The federal Fair Housing Act (“FHA”) and Americans with Disabilities Act (“ADA”) require property developers to provide reasonable accommodations for disabled individuals. In turn, property owners rely on their architect and engineer to design compliant projects. If a project is not compliant, it is typical thinking that the property owner will seek indemnification and defense from the architect or engineer who was paid and insured to make it compliant.
The federal courts prohibit this, however. That is because the national consensus is that the FHA and ADA preempt state contractual law. The courts have looked at the statutes for an express private right of indemnification by an owner against a negligent designer, and they have not found one. As such, they hold that the requirements of the FHA and ADA on property owners are “non-delegable,” and that the liability for their breach cannot be shifted on to any other party.
The recent case of The Chicago Housing Authority v. Destefano and Partners, Ltd., 45 N.E.3d 767, 2015 IL App (1st) 142870 (2016) is illustrative. There, a review by the United States Department of Housing and Urban Development (“HUD”) revealed a range of noncompliance issues at seven properties, necessitating over $4 Million in renovations and new work. The Housing Authority had worked with the architects and engineers expressly to achieve compliance, requiring compliance in the design contracts. The Housing Authority therefore sued the architect and engineer to recover the cost of achieving compliance, under both breach of contract and indemnity theories.
The Illinois Court reviewed a lead case on the matter, Equal Rights Center v. Niles Bolton Associates, 602 F.3d 597 (4th Cir. 2010), noting that the federal trend has been consistent that property owners cannot contractually delegate their duty to comply with the federal accessibility standards. The Illinois Court ultimately held that the Housing Authority had no recourse against its designers whose negligence had caused the noncompliance, because no recourse was provided for in the governing federal standards. Recently, contractors have also been taking advantage of this caselaw to further isolate developers when claims arise.