The U.S. Department of Housing and Urban Development (HUD) issued new guidance on April 4, 2016, on the use of criminal conviction records by housing providers in screening applicants. The guidance advises housing providers that blanket policies of refusing to rent to or otherwise taking adverse housing actions against any individual with a prior criminal conviction violates the Fair Housing Act (FHA). Instead, housing providers must have a policy that looks at individuals on a case-by-case basis to distinguish between "criminal conduct that indicates a demonstrable risk to resident safety and/or property and criminal conduct that does not." This guidance applies to all housing covered by the FHA, including housing owned by private or nonprofit landlords.

Although the Fair Housing Act does not expressly protect individuals with criminal convictions, the recent Supreme Court decision in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc. held that FHA claims could be brought against housing providers whose policies have an unjustified "disparate impact" on protected groups, such as racial minorities. The HUD guidance points to disproportionate incarceration rates for African Americans and Hispanics in support of the FHA’s applicability to individuals with criminal convictions.

In the new guidance, HUD cites its own 2013 regulations on burden shifting under disparate impact (also called discriminatory effect) theory. Under these regulations, a housing provider could defend its use of criminal conviction screening by demonstrating that such a practice serves a "substantial, legitimate, nondiscriminatory interest of the provider."

The guidance provides that a policy sufficiently tailored to legitimate interests will assess factors such as the nature and severity of the underlying crime and the amount of time that has passed since the criminal conduct occurred. Reviewing applicants on an individualized basis using these factors will properly allow a housing provider to determine whether that individual poses a safety risk to residents or property. If the housing provider successfully proves that its criminal conviction screening is necessary to further a legitimate interest, the applicant then has the burden of proving such interest could still be achieved through a less discriminatory policy.

This HUD publication comes at a time of heightened publicity about the issue of screening criminal records for tenant applicants, spurred by the pending federal court case The Fortune Society v. Sandcastle Towers Housing Development Fund. According to court documents, Sandcastle Towers had a blanket exclusion policy for any individuals with a criminal conviction. Whether intentionally or not, the new HUD guidance will likely have an impact on the outcome of the case as the parties prepare for dispositive motions.

Under the disparate impact theory for housing discrimination, housing providers must be aware that even seemingly race-neutral policies, like prohibiting rental to applicants with any prior criminal conviction, can nevertheless violate the FHA. Instead, housing providers must craft policies that look at criminal convictions on an individualized basis with a focus on the nature, severity, and recency of the conviction as it relates to the legitimate and substantial interests of the housing provider.

Copyright © 2016 by Ballard Spahr LLP.
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