New HUD Guidelines on Criminal Reports and How They Will Affect Landlords

Posted in Blog  
  on Apr 21, 2016

The Fair Housing Act stops discrimination based on several factors, including race, color, national origin, and four other criteria. Your tenant screening process may take a look at anything not noted within these protected classes, such as credit scores and criminal history.

Tenant screening services streamline the process of accessing background and credit reports, which makes it easier for landlords to check for their specific requirements. However, new guidance from the U.S. Department of Housing and Urban Development may change the way you're allowed to handle prospective tenants with criminal records.

The New HUD Guidelines

Many landlords have tenant qualifications barring applicants with a criminal record. The recently issued HUD guidance states that, while people with criminal records do not count as a protected class, a blanket rejection of anyone convicted of a crime can lead to discrimination based on race and color.

HUD's rationale for this guidance comes from a disproportionate incarceration rate for minorities, specifically African Americans and Hispanics.

United States prisons currently hold over two million prisoners, and 58 percent of this population are Hispanic and African American. These minorities only make up 25 percent of the country's population, however. After they complete their prison sentences, their reintroduction into society becomes difficult due to a lack of available housing.

The racial imbalance in the arrest and incarceration rates create an environment of unintentional discrimination in the housing market, which HUD is attempting to address with these new guidelines. Blanket bans against tenants with entries on their criminal background checks also filters out people who only have arrests, not convictions, on record.

 

You don't automatically run afoul of the Fair Housing Act for using a criminal past as a screening tool. Any decision you make based on the applicant's criminal background check must address safety concerns.

The HUD guidance states simply having a criminal record does not prove that there's any danger to other tenants, neighbors, or the property. You need justification for your concern, or you may be liable for a discrimination lawsuit.

How to Change Your Tenant Screening Process to Avoid Discrimination Lawsuits

  • You need to remove any verbiage stating a criminal record is automatically a disqualification from your policies, rental application, and marketing materials. HUD wants landlords to examine the listings on the background check to determine whether the prospective tenant represents a dangerous rental risk. Your time requirement to process these applications increases, so it's important to have a quality tenant screening service to help you out with the manual tasks. Once you have the report, you need to consider several key criteria when making your decision:
  • Does the record show a conviction or only an arrest? People get arrested for many reasons, from unpaid parking tickets to peaceful protests. If you only see an arrest without a conviction, the applicant was never found guilty of the crime. Public records keep the arrest record on the background check, but it doesn't provide you with a justification for denying the application.
  • How long ago was the crime committed? People change over time and a single conviction several decades ago has little bearing on what they're like today, especially if they committed the crime as a teen or young adult. Look at what they've done after the crime to get a complete picture of the tenant.
  • Did the applicant reoffend? If you see a pattern of reoffending, you have good reason to believe that you may encounter a safety risk with the tenant. You can also look for a history of parole violations.
  • Is the crime related to drug manufacturing or distribution? HUD permits blanket bans on criminals convicted of these drug-related crimes.
  • How severe is the crime? A non-violent offender with a shoplifting charge sits on a different risk level than a person with multiple aggravated assault charges. Consider the type of crime and the circumstances surrounding the crime when making your decision.

The HUD guidelines add some uncertainty into handling applicants with a criminal past, as you don't have hard-and-fast rules governing acceptable crimes versus unacceptable crimes.

When you receive a background check with a criminal history and you make a denial decision based on this information, create an internal note explaining why you felt your actions protected yourself or your property. If the applicant later sues you based on discrimination, you have the basis of your defense ready to go.

Your policies surrounding applicants with criminal records must also be consistent. You can deny applicants based on specific crimes, such as violent offenders, as long as you deny all applicants meeting these criteria. If you deny a Hispanic applicant based on a violent crime, but you disregard this information with an applicant of another race or national origin, you violate the Fair Housing Act.

Your existing rental policies may need minor or even major restructuring based on these new guidelines. Addressing these changes now lets you avoid lawsuits which take up your time, energy, and money.

You will invest more time into looking at tenant applications under this new system, but a clearly defined and consistent policy protects you in the long run while maintaining your adherence to the Fair Housing Act.


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