Landlords: The Right Way to Use Criminal Background Checks

by Chris on October 24, 2016

Because of recent developments, some tenant screening policies regarding criminal history now can lead to discrimination claims.

Criminal background checks remain a necessary step in the tenant screening process, and, in fact, landlords who do not run these reports can be sued for negligence. So, it is important for landlords to understand which screening policies may cross the line.

The Fair Housing Act — which covers most landlords — provides that no landlord can overtly discriminate based on “protected classes” such as race, color, religion, gender, disability, familial status or national origin. In addition, newer regulations provide that even if the discrimination is not overt or intentional, if a policy unfairly impacts a protected class, then it may be discriminatory.

tenant screeningBy using that argument of disparate impact, the U.S. Justice Department recently has taken the position that a landlord’s blanket policy of rejecting any applicant with a criminal history unfairly targets those most likely to have been arrested or convicted of crimes — minority applicants.

While as many as 100 million U.S. adults — nearly one-third of the population – have some sort of criminal record, these statistics show a disproportionate number of minorities, specifically African-American and Hispanic males, are arrested or convicted of crimes, and tend to serve longer sentences.

The Justice Department recently clarified its position with these key points:

The Fair Housing Act does not prohibit landlords from using a criminal background check when evaluating a tenant.

Broad, “categorical” rejection of all applicants with a criminal history may be discriminatory, particularly on the basis of race or national origin, because these populations are significantly more likely to have been convicted of a crime.

Rather than a sweeping, broad policy, each applicant should be evaluated individually, taking into account factors such as how long ago the conviction occurred, the nature of the criminal conduct, and what the applicant has done since that time.

In a case that is currently pending, the government is prosecuting a housing provider for applying a blanket prohibition against applicants convicted of crimes. The landlord refused to rent to any individual with a prior felony or misdemeanor other than a traffic offense. The housing provider now must provide specific evidence that this broad policy is justified, and that there is no less discriminatory alternative. A general belief that every applicant with a criminal history is dangerous will not suffice.

In April of this year, the U.S. Department of Housing and Urban Development issued guidance on how the Fair Housing Act applies to criminal background checks.

When prosecuting cases, the Justice Department (which represents HUD) can use national crime statistics and population demographics to show disparate impact on minority applicants.

Tenant ScreeningMany landlords argue that a blanket policy against criminals is necessary to protect residents and the property. HUD does not necessarily agree.

While HUD acknowledges that tenant safety is paramount, the landlord still must show that the specific policy applied achieves that goal, without relying on “bald assertions” — generalizations or stereotypes — that a person with a prior conviction poses a greater risk than someone with no criminal record.

Landlords who adopt screening policies that list certain types of convictions must be careful to distinguish between criminal history that indicates a risk to residents or the property from conduct that does not. Regardless of the crime, the tenant screening policy must take into account the nature and severity of an individual’s conviction.

Likewise, a screening policy must take into account the amount of time that has passed since the criminal conduct occurred. Recent research indicates that the more time that passes, the less likely that the individual will again engage in criminal conduct.

Other factors that should be considered include:

The facts or circumstances of the prior criminal conduct;
The age of the applicant at the time of the criminal conduct;
The person’s rental history; and
Evidence of efforts to rehabilitate.

According to HUD’s guidance, prior arrests without convictions should not be used to evaluate a rental applicant.

HUD suggests delaying consideration of criminal history until after the applicant’s other qualifications — like income, credit, and rental history —  have been verified.

Illegal drug manufacturing and sales are exceptions to these rules, and landlords are not required to consider applicants who have been convicted of such crimes. However, landlords must be careful to distinguish between drug manufacturing or sales and possession of drugs. Applicants and tenants with drug addictions may be protected by anti-discrimination statutes.

Discrimination rules apply to the tenant screening process, lease terms and renewals, and other aspects of property management. They also apply to real estate-related transactions.

It is a good idea to ask an attorney to review provisions of the lease agreement that may deal with crime, including a “crime-free” lease addendum, to make sure that the language in the lease is in sync with these Fair Housing rules.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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