CRIMINAL SCREENING KTS 2016 UPDATE

Kimball,Tirey&St.JohnLLP

Legal Alert

New HUD Guidance on Use of Criminal Background Checks

April, 2016

On April 4, 2016, HUD’s General Counsel released guidance for all housing providers (not just

those who are HUD subsidized) regarding how the use of criminal background checks could

potentially violate fair housing laws. If you are a Landlord and run criminal background checks as

part of your screening process, it is important for you to become familiar with the guidance.

Although this is HUD guidance, rather than law, it clearly outlines how HUD would analyze a fair

housing complaint based on the use of criminal background checks to deny housing.

The guidance focuses on “disparate impact” (discriminatory effect) discrimination. Disparate impact

occurs when a landlord has a policy or practice that is neutral (i.e., non-discriminatory) on its face

and applies equally to all applicants and/or residents, but its application has a discriminatory effect

on one or more of the protected classes. In order to successfully defend a claim of discrimination,

the landlord must be able to show that this policy or practice is necessary in order to achieve a

non-discriminatory business objective, and that there is no less discriminatory alternative that

would achieve that business objective.

The HUD guidance states that due to the higher than average incarceration rates among certain

races (Hispanics and African Americans) in the United States relative to their percentage of the

total population and when compared against the incarceration rates of non-Hispanic Caucasians,

the use of criminal history to deny housing can cause a disparate impact on these particular races.

Therefore, if Landlords want to use criminal background checks as part of their rental criteria, they

have the burden to show: (1) it is necessary to use criminal background checks in order to achieve

a non-discriminatory business objective and; (2) there is no less discriminatory alternative. (The

“business objective” would presumably be the protection of resident safety and/or property.

However, the guidance states that the business objective cannot be prospective in nature. The

landlord must prove that the use of the criminal background checks actually accomplishes the

business objective.)

The HUD memo goes on to state that in order to meet this burden when a Landlord’s policy has a

disparate impact, Landlords must consider the following:

1)

Arrest Records: HUD states that landlords should not use arrest records as a basis for

excluding applicants. According to HUD’s General Counsel, an arrest which does not lead

Kimball, Tirey and St. John LLP is a full service real estate law firm representing residential and commercial

property owners and managers. This alert is for general information purposes only. Laws may have changed

since this article was published. Before acting, be sure to receive legal advice from our office. If you have

questions, please contact your local KTS office. For contact information, please visit our website: www.ktslaw.

com. For past Legal Alerts, Questions & Answers and Legal Articles, please consult the resource library

section of our website.

© 2016 Kimball, Tirey and St. John LLP

.

to a subsequent conviction does not prove that an individual engaged in illegal activity.

Therefore, the use of arrest records would not provide information regarding whether the

applicant who was arrested would be a threat to the safety of other residents or their

property.

2)

Prior Convictions: Although prior convictions are sufficient evidence to prove that an

individual engaged in criminal conduct, HUD’s General Counsel states: “A housing provider

that imposes a blanket prohibition on any person with any conviction record-no matter

when the conviction occurred, what the underlying conduct entailed, or what the convicted

person has done since then-will be unable to meet this burden.”

In other words, according to HUD’s General Counsel, if a landlord is going to use criminal

records as part of the screening criteria, the policy must be narrowly tailored. The guidance

goes on to state that even then a landlord would still need to prove that this “tailored” policy

is necessary to serve a “substantial, legitimate, nondiscriminatory interest.” In order to do

this, a landlord must be able to show that its “tailored” use of criminal background checks

“accurately distinguishes between criminal conduct that indicates a demonstrable risk to

resident safety and/or property and criminal conduct that does not.”

So what does this all mean? Can Landlords take into account the criminal background of

applicants as part of their screening criteria without violating fair housing laws? This latest HUD

guidance does confirm that there is one “safe harbor” available to landlords: If a landlord uses

criminal background checks and only excludes applicants who have been convicted of the illegal

manufacture or distribution of a controlled substance, a landlord will not run afoul of fair housing

laws. This is because the Fair Housing Act specifically states that landlords do not have to make

housing available to persons with such a conviction. The guidance warns, however, that the

exclusion is only for manufacture or distribution (making or selling) controlled substances and does

not extend to other drug-related crimes such as use or possession.

What if a landlord wants to exclude applicants who have been convicted of other crimes? Will it be

considered a fair housing violation? Other than the safe harbor addressed above, the HUD memo

does not specify what types of criminal convictions would warrant a denial to rent. However, the

HUD guidance does provide some general guidelines which landlords must consider if they choose

to go beyond denial of applicants convicted of illegal manufacture or distribution of controlled

substances:

1)

Nature of the Conviction: The guidance states that a landlord who wants to use criminal

background checks must take into account the “nature and severity” of an individual’s

conviction. For example, the landlord should consider the exact crime and how severe it

was. Moreover, the landlord should consider whether the fact that the applicant engaged in

this particular type of criminal activity means this applicant will be a greater risk to resident

safety and/or property. This closer scrutiny that HUD is requiring means that landlords

should avoid blanket restrictions such as a policy that excludes all applicants who have any

felony conviction.

2)

When the Criminal Activity Occurred: The guidance also states that a landlord who

screens for criminal history must take into account how long ago the criminal activity

Kimball, Tirey and St. John LLP is a full service real estate law firm representing residential and commercial

property owners and managers. This alert is for general information purposes only. Laws may have changed

since this article was published. Before acting, be sure to receive legal advice from our office. If you have

questions, please contact your local KTS office. For contact information, please visit our website: www.ktslaw.

com. For past Legal Alerts, Questions & Answers and Legal Articles, please consult the resource library

section of our website.

© 2016 Kimball, Tirey and St. John LLP

.

occurred. According to HUD’s general counsel, there is “criminological research” which

shows that over time, “the likelihood that a person with a prior criminal record will engage in

additional criminal conduct decreases until it approximates the likelihood that a person with

no criminal history will commit an offense.” In other words, crimes that occurred a long time

ago should be considered less relevant as compared to more recent crimes (and possibly

not considered at all). So how far back should a landlord look? Could a landlord safely

consider a crime that took place 5 years ago? 10 years ago? Unfortunately HUD offers no

guidance on this question. It is left up to the landlord to be able to defend whatever policy

they choose to implement.

3)

Individualized Assessment: The HUD memo goes on to state that not only do Landlords

need to narrowly tailor their use of an applicant’s criminal history, but they must also show

that this narrowly tailored policy has the least possible discriminatory affect. In order to

accomplish this goal, HUD recommends that Landlords conduct an “individualized

assessment” of each applicant, considering “relevant mitigating information” such as; (1)

the facts or circumstances surrounding the criminal conduct; (2) the age of the individual at

the time the conduct occurred; (3) evidence that the individual has maintained a good

tenant history before and after the conviction or conduct; (4) and evidence of rehabilitation

efforts.

Finally, the guidance states even if a Landlord’s use of criminal background checks is narrowly

tailored by taking into consideration the nature and severity of the crime, the length of time since

conviction occurred, and where individualized assessments are carried out, a Landlord “will still

bear the burden of proving that any discriminatory effect caused by such policy or practice

[involving the use of criminal background checks] is justified.”

Based on this guidance from HUD, the only sure way a Landlord can avoid fair housing liability if

he/she wants to consider an applicant’s criminal history is to limit the policy to exclude only

applicants with prior convictions for illegal manufacture or distribution of controlled substances.1 If a

landlord wants to deny an applicant for any other convictions, the landlord must be able to prove

that the particular policy is necessary in order to achieve a substantial, legitimate, nondiscriminatory

interest, and that there is no less discriminatory way to achieve this interest.

Our Fair Housing Practice Group has a detailed opinion letter on criminal background checks.

Please contact us today at (800) 338-6039 for more information or to purchase this opinion letter.

1 Note that project-based HUD subsidized properties must also prohibit admission to sex offenders subject to a

lifetime registration requirement under state government’s sex offender registration program or to individuals found

to have manufactured or produced methamphetamine on the premises of federally assisted housing.

Kimball, Tirey and St. John LLP is a full service real estate law firm representing residential and commercial

property owners and managers. This alert is for general information purposes only. Laws may have changed

since this article was published. Before acting, be sure to receive legal advice from our office. If you have

questions, please contact your local KTS office. For contact information, please visit our website: www.ktslaw.

com. For past Legal Alerts, Questions & Answers and Legal Articles, please consult the resource library

section of our website.

© 2016 Kimball, Tirey and St. John LLP