HUD’s Office of
General Counsel issued guidance on April 4, 2016 relative to the Fair Housing
Act and landlords using criminal history as a basis for denying applicants for housing. Among other things, the Fair Housing Act, 42
U.S.C. §3601 et seq., prohibits discrimination in the rental of apartments on
the basis of race, color, religion, sex, disability, familial status or
national origin. As a result of HUD’s
guidance, attorneys representing residential landlords should advise them to
review their qualifying criteria and standards for rejecting applicants.
There are two
types of discrimination: intentional discrimination, or disparate
impact/discriminatory effect, which is when a neutral policy or procedure has a
disproportionately negative impact on a protected class. In 2015, the
U.S. Supreme Court in Texas Department of
Housing and Community Affairs v. Inclusive Communities Project, Inc., 135
S. Ct. 2507, recognized that the disparate impact theory applies in fair
housing cases, and the HUD guidance concentrates on this type of discrimination
in the context of criminal history. It points out that as many as 100
million adults in the United States have a criminal record and that it is
important for individuals released from incarceration to be able “to access
safe, secure and affordable housing.” Applicant screening policies that
disqualify individuals who have been arrested or convicted of a crime have a
disproportionately negative effect on African Americans and Hispanics who are
arrested and convicted at a rate much higher than that of the general
population.
Landlords
generally refuse to rent to applicants with an arrest or conviction because it
is believed that they are more likely to pose a risk to tenant safety or
property. As perhaps the most
fundamental obligation of a landlord is to strive to keep its residents safe
and secure, that is certainly a legitimate concern for landlords. The guidance recognizes this but states that
landlords must be able to prove that their criminal screening policies actually
do protect tenant safety or property. It
then rejects the approach of denying all applicants who have been arrested or
convicted as not being an effective means of achieving that goal.
The guidance
states that arrest records are not proof of past criminal conduct, since they
just show the individual was suspected of committing a crime. An
individual with an arrest record does not necessarily constitute a risk to
other residents, so excluding that person does not really protect residents and
does not satisfy the landlord’s burden of demonstrating that the policy “is
necessary to achieve a substantial, legitimate, nondiscriminatory interest.” The guidance quotes the U.S. Supreme Court in
Schware v. Board of Bar Examiners,
353 U.S. 232, 241 (1957), where the court stated that “the mere fact that a man
has been arrested has very little, if any, probative value in showing that he
has engaged in any misconduct. An arrest
shows nothing more than that someone probably suspected the person apprehended
of an offense.”
Individuals who
have been convicted did commit a crime.
However, the guidance notes that there are many different types of
crimes that one may be convicted of, some much more serious than others. Similarly, some crimes occurred long ago,
while others were more recent. It states
that a landlord who has a blanket prohibition on accepting any applicant with
any type of conviction cannot meet the same burden, that the policy “is
necessary to achieve a substantial, legitimate, non-discriminatory
interest.” The guidance goes on to say
that landlords should tailor their criminal history policy so it distinguishes
between which criminal conduct poses a risk to resident safety or property and
which does not, and consider the “nature, severity and recency of the criminal
conduct.”
It recommends
that landlords perform an individualized assessment of a conviction and
relevant mitigating circumstances, which could include the facts surrounding
the criminal conduct, the age of the applicant at the time, the applicant’s
tenant history before and after the conduct, and evidence of rehabilitation
efforts.
Since the Fair
Housing Act has specific exemptions for the illegal manufacture or distribution
of controlled substances, the guidance points out that it is acceptable for a
landlord to maintain a blanket rejection policy for convictions for those
specific crimes. These exemptions do not
apply to arrests for drug manufacture or distribution, or to convictions for
drug possession. Aside from these
specific exemptions, the guidance states that denying applicants based upon “a
prior arrest or any kind of criminal conviction cannot be justified, and
therefore such a practice would violate the Fair Housing Act.”
Landlords should
now be reviewing and revising their qualifying criteria. Arrests should be eliminated as a basis for
denying applicants, and landlords should carefully examine the various types of
convictions for their relation to threats to safety or property. Landlords who use firms to search criminal
histories and recommend acceptance or rejection of applicants should revise the
specific criminal decision criteria used by the firms. An applicant who is rejected solely for
criminal history should be given an opportunity to provide evidence of
mitigating circumstances for the landlord to consider.
Implementing
these new policies will take some time but should not be overly burdensome to
landlords. Without a doubt, taking steps
now to comply with the Fair Housing Act can help avoid potential disparate
impact claims in the future.
Co-chair
of REBA’s residential landlord/tenant section, Ken Krems is a partner in the
Boston office of Shaevel & Krems, LLP, where he focuses his practice on
real estate management. Ken represents large residential management companies
and is responsible for more than 11,000 units of housing in Massachusetts; he
also represents landlords and tenants regarding commercial leasing issues,
condominium associations and a buyers and sellers of real estate. Ken can be reached at kkrems@shaevelkrems.com.
