Renting out your home can be a nerve-wracking experience, especially if you’re working with the Housing and Urban Development (HUD) department. HUD runs a wonderful program with many benefits for landlords, but the rules and requirements are strict — and any infraction can lead to denial. The 2016 updates to the program’s background check guidelines are surprisingly clarifying and take a lot of the stress out of the process.
Government programs can often be a bit hard to grasp, and the HUD guidelines for criminal background checks are no different. This guide will explain the ins and outs of the guidelines, the 2016 update, and what to expect if you work with HUD to rent your property.
The HUD Criminal Background Check Policy
Landlords who rent their properties to recipients of HUD benefits can use a criminal background check to help decide who is eligible. Here’s what to keep in mind:
- A criminal background check is a legal investigation into a potential tenant’s criminal history. It provides information such as arrest history, jail time, sex offender status, and litigation records.
- A HUD criminal background check can access federal or state records. This information could potentially be used to discriminate against an applicant, although it can be a valid way for a landlord to get important information used to protect their tenants and property.
- HUD has specific guidelines for landlords who use criminal background checks in their rental process. The goal is to enforce fair housing laws fully and avoid any discriminatory activity. HUD requires that any rental applicant who applies through their program receive the same opportunity as any other applicant.
The HUD criminal background check guidelines are multifaceted and can be confusing, especially if you aren’t familiar with the terminology. Getting a solid grasp on the fundamental concepts of HUD’s guidelines during the rental housing screening process greatly reduces the chances of making a mistake along the way.
The Fair Housing Act and HUD Guidelines
The Fair Housing Act (FHA) is a law that prevents landlords and property managers from discriminating against an applicant on the grounds of:
- Family status
A landlord, property manager, or housing provider may stick to the laws but can still be found liable for discrimination if their policies result in an unjustified discriminatory effect, however unintentional. Not all landlords are subject to the FHA, because exact laws change slightly from state to state. Federal laws are the same nationwide. There are some exemptions, such as landlords who use a broker and those who own less than four units.
Discriminatory Effect and Criminal Background Checks
Landlords and housing providers use criminal background checks to help in the rental process because they are good indicators of credit standing and eviction history. They can also be an indicator of negative rental references: People with a felony criminal history are twice as likely to have a credit score below 600, for instance. There are legitimate reasons to use a criminal background check, but they must be used responsibly and cautiously to avoid a complaint.
FBI crime statistics historically show that most minorities are arrested, convicted, and jailed at rates higher than their percentage of the population, leading to disproportionate levels of incarceration. This causes barriers to housing based on criminal history, which in turn also unduly affects minorities.
No Protection for Applicants With Criminal Records
Rental applicants with criminal records have not received much legal protection from discrimination, traditionally. Federal law allows landlords to use an applicant’s criminal history against them because the Fair Housing Act does not consider people with a criminal history a protected class.
HUD considers the following to be protected classes:
- National origin
- Familial status
A person identifying as LGBTQ who believes to have been a victim of housing discrimination can file a complaint under one or more of those classes. Discriminating against a protected class of people for any reason can result in serious penalties, such as fines and even incarceration.
The HUD update to criminal background check guidelines attempted to address the lack of protection for people with arrest records and asserted that landlords using criminal background checks are in some cases discriminating against those protected classes of minorities who are unduly affected by arrest and conviction rates.
HUD states that housing discrimination is usually done in a subtle and indirect fashion known as “indirect impact,” which their guidelines aim to extinguish. An example would be a landlord who, instead of saying, “I don’t rent to Hispanic people,” might say, “I don’t rent to people from [some largely Hispanic area].” The implied fact that the landlord doesn’t rent to Hispanic people is apparent and against HUD’s guidelines.
Usefulness of Information in Criminal Background Checks
There are some legitimate reasons to run a criminal background check for a rental applicant, but there’s only so much value in it. It’s only part of the story. The details are missing, and they are often the most telling part. A background check not only lists violent convictions or financial crimes, but also arrests without convictions and other factors that have no bearing in a rental situation. It’s basically a mishmash of negative information with no real detail about how it could affect a rental agreement.
It’s a scary thought to know you could be liable for discrimination without ever meaning to do it. Landlords should use common sense and an abundance of caution when screening applicants. Always follow HUD’s suggested policies and integrate them into your screening process.
HUD Suggested Policies for Screening Rental Applicants
HUD suggests some policies to implement that can keep prospective tenants from claiming you have discriminatory practices. Use these in your rental screening process to cover all your bases and minimize your chances of receiving a complaint.
Formal Written Policies
Formally write your screening policies out and provide them to all personnel along with any needed training.
Third-Party Screening Companies Can Help
Hire a legitimate third-party screening company in compliance with your policies and with the Fair Credit Reporting Act (FCRA) and FHA standards.
Arrest Records and Withheld Adjudication
Never deny a tenant based solely on arrest records or if adjudication was withheld. There must be more information to back up a denial.
Misdemeanor Charges Aren’t Enough
Never deny a tenant based solely on misdemeanor convictions, simple D.U.I., or petty drug offenses.
An Arrest Means Nothing
It’s OK to rent to someone who has been arrested. Police can arrest anyone at any time. It’s what happens after the arrest that may have an impact on a rental agreement.
Consider the Whys and Whens
HUD recommends looking at the type of crimes committed as opposed to just the fact that there’s an arrest record. Petty theft and drug possession charges cannot be reason for denying housing to anyone.
Following the suggested policies can help keep you out of trouble, but this list alone isn’t infallible. Landlords must consider their screening processes carefully in light of the Fair Housing Act, HUDs guidelines, and today’s social climate. Any prospective tenant who feels that a disparate impact affected their chances at housing can act against a landlord and force them to defend themselves.
Disparate Impact Claims
A tenant who feels they have been discriminated against in housing can file a disparate impact claim against the landlord with HUD. The agency provides a simple process for these claims in their guidelines:
- The first step in the process is to prove that the landlord’s screening process has a disparate impact. Applicants can fill out the complaint form online. HUD will then begin an investigation to determine if any fair housing laws were broken.
- The housing provider must defend their screening process once a complaint is filed. They must prove the policy is justified and that there isn’t a better, less discriminatory way to go about it. Basing decisions on prior arrests and convictions with no link to possible property or rental issues is not considered a viable defense.
- The applicant must prove that there is a better, less-discriminatory way to screen if the housing provider can show that the screening methods used were purely for ensuring the safety of residents and property.
- Keep in mind that the language used in ads placed to gain renters is important. The way ads are phrased can be construed as disparate impact discrimination. The questions on a rental application can also appear discriminatory.
Navigating the world of tenant screening and HUD criminal background checks is intimidating. There is a lot to learn, and mistakes have consequences. It’s why many landlords outsource this tricky task to someone with the expertise to screen applicants fairly and without complaints.
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