Tip: when a unit is sold, age information should be gathered about the future occupant. Thereafter, and at least once every two years, the association should send to the occupants surveys regarding age for the occupants to complete.
• Verification typically requires submission of a reliable document relating to the occupant’s age (state issued driver’s license or ID, birth certificate, passport, etc.) A signed affidavit by an occupant of the unit (including the individual submitting the survey) asserting that the occupant is at least 55 years old is also acceptable.
• HOPA mandates that the 55+ community require compliance with the verification process.
  • For 55+ communities, it is recommended that age restriction policies be filed in the real property records, thereby allowing the community to enforce the processes set forth in the age restriction policy as deed restrictions and to pursue violations of these policies as deed restriction violations.
• Compliance is essential!

Along with the complying with HOPA’s 80/20 rule, 55+ communities must publish and adhere to policies and procedures that demonstrate their intent to operate as a community for people 55 years of age and older. This intent can be shown through

(1) the manner in which the development is described to its prospective residents;

(2) advertising designed to attract prospective residents;

(3) lease provisions;

(4) written rules, regulations, covenants, and deed restrictions;

(5) the maintenance and consistent application of relevant procedures necessary for maintaining the exemption;

(6) actual practices of the development; and

(7) the posting in the common areas of the development of statements describing the development as intended for persons 55 years of age or older.

Getting the Community Off on the Right Start

Real estate developers with the prospect of developing age restricted communities should be conscientious about their plans and be able to communicate their intentions throughout the development process. A misunderstanding or miscommunication can place the community at risk of a HOPA and a Fair Housing Act violation. Developers should work hand-in-hand with their legal counsel throughout the development process to ensure that their communications, documents, rules, regulations, and practices stay in compliance with HOPA to create a lifestyle community that all homeowners can enjoy.