Q: We have several multifamily units with moderate turnover and we run a full credit check on everyone wishing to apply. Sometimes we get applicants where their income and basic credit info is marginal, but they do meet our minimum economic rental criteria so we go ahead and rent to them. We are now seeing that some of these applicants that meet our minimum requirements also have served time for convictions for violent crime, drugs or something pretty serious. We were advised by local law enforcement that it may be a good idea to begin screening tenants for criminal convictions, as we have had problems with a few of our tenants associating with or attracting others that the police department has indicated are not good citizens.
So recently we began having our credit reporting company also generate a criminal background check. I am concerned that we will be accused of discrimination or fair-housing violations if we deny these applicants that otherwise meet our income and credit criteria.
Can we screen out these individuals with criminal convictions or is that considered discrimination? I once heard someone at a property management seminar say that once criminals are released from prison that they have served their time and a landlord cannot consider past criminal convictions in making a rental decision. What’s your opinion?
A: You should always follow all fair-housing laws and have rental criteria that you can apply to all applicants, and it appears that you have such policies in place. However, you raise legitimate concerns about protecting your property and your other tenants if you allow known convicted criminals into your rental property. This is an evolving area and sometimes there can be conflicts between the rights of individuals and the rights of others, and you really need to evaluate each situation independently as "one size doesn’t fit all" when it comes to evaluating an application from a convicted criminal, as the type and nature of each criminal act may be different.
Is a drug dealer conviction different than a white-collar, check-kiting conviction? That is why you should seek legal advice for each specific situation you encounter. For example, former drug users may be considered protected under ADA or fair-housing laws, but that protection under the law does not extend to current illegal drug users or dealers, which I believe you can deny.
In some states the rights of convicted sex offenders to live in the community is protected. However, those exceptions aside, I think in general that a landlord should be able to show that it was a reasonable business decision and not discrimination (as long as you apply the same criteria in all similar situations) to deny the applicants with criminal convictions involving any bodily injury crimes or serious property crimes that endanger others — murder, assault, rape, arson, etc. A landlord can be assured that he or she would be sued if these individuals (or even their associates) were to commit a crime against one of their tenants or even someone in the neighborhood.
Personally, I do not buy the argument for some types of crime that they "have served their debt to society" so you don’t have the right to deny them. I believe that the risk of liability from claims and lawsuits if another crime occurs is too high for the landlord or property manager. Many times you will not have to consider the criminal conviction, as often someone who served time for a criminal conviction could have trouble meeting your minimum rental criteria for income and credit and other conditions, and as long as you apply that policy uniformly you should also be fine. Of course, it would also be advisable to get a formal legal opinion in general for your property based on state and local laws plus contact an attorney if you receive information indicating that an applicant has a criminal conviction that doesn’t involve bodily injury or serious property crime.
This column on issues confronting tenants and landlords is written by property manager Robert Griswold, author of "Property Management for Dummies" and co-author of "Real Estate Investing for Dummies."
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