On April 4th of 2016, the General Counsel of the Department of Housing and Urban Development (HUD) released new guidance for all providers of housing within the United States in regard to the utilization of criminal background checks and how that utilization could violate the laws that govern fair housing within the country.

If you work in property management and engage in leasing, renting, and/or subletting in any fashion, it is imperative that you become familiar with this newly-released information – especially if running and using criminal background checks is a part of your tenant screening process. While reading this guide, it should be understood that the new guidance is not a law; however, it is the analyzation process in which a complaint on fair housing practices would be conducted by HUD in the event that a criminal background check would be used as grounds to deny an individual housing.

Criminal Background Checks

The Discriminatory Effect
The new guidance, as outlined by HUD, places an immediate focus on the discriminatory effect known as the “disparate impact”. Basically, this impact happens when a landlord engages in practices that appears to be non-discriminatory at face value and applies to all applicants in an equal fashion, but, results in a discriminatory effect on at least one applicant class. Should a claim occur where discrimination is accused, a property management professional/landlord should have the means of displaying that the processes that they have in place is necessary for a business-based objective and that there is no less discriminatory method for achieving that, specific, objective. If a property management professional – such as a landlord – is unable to justify the particular process, complications could arise.

Incarceration Rates
Covered within the new guidance offered by HUD, it is stated that certain races have a higher-than-average record when it comes to incarceration rates. This is particularly true of the African Americans and the Hispanics. If a landlord uses criminal background screenings as a means of determining whether or not a tenant is suitable, this could have a detrimental impact on those races that have a higher-than-average incarceration rate. As a result of exceptionally high incarceration rates among certain races, the new HUD guidance states that if a property management professional utilizes background checks in their processes, they must show the following:

  • It is absolutely necessary to use the criminal background checks in an effort to achieve their business objective in a non-discriminatory manner.
  • There is no alternative available that is considered to be less discriminatory.

Property Management Considerations
The new HUD guidance states that there are many considerations that a property management professional/landlord must consider when using criminal background checks for the tenant approval process. In next week’s installment, we will outline these considerations. As a real estate professional that specializes in renting, leasing, and/or subletting, it is imperative that you learn as much as possible about the HUD guidance suggestions. It will not only protect the interests of your tenants, but, it will protect you, too!

Call Now Button