This article was published in the Pennsylvania Association of Housing & Redevelopment Agencies (PAHRA) Monitor (Winter 2016-17). It is reprinted here with permission.
The message from HUD is certainly confusing: don't discriminate, but use your discretion. It is enough to strike fear into the heart (and liability insurer) of even a seasoned property owner and manager. The common advice to date has been to adopt a standard policy and apply it to everyone; however, HUD now wants landlords to look at applicants on an individual, case-by-case basis, which represents a sea change from longstanding "best practices" in admissions policies and puts management employees squarely in the middle of rendering discretionary but nondiscriminatory decisions.
Why the Change?
According to statistics published by the Justice Department in 2014, nearly one-third of the adult population in the United States has a criminal record of some sort. Those individuals face significant barriers to securing housing, including federally assisted housing. Those same statistics demonstrated that African Americans and Hispanics are arrested, convicted and incarcerated at rates disproportionate to their share of the general population. Thus, denials based on criminal background checks can lead a landlord to violate the Fair Housing Act. This is true if its policy for denying applicants with criminal histories has an unjustified discriminatory effect, even if the landlord had no intent to discriminate.
Considering Prior Convictions
Owners and operators of federally assisted housing have been on notice since at least November 2, 2015 that denials of admission cannot be based solely on arrests and not convictions. (See Notice PIH 2015-19). Moreover, given that there are only two types of convictions that lead to mandated exclusion (a lifetime ban on registered sex offenders and those convicted of manufacturing methamphetamine in federally assisted housing), any other convictions are not an automatic bar to admission. So, how does a landlord decide who to admit and who to reject when considering prior convictions?
The April 4, 2016 Guidance from HUD's Office of General Counsel (OGC) addresses the likelihood that the Fair Housing Act is being violated when housing providers use blanket policies in refusing admission or lease renewal based on an individual’s criminal history because such policies are likely to have a disparate impact on racial minorities. Moreover, "bald assertions based on generalization or stereotype that any individual with an arrest or conviction record poses a greater risk than those without such records are not sufficient.” Landlords and property managers must be able to prove through reliable evidence that blanket policies actually assist in protecting residents and property.
There are two requisites for an admissions policy regarding prior convictions that will withstand scrutiny: a reasonable look-back and a reasonable connection to the health, safety and welfare of current residents.
While OGC did not explicitly define what constitutes a reasonable look-back, it is clear that certain policies will be deemed unreasonable. For example, a policy that forever excludes those with a felony conviction of any kind cannot withstand scrutiny. A policy or practice that does not consider the amount of time that has passed since the criminal conduct occurred is unlikely to be deemed reasonable. Similarly, a policy that treats old misdemeanor convictions the same as felony convictions is bound to fail. The policy must discern between conduct that is a risk to safety and property and conduct that is not. If a felonious forger is treated the same as an individual with a felony assault record, then the policy requires revision.
Most troubling to landlords, the Guidance suggests that criminal records should be reviewed on a case-by-case basis, considering the nature, severity and recency of the criminal conduct. This type of individualized assessment of mitigating information is deemed inherently better than blanket or categorical exclusions that do not consider other information.
The method used to gather this additional information is left to the discretion of the landlord. You may decide to add a space to your application requesting additional information from the applicant regarding any convictions. Alternatively, you may elect to conduct a follow-up interview with an applicant with a criminal background that might otherwise lead to denial of admission. The 2015 Notice identified such an interview as a "best practice" and noted that it had the potential to produce cost savings, as it can lead to a decrease in the number of complaints about denials of admission. Relevant mitigating information to be sought from the applicant may include: "the facts or circumstances surrounding the criminal conduct; the age of the individual at the time of the conduct; evidence that the individual has maintained a good tenant history before and/or after the conviction or conduct; and evidence of rehabilitation efforts." OGC also noted that by delaying consideration of criminal history until after an applicant's credit and other qualifications are verified, a landlord may help minimize any additional costs related to the individualized process.
The New Normal
While landlords may still use criminal histories to make decisions, those records cannot be used to discriminate or be allowed to have an unjustified discriminatory effect. Policies that deny admission to applicants based on their criminal history must be narrowly tailored to serve the landlord's substantial, legitimate, nondiscriminatory interests and take into consideration such factors as the type of the crime and the length of the time since conviction. Policies that do not take those factors into consideration are unlikely to withstand scrutiny. This type of case-by-case analysis requires both a well-articulated written policy for staff to follow and in-depth training for front-line staff on how to consider these factors and make decisions in a nondiscriminatory way.
The material in this publication was created as of the date set forth above and is based on laws, court decisions, administrative rulings and congressional materials that existed at that time, and should not be construed as legal advice or legal opinions on specific facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship.