Immediate modifications to your application process may be neccessary

As many of you are aware, the Department of Housing issued new guidance on April 4, 2016 that requires anyone offering residential rentals to revisit their rental criteria.[1]    This article discusses how The Fair Housing Act applies to the use of criminal history by landlords.  HUD released some very compelling statistics that indicate that some protected classes are being disproportionately impacted by previous criminal history arrests and convictions.   HUD did not make persons with felonies a new protected class.  They still allow the landlord to use criminal records in the background screening process, however, this new decision conclusively prohibits a landlord from denying anyone solely based on an arrest that did not result in conviction.  HUD also recommends that a landlord create a policy based on proof that that policy is necessary to achieve a substantial, legitimate and non-discriminatory interest.   As a landlord, you have an obligation to ensure resident safety and are also motivated to protect your rental property from damage or liability.

 

While this article is complex in nature, the basic guidance is that your rental criteria must differentiate between arrests and convictions and that you must also avoid policies that have a blanket ban on all felonies and that treat all felonies as identical in nature and time that has passed since it was committed.  In order to avoid potentially violating The Fair Housing Act, your policies need to consider the nature of the criminal conviction, the severity of that crime, the length of time since the conviction occurred, and the tenant’s actions since the completion of that sentence. 

This means that you need to immediately review your current rental criteria (including that of any 3rd party screening) to ensure that you are in compliance with the HUD guidelines.  Every Landlord is still free to create their own rental guidelines, we have attached some suggested changes to your current resident rental criteria involving felony convictions until there is clear guidance from HUD.

It is important to remember that the changes to the “felony history policy” is a fluid issue since HUD just passed this resolution and has not provided a lot of guidance at this point.  In addition to modifying your criteria, we are also suggesting that the on-site team be trained to make the correct verbal response to any prospective asking about a felony issue.  That response should be “Our corporate policy addresses felony convictions.  If you would like management to take into account any additional information before a previous felony conviction causes your application to be denied, please provide that additional information and documentation with your application.”

[1] A copy of that article is available by visiting HUD’s website and downloading “Office of General Counsel Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate-Related Transactions”.  

 

Rental Qualifications:

Criminal History:

Not only must Applicant must have acceptable credit history, additionally, all Applicants must meet our Criminal History Criteria.  Applicants that are registered sex offenders will be denied.   Applicants must have no felony convictions less than 10 years old that involve violent crimes against persons or property, including but not limited to murder, arson, kidnapping, assault, bomb related offenses, robbery or burglary, terrorism OR that involve the manufacturing or distribution of drugs in any manner.  All other felony convictions must be more than 5 years old.  Conviction of any drug related offenses involving possession only, or alcohol related offenses where no one was permanently injured or killed, must be at least 2 years old.  Successful completion of any felony sentence at least 2 years ago and no new criminal activity for at least 2 years before this application is also required.  No Applicant with any outstanding warrants or crime that is awaiting trial will be accepted.

If the Applicant would like management to review additional information regarding the felony conviction or the current arrest or warrant as part of their rental application, the Applicant is permitted to submit that information to management along with their application and Management will review that information on a case by case basis.