Protecting an individual’s right to housing has been, and continues to be, of paramount importance at federal, state and local levels.
The Fair Housing Act prohibits discriminating in the sale, renting or financing of homes based upon an individual’s race, color, religion, gender, disability, familial status or national origin. Additional protections have been provided at state and local levels to preclude discrimination against individuals who are dependent upon guide or support animals, individuals who train guide or support animals or based upon one’s sexual preference or gender identity. Individuals who fall into one or more of these categories are considered to be members of a “protected class”.
Two criteria have not received protection under the several fair housing laws: individuals with poor credit histories and individuals with criminal backgrounds. Historically, it has been lawful for a property owner to deny access to housing to someone based upon their financial history and the consequences of bad financial decisions; it has also been lawful to deny access to housing to individuals because they have convictions or other criminal records. The landscape has shifted. Following a United States Supreme Court decision in 2015, the Department of Housing and Urban Development (“HUD”) issued a formal guidance on April 4, 2016, to address how denying someone access to housing based upon their criminal history can have unlawful discriminatory effects because members of a protected class have been treated differently.
In other words, if your business practices as a Realtor®, whether selling properties or managing rentals, have an unjustified discriminatory impact, then you may have violated the Fair Housing Act, even if you do not intend to.
Determining whether your business practices violate or comply with the several fair housing laws is becoming increasingly difficult, and it is wise to involve counsel early in the process. Since that road is not always traveled, however, here are some thoughts to consider if you and your clients want to use criminal histories in deciding whether to rent or sell property to an individual.
- Does your criminal history policy or practice disproportionately affect members of a protected class? Recognize that if your policy creates or perpetuates segregation based upon a protected class, which will be analyzed based upon the composition of the neighborhood or community, your policy has an unlawful discriminatory effect.
- Is your criminal history policy necessary to achieve a result that is legitimate, substantial and non-discriminatory? This requires actual evidence that the policy achieves the desired result (e.g., increased safety of residents) and is not just suppositions or generalizations.
- Is your criminal history policy based upon arrests or actual convictions? The law is fairly well-established that an arrest has little or no value in determining whether someone was actually engaged in criminal activity. Accordingly, denying someone access to housing based solely upon an arrest will not survive a challenge of unlawful discrimination.
- How encompassing is your criminal history policy when prohibiting working with individuals who have criminal records, and how far back do you consider convictions? It is likely impossible to articulate a business necessity that would justify banning every person ever convicted of a criminal offense from access to housing.
- Is there a more narrowly tailored alternative to achieving the desired goal, other than using an individual’s criminal history? This analysis will be heavily dependent upon the facts and circumstances of each transaction.
Fair housing laws are now considering the effect that otherwise lawful discrimination has on individuals within protected classes. HUD, in its official guidance, repeatedly referenced the guidelines offered by the Equal Employment Opportunity Commission as that agency also has addressed the viability of using criminal histories to determine whether one is eligible for employment. While this is not exactly a moving target, disparate impact analyses are far more complex than simply determining whether an individual or group of individuals is a member of protected classes. While experience is an invaluable tool in identifying practices that violate the fair housing laws, developing and implementing policies for using such criteria as criminal history records should be done under the supervision of an attorney.