Monday, April 11, 2016

Are criminal background checks for new purchasers and renters in a community association discriminatory?

Most community associations screen potential purchasers and potential renters. In fact, when surveyed, many board members state that screening community occupants is one of their primary functions.

What is the #1 item that typically presents a red flag on a screening application? If you said evidence of a criminal history you would be correct and it follows closely on the heels of financial red flags such as prior bankruptcies. 

HUD's General Counsel, Helen R. Kanovsky, issued a Guidance Memo which warns that looking at the criminal background of applicants may have a disparate impact on minorities who may have been subject to different scrutiny under the criminal justice system. According to the memo, as many as 100 million Americans (or 1/3 of the population) has a criminal record of some sort.


When your board is presented with a background check that reveals a criminal history, there is more to consider than just the fact that the applicant has a record. If a background check reveals that the applicant has previously been arrested or convicted of a crime you must ask experienced association counsel the following questions:

-Did the crime involve theft or violence?
-Was the applicant charged with a misdemeanor or a felony?
-How long ago was the crime committed?
-Did the crime involve an attack on a minor?
-Did the crime result in a conviction?

Certainly, an applicant who committed a white-collar crime twenty years ago presents less of a security concern for a community association than  an applicant who was arrested for rape or another violent crime within the last five years.  Denying applications for any reason requires a conversation with association counsel. Denying applications based on criminal background is an even more compelling reason to have that conversation.

HUD's General Counsel concluded:
The Fair Housing Act prohibits both intentional housing discrimination and housing practices that have an unjustified discriminatory effect because of race, national origin or other protected characteristics. Because of widespread racial and ethnic disparities in the U.S. criminal justice system, criminal history-based restrictions on access to housing are likely disproportionately to burden African Americans and Hispanics. While the Act does not prohibit housing providers from appropriately considering criminal history information when making housing decisions, arbitrary and overbroad criminal history-related bans are likely to lack a legally sufficient justification. Thus, a discriminatory effect resulting from a policy or practice that denies housing to anyone with a prior arrest or any kind of criminal conviction cannot be justified, and therefore such a practice would violate the Fair Housing Act.

This does not mean that your board should discontinue the responsible screening of potential purchasers and prospective renters; in fact, abandoning careful screening could subject the association to significant liability. In order to walk the tightrope between screening applications and avoiding a discriminatory effect from such screening, your Board must address each application on a case by case basis and prove that your approval decision is justified and is necessary to achieve a substantial, legitimate, nondiscriminatory interest of the community.