On April 4, 2016, the federal government, through the Housing and Urban Development (HUD), released new Fair Housing regulations for screening prospective residential tenants.
The regulations basically inform you that you cannot utilize a blanket policy of automatically rejecting prospective tenants based upon prior criminal convictions or arrests. You need to find out the details and conduct a full picture assessment of the applicant. Details like: What crime? When was the conviction? How old was the applicant at the time? What were the circumstances of the offense? The HUD regulations specifically state that, “A housing provider with a more tailored policy or practice that excludes individuals with only certain types of convictions must still prove that its policy is necessary to serve a ‘substantial, legitimate, nondiscriminatory interest.’” So, if you are denying a rental applicant with a prior conviction because of safety concerns to other residents, you need to be able to show that your housing policy [denial] distinctly addresses the differences between the types of criminal actions that show a demonstrable safety risk to other residents and types of criminal convictions that would not pose such a risk.
Another example: let’s say that your applicant was convicted of a felony sex offense. You do some research and discover that when the applicant was 18 years old, he had consensual sex with his 16-year-old girlfriend and was subsequently convicted of statutory rape. Even if he and his girlfriend are now married, he has a conviction for rape on his record. In such a scenario, the applicant’s felony conviction probably would probably not be viewed by Fair Housing as a legitimate reason to reject his rental application. That’s an extreme example, but it points out the rationale for doing some research into the details of an applicant’s criminal history.
There may be some “requirements” that you could add to your application process that would allow you to “work around” the new HUD regulations. This could include: a requirement that the applicant provide several years of continuous employment history or provide references from other properties where he or she has lived for a significant period of time. Such requirements would be difficult for a convicted felon to meet but be careful that they are not discriminatory in other ways or run afoul of other Fair Housing regulations.
Excuses for not researching the criminal conviction of a prospective tenant such as: “we use a third party application assessment service; or, we only see the assessment results, not the details; or, we don’t know the exact reason that an application is rejected” will not be acceptable. By requiring that you refrain from denying the application of a prospective tenant simply because of a criminal conviction, the Fair Housing regulations are basically telling you that you cannot rely on a service that uses a mysterious formula that you don’t understand or have not fully vetted. Your best bet is to be prepared to research the history of the applicant’s criminal conviction, and if you deny his or her application based on the criminal conviction, have a very specific and well documented rationale for doing so.
Before denying a rental applicant based on his or her prior criminal or arrest record, it is a good idea to make sure you discuss your rental policies and basis for denial with a real estate attorney.
For a full text of the regulations, visit: http://portal.hud.gov/hudportal/documents/huddoc?id=HUD_OGCGuidAppFHAStandCR.pdf
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