Fourth Circuit narrows what an HOA may demand for a fair-housing accommodation
Fourth Circuit narrows what an HOA may demand for a fair-housing accommodation
2026-09-12 · North Carolina · Courts
An association that grants a fair-housing accommodation subject to conditions has made a counter-offer, not an approval — and the legal test looks at the accommodation the resident asked for, not at the conditions the association attached. The Fourth Circuit held so in a published opinion on July 15, 2025.1
The case arose in Maryland, but the Fourth Circuit is the federal appellate court for North Carolina, so this is binding authority in the Eastern, Middle and Western Districts of North Carolina. It is the most consequential fair-housing development for North Carolina associations in the period, and it has had almost no coverage in the state.
What happened
A homeowners association for a private gated community invoked a “business-purpose covenant” to block an assisted-living group home. The owner requested a waiver of the covenant as a reasonable accommodation under the Fair Housing Act.
The association did not refuse outright. It agreed to the accommodation subject to four disputed conditions. The district court granted summary judgment to the association. The Department of Justice and HUD appeared as amici supporting the appellants.
What the court held
The Fourth Circuit vacated summary judgment.
The central holding concerns the “necessary” element of 42 U.S.C. § 3604(f)(3)(B). The district court had asked whether removal of the association's proposed conditions was necessary to afford equal opportunity. That, the Fourth Circuit held, is the wrong question. The statute asks whether the accommodation actually requested — here, the covenant exception — is necessary.
The court was explicit that the difference matters:
This is not just semantics.
The contrary rule, it reasoned, would let a community “impose all kinds of burdensome conditions on accommodation approvals even if they have no relationship to the needs of future residents with disabilities.”
The court also held that a conditional approval operates as a counter-offer — “It is hornbook law that a counter-offer is a rejection” — and that a reasonable jury could find both disability discrimination and retaliation.
It limited itself carefully: “The only thing we hold today is that… there are two sides to this story, not one, making summary judgment inappropriate.”
What it changes for North Carolina boards and managers
The practical exposure here is in a habit that is close to universal, and that most boards regard as the reasonable, cooperative response.
An association receives an accommodation request. It does not want to say no. It says yes, with conditions — insurance requirements, indemnities, caps on occupancy or staff, restrictions on vehicles or hours, a requirement to re-apply annually. That feels like a middle path. After this decision, in the federal courts covering North Carolina, it carries two specific risks:
- It may count as a denial. If the conditions are ones the requester did not accept, the association has made a counter-offer, and a counter-offer is a rejection. The association's position that it “approved” the request will not resolve the case.
- The conditions must relate to the disability-related need. The court's concern was conditions with “no relationship to the needs of future residents with disabilities.” A condition that exists because the board is uneasy, or to appease neighbours, or to create a bargaining position, is the kind the opinion is aimed at.
What this does not hold is that an association must grant every request unconditionally. The reasonableness element is untouched; an association may still show that an accommodation imposes an undue financial or administrative burden or requires a fundamental alteration. The decision is about the analytical order — test the requested accommodation, not the association's counter-proposal — and about the consequence of dressing a refusal as an approval.
Where North Carolina associations meet this
Three recurring situations, all governed by the same framework:
- Group homes and assisted living against single-family, residential-use or business-purpose covenants — the fact pattern of this case, and one North Carolina communities encounter regularly given the state's ageing population.
- Assistance animals against pet restrictions — breed bans, weight limits, numerical caps, and no-pet buildings. Conditional approvals are especially common here, and often carry exactly the sort of unrelated conditions the court criticised: extra deposits, liability insurance, designated relief areas, muzzle requirements.
- Physical modifications against architectural standards — ramps, lifts, grab bars, widened doorways, parking adjacent to a unit.
In each, the question to ask before issuing a conditional approval is simply whether each condition connects to the disability-related need, and whether the requester has agreed to it. If the answer to either is no, the association is closer to a denial than it thinks.
The state-law backdrop has not moved
North Carolina has no state-level HOA complaint or enforcement mechanism, so fair-housing claims against associations run through HUD, the North Carolina Human Relations Commission, or federal court. House Bill 1174, which would have created a Department of Justice complaint database, stalled in committee and expressly barred the Department from resolving anything in any event.
That absence raises the practical stakes of this decision: in North Carolina there is no low-cost administrative forum in which an accommodation dispute gets tested early. It escalates from the board's letter to litigation with comparatively little in between, which is a reason to get the letter right.
What to watch next
The case returns to the district court, where the Fourth Circuit's limited holding — that there are two sides and summary judgment was inappropriate — means a trial or a settlement rather than a rule.
More useful to watch is application in the North Carolina federal districts. No published decision from the Eastern, Middle or Western District applying this holding to a community association has surfaced yet. The first one will show how far the counter-offer reasoning travels from group homes to the far more common assistance-animal and modification disputes.
Separately, federal enforcement posture on assistance animals has been shifting, and any association relying on guidance issued before 2025 should confirm it is still current before building a policy on it.
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