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HUD Publishes Guidance on Renting to People with Criminal History

April, 2016

On April 4, HUD published the document, “Office of General Counsel Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate-Related Transactions” specifying that housing providers must not implement a blanket policy using criminal background checks to prohibit renting to someone who has a criminal history.  This guidance follows the U.S. Supreme Court decision, Texas Department of Housing and Community Affairs v. Inclusive Communities Project that affirmed the disparate impact housing theory under the Fair Housing Act (Act).

In the United States racial minorities are arrested, convicted, and incarcerated at a much higher rate than whites. Criminals are not a protected class under the Act. However, if a housing provider uses a criminal background check to refuse to rent to anyone who has ever been arrested or convicted of a crime -- the landlord’s policies could be considered to create a disparate impact on a protected class. The Act prohibits discrimination against people based on their race, color, religion, sex, disability, familial status, or national origin. 

The guidance directs landlords and housing providers to not establish a policy of outright refusal to rent to anyone who has had a criminal past and are encouraged to consider those applicants on a case-by-case basis.

IREM Members have expressed deep concern with this guidance.  Historically, through the Act, and by other HUD guidance, housing providers have been directed to treat each home buyer and renter equally.  This HUD guidance now calls for the different treatment of people seeking housing.

IREM approved a legislative Statement of Policy on disparate impact housing theory in 2013. IREM opposes policies and practices which are known to have a disparate impact on any demographic group defined by race, religion, national origin, sex handicap familial status, sexual orientation, or gender identity.  However, IREM supports the right to continue a policy or practice, such as a credit check or background check that has or could have a known disparate impact if there is a legitimate business purpose for the practice or policy.

We encourage all real estate managers and owners to read the HUD guidance in detail in order to better understand how to create a policy that will not violate the Fair Housing Act. NAR has drafted its own “do’s and don’ts” guidance for criminal history-based housing policies and practices. This information that can help you make an informed decision when considering an applicant with a criminal background. The National Association of REALTORS® is establishing a task force to look deeper into this guidance and its implications for real estate managers and owners; IREM will be involved participants.

IREM will host a Webinar on May 17 at 1:00PM (Central) to further discuss the HUD guidance and offer insight into how real estate managers and owners can remain in compliance with the directive. To learn more and register, please visit IREM’s webinar page. In addition, IREM staff will be sure to keep you posted with any new developments.