Thank you for using Rental Services, Inc. as your resident screening provider. As a trusted partner in selecting the best renter’s possible RSI continuously reviews information sources and current legal issues that can affect you, our client.
Recently HUD (Housing and Urban Development) released their guidelines http://erentalservicesinc.com/PDFs/HUD%20Arrest%20Position.pdf on Disparate Impact. If you’re not familiar with Disparate Impact it’s a legal doctrine under the Fair Housing Act which states that a policy, like rental criteria, could be considered discriminatory. This can happen if your policy has a disproportionate “adverse impact” against any group based on race, national origin, color, religion, sex, familial status, or disability when there is no legitimate, non-discriminatory business need for the policy.
HUDs goal with Disparate Impact is to address the uneven numbers of minority’s that are convicted of crimes in comparison to non-minorities. HUD's mission statement is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination, and transform the way HUD does business.
So what does this have to do with your rental criteria? HUD is concerned that your rental criteria will adversely affect minorities. After discussing Desperate Impact with Representative Ed Perlmutter, prominent real estate attorneys and leaders in the background screening field, I would like to make a few recommendations.
If you read HUDs guidelines they spell out several things they deem discriminatory and therefore are illegal. If your using arrest records as part of your background check we recommend that you stop this practice immediately. Arrests are not a conviction and unless the person has been convicted the use of the arrest record is deemed discriminatory by HUD. A valid reason for denying an applicant must prove that the exclusion (denial of housing) actually assists in protecting resident. Denying an applicant for an arrest does not meet this requirement.
RSI suggests that you review your rental criteria and address how far back you look for convictions. Some companies have criteria that deny applicants if they have ever been convicted of a felony. This could be looked at as discriminatory. As an example Blacks/or African Americans make up 14.3% of the U.S. population and 37.6% of the incarcerated population. RSI recommends you set a realistic time frame for using criminal records. Many clients we’ve spoken with are using 3-7 years depending on whether the crime is a misdemeanor or a felony.
The type of crime should also be reviewed when looking at your rental criteria. RSI recommends that you distinguish between crimes against a person and property. The definition of an offence against the person usually refers to a crime which is committed by direct physical harm or force being applied to another person. Crime against property is any criminal act that destroys another's property, or that deprives an owner of property against the owner's will. The criminal law generally considers these crimes less serious than violent crimes, or crimes against persons, but they can still constitute very serious felony charges.
Establishing a “business necessity” for each aspect of your rental criteria could help you avoid liability if your rental criteria is challenged in the future for discriminatory practices. Rental Services, Inc. also recommends having a qualified attorney review your rental criteria.