New HUD Guidance on Criminal Background Screening and Fair Housing

HUD recently released 'Guidance' on the application of Fair Housing Standards in a prospective tenant's criminal background screening. The guidance, found here, eliminates blanket exclusions on individuals with a criminal record and limits the use of arrest records in making leasing determinations for prospective tenants. This means that any policy which denies tenancy based on any prior conviction, will likely result in a finding of discrimination. HUD does maintain the statutory exemption denying tenancy to an individual with prior convictions for production and/or distribution from specified drug crimes.

When an allegation of a discriminatory policy is made, the investigative agency will look to the landlord to show by specific facts that the policy is in place to achieve a substantial, legitimate and non-discriminatory interest. Once the landlord has shown this, the tenant must show that there are less restrictive means available to achieve the same goal. General statements will not suffice and a landlord must show facts specific to the prospective tenant and the crime(s) committed by that person as the basis for denial. One hypothetical example of a situation where denial may be appropriate is a prospective tenant’s prior criminal record which includes more than one felony conviction (not misdemeanor) for assault or property damage. Unfortunately, the HUD Guidance does not mention sex offenders or persons with convictions for terrorism. We can only assume that this was an oversight and that landlords can still reject persons with sex offenses who are required to register as sex offenders under state law.

Arrest History: In addition, HUD provides that any policy based only on an arrest and not a conviction is likely to fail and will likely result in a finding of discrimination. It can certainly be argued that a landlord can and should properly consider a recent arrest for a serious crime that has a pending trial. An arrest that is several years old and did not result in any still pending charges should not result in a denial. Note that Washington State Law permits an action in unlawful detainer if a tenant physically assaults another person which results in an arrest, or unlawfully uses a firearm or other deadly weapon which results in an arrest.

Prior Drug Convictions: In terms of drug crimes, HUD makes clear that there is a statutory exemption in disparate impact allegations from convictions for manufacture and distribution of drugs, as defined in the Federal Controlled Substances Act (which does include marijuana). This does not automatically extend to convictions for drug possession alone, which are much more closely examined for disparate impact. We recommend caution when considering denial on the basis of prior convictions for drug possession only, especially marijuana. There are also HUD exemptions in public housing and federally financed housing for 'lifetime' sex offender registrants.

Recommendations: HUD's guidance provides recommendations for landlords when a prospective tenant presents with a criminal record where a landlord's screening criteria would otherwise require denial on this basis. HUD strongly encourages you to take a close look at the circumstances and facts of the conviction including:

1. the nature and severity of the conviction;
2. the amount of time since the conviction; and
3. the age of the person at the time of the conviction.

HUD specifically recommends that landlords perform a credit check of a prospective tenant prior to conducting a criminal background check, to avoid any added costs associated with a separate criminal background screening. HUD does assume that there may be additional costs related to the extended analysis for criminal convictions. It is unclear whether HUD would endorse a landlord's decision to charge an extra screening fee if the applicant has criminal convictions in his/her history. Washington law provides that a landlord may charge a prospective tenant for the costs incurred in obtaining a tenant screening report and may charge the prospective tenant the actual costs associated in obtaining the background information.

WMFHA very strongly recommends that you carefully review your screening policies, as they pertain to criminal background checks, and make sure that all blanket exclusion policies are reviewed and updated. Any policy to deny a person based upon their prior criminal record must be 'necessary to achieve a substantial, legitimate, nondiscriminatory interest.' This is the legal defense standard applied to a disparate impact claim. The policy must 'accurately distinguish between criminal conduct that indicates a demonstrable risk to resident safety and/or property and criminal conduct that does not.'

If you have questions about this HUD Guidance and your particular criminal screening criteria, please contact your supervisor, legal counsel and/or screening company.

Joe Puckett and Brett Waller
Government Affairs
Washington Multi-Family Housing Association