There are approximately 50 million rental housing units in the United States. Of these, about 41% are owned by individual investors (often referred to as “mom and pop investors”). Essentially, these individual investors are running a small business while sacrificing and investing in an income-producing property. Needless to say, one delinquent tenant or “professional tenant”, can lead to a financial catastrophe for these investors. As such, it is incredibly important for landlords to thoroughly vet any prospective tenants. Therefore, it is strongly recommended that a thorough background screening on all applicants be conducted during the application process. These screenings typically include a credit, criminal, and eviction history check. In recent years, some issues have been raised regarding the use of a criminal history in a background screening. Although it seems obvious that any landlord would prefer not to rent their property to a criminal, some have pushed back on this stating that a criminal history may put minorities at a disadvantage.
Proposed new rules from HUD
The U.S. Department of Housing and Urban Development (HUD) says it will issue a Notice of Proposed Rule Making within the next few weeks regarding rentals to people with a criminal history. The rules, which are still in the early stages of development, would require landlords to consider factors other than criminal history when making housing decisions, such as an applicant’s ability to pay rent and their history of good behavior. As for the HUD recommendations, they are as follows:
- Don’t automatically deny housing assistance based on the presence of a criminal conviction, other than where explicitly prohibited by federal law.
- Disregard criminal history that is unlikely to bear on fitness for tenancy, such as arrest records, sealed or expunged records, older convictions and convictions not involving violence or harm to persons or property.
- Assess individuals on a case-by-case basis to determine whether they pose a future risk to persons or property. Take into account other factors, such as the applicant’s employment, engagement in alcohol or drug treatment programs, and their community involvement.
- Give applicants with a criminal history reasonable time and opportunity to provide supporting information about mitigating factors.
Summary
According to a study by the National Fair Housing Alliance, one in four people with a criminal record has been denied housing because of their record. Needless to say, a criminal history will present challenges when trying to find housing. On the flip side, landlords should certainly have a final say in how they want to manage their investment. Regardless of these proposed new rules, it remains critically important for landlords to conduct thorough background screenings on all adult occupants of their properties.
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