On November 30, 2015 the United States Department of Housing and Urban Development (HUD) issued new guidance involving the use of criminal background screening in federally assisted properties.

In honor of Fair Housing Month, HUD issued new guidance on April 4, 2016 for this topic for all communities. That guidance, which was effective immediately, requires landlords to change the way they screen applicants based upon their criminal histories.

New Standards

Specifically the guidance establishes three new standards:

  1. Properties may not exclude an applicant on the basis of an arrest that did not result in a conviction for criminal activity.
  2. Properties may screen out applicants based on evidence of criminal convictions only if the conduct reflected in those criminal convictions is closely related to important interests of the property.
  3. If an applicant is presumptively disqualified from renting at a property due to evidence of a criminal conviction, the property must give the applicant an opportunity to show mitigating measures as to why he or she should be allowed to rent there.

In order to avoid additional costs and burdens on the property that may occur because of these new standards, HUD recommends that properties not consider an applicant’s criminal history until the applicant has already passed the credit screening and screening for prior rental history. If an applicant does not qualify because of his/her credit or prior rental history, the person’s criminal history becomes irrelevant as the property can exclude the applicant based on lack of these other qualifications.

Permissible Use of Screening Materials

If an applicant passes his/her credit and rental history screening, then a property may consider the applicant’s criminal history to the extent that this history is relevant to the property’s substantial and legitimate important interests. Those interests will typically include the property’s interest in ensuring that the new tenant will not “threaten the physical safety of other tenants or property management, will not commit crimes against persons or property, and will not engage in other criminal activity which may threaten the health or safety of the rental community.”

The property may not exclude applicants for criminal convictions that do not substantially impact these or other, previously identified substantial and legitimate interests. So, for example, a property may not exclude an applicant because of any and all felonies but only for felonies that create a substantial risk to the property. In many situations this will require management to revisit its screening criteria and notify credit-screening companies of these new standards.

Properties should also carefully calibrate their screening in order to ensure that the periods of exclusion for criminal convictions are reasonably related to the likelihood that the applicant will commit a similar crime in the future; thus, permanent exclusion of all applicants who have any felony is likely to be unlawful under this guidance.

Consideration of Mitigating Measures

While the existence of a criminal conviction involving an issue that affects a property’s substantial and legitimate interests creates a presumption that the applicant will be denied the opportunity to rent, the inquiry does not stop there. Any time an applicant is being screened out due to criminal history the applicant must be given the opportunity to request reconsideration by someone at a level above the site manager. As part of that reconsideration the applicant would be entitled to provide “mitigating information” that may go to demonstrate that allowing him/her to rent at the community is not likely going to negatively affect the property’s legitimate and substantial interests. Examples of mitigating evidence can include, but should not be limited to factors such as:

1) How long ago did the crime occur? For example, a person convicted of an assault twenty years ago who has no subsequent criminal history is less likely to engage in violence than someone who assaulted another person one year ago.

2) How old was the person when the original criminal conduct that resulted in a conviction occurred? How old is the person now? We know, for example, that persons in their 20s (especially males) are more likely to commit violent crimes than persons who are older, so comparative age may be a mitigating factor.

3) Was the offense an isolated incident or was it part of a pattern of criminal activity?

4) Has the applicant lived in other apartments since the time of the criminal conviction and, if so, were there any incidents during those tenancies to suggest that the person posed a threat to any persons or property during those tenancies?

5) Has the person maintained steady employment with the same or similar employer for an extended period of time?

6) If the person was convicted of a drug related offense can he/she show that he/she is no longer using drugs or involved with them?

Guidance for On-Site Staff

While most of the obligations to change these criteria will fall on corporate and supervisory staff who will establish the new screening criteria and set up procedures for considering mitigating measures, on-site staff can create liability for properties by communicating the wrong information to applicants about management’s procedures. This issue has come up several times in the last couple weeks as testers have been calling and visiting different communities and asking on-site staff if they will rent to persons who have felonies or other criminal convictions.

In the event that any employee receives an inquiry about whether management screens applicants to determine whether they have criminal convictions or excludes applicants with criminal convictions, staff should be careful to communicate only the following information:

  1. All applicants are welcome to apply to rent at the community, regardless of whether they have criminal convictions or not.
  2. Staff cannot determine whether any particular person will qualify to rent there until the full background screening has been concluded.
  3. That background screening will include screening for credit, prior rental history and criminal convictions.
  4. Any person who wants management to consider special circumstances showing why he/she should be allowed to rent there (even if the person does not appear to meet the rental criteria) will have an opportunity to speak with a supervisor and discuss those special circumstances.
  5. On-site staff does not have the authority to approve or deny any applicants.

Judy Drickey-Prohow, Esq. is with the Law Firm of Scott M. Clark.  Scott Clark Law is a full service resource for Residential Multi-housing Property Management law in Arizona.  Reprinted with permission.