The Danger of Using Criminal Background Checks to Screen Tenants

January 5, 2018
Aaron S. Marines

A recent blog post from the Pennsylvania and Delaware Valley Chapter of the Community Associations Institute discussed the danger of condominium and homeowners’ associations requiring criminal background checks for renters of units.  In the blog post, Marshal Granor discusses a Department of Housing and Urban Development guidance paper on this subject.  HUD warns that most criminal background checks by housing providers have a discriminatory impact.  This means that the criminal background check policy is very likely a violation of the Fair Housing Act.  This violation of the Fair Housing Act could cause real legal trouble for associations.

The CAI blog post and the HUD guidance follows exactly the advice I have given association boards for years.  If an association requires renters to submit criminal background checks to the board for board approval, this requirement could very well be a Fair Housing Act violation.  Even though the policy is neutral, the actual effects are likely to affect minorities more than other races.  This is what the HUD calls a “disparate impact.”  And, even if the Association means well, this “disparate impact” is a Fair Housing Act violation. 

One of the few exceptions from this disparate impact rule is that a housing provider can disqualify potential renters if they are convicted of a crime dealing with drug manufacturing or distribution.  At this time, this is the only specific exception for a criminal background in the Fair Housing Act.

When an association board wants to institute criminal background checks for renters, my first question is always “what are you going to do if a potential renter has a criminal background?”  The answer is usually that the board will not allow that person to rent in the community.  This decision has two very negative effects.  First of all, a unit owner is being told they cannot rent to a prospective tenant.  This may be the only tenant that this unit owner has seen for months.  So the denial causes financial harm to the unit owner.  Second, if the person who is denied the opportunity to rent is a member of a protected class under the Fair Housing Act, the actions of the board may have created a disparate impact.  This could cause the association to have liability for damages under the Fair Housing Act.  These two potential problems are the reasons I advise boards not to screen potential renters in the community. If the unit owner wants to screen his or her tenants, they can.  But an association board should not involve themselves in who can and cannot reside in their communities.

Aaron Marines is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. He received his law degree from Widener University and practices in a variety of areas including BusinessCommercial Real EstateLand Use, Land Planning and Zoning matters.