The Use of Criminal History Checks in Rental Agreements

Consider the following tips when implementing criminal background checks as part of your rental screening policies or agreements to reduce liability risks related to housing discrimination.

1. Do not create blanket prohibitions.

Refusal to rent based on an arrest or criminal history alone can be discriminatory. Avoid including blanket restrictions when creating your criminal history policy, such as, but not limited to, refusing to rent to anyone who was convicted of drug use or denying occupancy to someone arrested for disorderly conduct.

The do's and Don'ts of criminal background checks

2. Establish a written policy that aligns with HUD rules.

Include a breakdown of the types of crimes you might encounter (certain felonies, crimes against children, sex crimes, or specific misdemeanors such as theft or property damage), outline the definitions of each, layout how far back in time your background check will go, and explain your decision based on the crime and time elapsed. Be as specific and clear in your definitions and explanations as possible. Your policy and subsequent background check cannot consider arrest records but may only look at convictions.

Also keep in mind that you are responsible for knowing if your rental property would not be suitable for someone on the sex offender registry, due to its proximity to prohibited locations. It may be incumbent upon you, the landlord, leasing agent, or property owner, to check the registry for applicants, even though it’s the applicant’s responsibility to disclose their status. Always double-check.

3. Allow for individual assessments in your policy.

Every case is different so build in other considerations to your written policy such as time of conviction, tenant history since conviction, evidence of rehabilitation, age when the crime was committed, etc., to allow yourself the ability to make decisions on a case-by-case basis. This will also allow you to avoid creating a blanket policy.

4. Apply your policy consistently and fairly regardless of race, gender, or age.

Applying your policy unfairly based on race or gender is a violation of HUD policies and could result in legal ramifications. Once your policy is created and in place, you must apply it equally to each applicant.

5. Don’t run a criminal background check until you’ve done all other checks that may be part of your review process.

Why go through the trouble of a background check if their financials aren’t verified and approved in the first place? Save the criminal background check for last and don’t go digging for information when you don’t need to.

Criminal background checks serve a valuable function in rental agreements but can create issues if not done properly. Remember to create these policies fairly and implement them equally, reviewing them periodically to ensure you are in line with HUD guidelines.

For more information on criminal background checks, visit the resources listed below:

HUD Guidance on Application of Fair Housing Act Standards, The U.S. Department of Housing and Urban Development

Window to the Law: Learn about New HUD Guidance, National Association of REALTORS®

Fair Housing Act: Criminal History-Based Practices and Policies, National Association of REALTORS®

Voice for Real Estate 44: Criminal Records, Reverse Mortgage, National Association of REALTORS®

4 Issues to Watch for Property Managers, REALTOR® Magazine

Tuesday Tip: HUD Rules – Arrest Vs. Conviction, Navigate Affordable Housing Partners

Fair Housing Act: Criminal History-Based Practices and Policies, Chicago Association of REALTORS®

HUD’s Guidance for Criminal Background Screening and What it Means for SmartMove Users, SmartMove

This content was summarized from the discussion at a recent First Friday Legal Forum, offered exclusively to designated and managing broker members of BRR. It is provided here for educational and informational purposes only. It is not intended to be nor, should it be used as a substitute for legal advice regarding any specific circumstance. Every fact and situation is different and you should consult with your personal attorney before acting upon the matters discussed during these forums and in this post.