Phil Querin Q&A - Vetting Criminal History In The Application Process

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November 28, 2016
Phil Querin
MHCO Legal Counsel
Querin Law

 

Question: We recently had an applicant (with a criminal history) that management rejected for an RV spot we had available. The criminal background check disclosed that the applicant had a prior burglary and criminal mischief conviction in 2008. He pled guilty and was given a 20-day jail sentence, with 18 months’ probation. He accepted our rejection without argument, but upon reflection, I’m concerned whether our manager may have been too hasty in light of the recent court rulings and Department of Justice pronouncements on how we should use criminal background information when one applies for housing.  Should we have handled this any differently?

 

Answer:  In a word “Yes”. Today, the rule of thumb should be that subject to certain exceptions (listed below), you should not summarily reject applicants solely because of prior convictions.  I have written and spoken on this issue during 2016. 

 

On April 4, 2016, the U.S Department of Housing and Urban Development (“HUD”) issued its “Office of General Counsel Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate-Related Transactions” (hereinafter, the “Memo”). The full text of the 10-page Memo can be found here. Not surprisingly, it follows the June 25, 2015 ruling by the U. S. Supreme Court, in the Texas Dept. of Housing vs. Inclusive Communities case, which upheld the much-debated concept of “disparate impact” under the Fair Housing Act, as amended (the “Act”). 

 

Disparate impact holds that certain practices in employment, housing, etc., may be considered discriminatory under the Act, if they have a disproportionately "adverse impact" on certain members of a protected class, i.e. those falling into the following groups: Race, color, religion, sex, disability, familial status or national origin.[1]  The simplest explanation of how disparate impact works is by the following example from the Memo:

 

Today, a landlord may be found to have discriminated against a prospective tenant, not because of an intentional discriminatory act, such as rejecting him or her based upon race or religion, but unintentionally, because the landlord relied upon a perfectly legal basis, except that it had a disproportionately adverse impact on members of a protected class.  Proof of the “disproportional impact” is usually based upon some statistical correlation showing that a certain class of protected persons are negatively impacted more than others. In other words, unintentional discrimination can now be a violation of the Act.

 

The purpose of the Memo was to issue guidance, mostly by way of examples and prior case law, in how the use of criminal history during the tenant-screening process, may, or may not, trigger a disparate impact result.

Although, ironically, the Memo on deals with cases of disparate impact affecting members of “protect classes”.[2]  However, for purposes of this discussion, it is well to apply these guidelines across the board, regardless of protected class. Otherwise, there is the possibility, perhaps remote, that a landlord could be accused of reverse discrimination, for applying one set of criteria to members of protected class, and another set to members outside the class. Crazy huh?

 

Summary of Thoughts and Suggestions.  Here are some tips based upon information from the Memo:

 

  1. Beware of testers calling over the phone and asking if you will rent to persons with a criminal background. Be careful about answering these blind calls with a “yes” or “no”. Make sure callers understand that no rental decisions are made in advance of reviewing all relevant background information, including a criminal background report. Encourage the caller to either come to the office and pick up the necessary paperwork, or if they prefer, send it to them at their provided address.

 

  1. Ultimately, landlords should plan on making adjustments in their rules and application process.  

 

  1. Do not have a rule or policy that treats an arrest, with no conviction, the same as a conviction. If you currently have such a rule, it should not be enforced.

 

  1. Do not have a blanket guideline providing, for example, that conviction for any crime is an automatic denial.

 

  1. Be sure that all rules and policies concerning criminal records are uniformly enforced – no exceptions.  However, note No. 7 below. You should avoid a policy saying that all persons with a felony are automatically disqualified. There is a world of difference between an ex-felon who served time for embezzlement ten years ago and has been a contributing member of society ever since vs. an ex-felon who served time for aggravated battery, and has been in and out of jail for similar violent crimes over the past five years.

 

  1. If possible, evaluate all other rental history, such as prior tenancies, employment, credit, income and affordability, before even going to the results of a criminal background check. If the prospective tenant does not pass one or more of these other criteria, then the rejection can be based on that, rather than a criminal background report, thus avoiding the disparate impact issue entirely.

 

  1. In evaluating an applicant’s criminal history, do not use a “one size fits all” approach. There are several gradations of severity. Additional issues need to be addressed before making a decision to reject a prospective tenant based upon criminal history. For example:

 

  1. How long ago was the conviction? (A single conviction over 6-7 years old, in most cases, should probably not be used as the basis for a denial, excluding registered sex offenders, or those convicted of violent crimes).

 

  1. What has the person been doing since their release?

 

  1. Has the person been convicted once, or on multiple occasions?

 

  1. What was the nature and severity of the crime?

 

  1. Note that according to the Memo, a refusal to rent to an applicant who has a conviction for one or more drug crimes involving the manufacture or distribution (not mere possession) of a federally defined controlled substance is permissible and not subject to a disparate impact claim. In other words, a landlord or manager may legally base the refusal to rent based upon a conviction for manufacture or distribution, since it is not a violation of the Act, based upon disparate impact.[3]

 

So this is one of those exceptions in which you may automatically decline an applicant. Others are, in my opinion, those convicted of sex crimes and pedophilia, regardless of how far in the past. Also, crimes of violence, e.g. murder, rape, aggravated assault, etc. The analysis is fairly straightforward: If the applicant’s prior conviction is one that, if he or she became a resident, it could foreseeably result in danger to the health, safety and well-being of other park residents, or their guests and invitees, a rejection, without the above analysis is in order. Some Fair Housing advocates may disagree, but my opinion is based upon a choice of evils, i.e. choosing between a threatened Fair Housing violation, balanced against the risk of a resident or their guests or invitees being injured or killed, because  you ignored their violent criminal history, and permitted them entry to the park 

 

Conclusion. So, based upon the facts you described above, this applicant had a conviction of two non-violent crimes (presumably occurring at the same time, resulting in companion charges).  They were eight years ago. Accordingly, it is important to find out what the applicant had been doing since being released from jail.

Lastly, as pointed out above, I suggest that you reserve the criminal background analysis for applicants who have already passed all of the park’s other screening criteria.  In other words, if you don’t have to use criminal background as a basis for rejection – i.e. there are other valid criteria for rejection – you do not have to rely upon the applicant’s criminal background for a rejection.

Please review MHCO Form 1A. It includes the criminal background analysis discussed above.

 


[1] Note, the State of Oregon and some of its local jurisdictions have additional classes, including sexual orientation. See, http://www.fhco.org/discrimination-in-oregon/protected-classes .

[2] The seven protected classes under the Federal Fair Housing Act are: Race; Color; Religion; Sex; National Origin; Disability (added in 1988); Familial Status (having children under 18 in a household, including pregnant women) (added in 1988). There may be additional protected classes added by state and local laws.

 

[3] Per the Memo: “Section 807(b)(4) of the Fair Housing Act provides that the Act does not prohibit ‘conduct against a person because such person has been convicted … of the illegal manufacture or distribution of a controlled substance as defined in section 102 of the Controlled Substances Act (21 U.S.C. 802).’”