Recently, there’s been a lot of controversy surrounding HUD’s April 2016 Housing Update which limits the use of criminal records in background checks. While the area of law is complex, and will undoubtedly evolve over the upcoming months and years, it is important for property managers and landlords to understand the basics. Failure to do so could lead to stiff penalties and fines.

The Law in a Nutshell

The Fair Housing Act (“FHA”) prohibits housing providers, which includes landlords and property managers, from discriminating against potential renters on the basis of race, color, religion, sex, national origin, disability or familial status. Although a housing provider might do everything correctly and not intentionally discriminate, if the housing provider’s policies result in an unjustified discriminatory effect, the housing provider could be held liable for discrimination.

Criminal Background Checks and Discriminatory Effect

According to the HUD update, “African Americans and Hispanics are arrested, convicted and incarcerated at rates disproportionate to their share of the general population.  Consequently, criminal records-based barriers to housing are likely to have a disproportionate impact on minority home seekers.”

What does this mean for the housing provider? If a housing provider has a policy in place that denies tenants because of their criminal background, and upon investigation, HUD determines that the denials disproportionately affect members of a certain race (i.e. have a “disparate impact”), HUD could hold the housing provider liable for discrimination. It doesn’t matter if the resulting discrimination was unintended. Property managers and landlords should use caution and a common sense approach when screening tenants.

Suggested Policies to Integrate into Your Fair Housing Policies and Criminal Background Screening

1.       Make sure you have written policies on screening procedures that all office members are trained on.

2.       It is recommended you utilize a legitimate 3rd party screening company that will comply with FHA and FCRA standards.

3.       Make sure your policies and the 3rd party screening company’s policies are consistent with each other and DO NOT:

a.       Deny a tenant based on arrest records;

b.       Deny a tenant if adjudication was withheld;

c.        Deny a tenant based on convictions for misdemeanors;

d.       Deny a tenant based on convictions for petty drug offences, such as possession of a controlled substance;

e.       Deny a tenant based on simple DUI.