Eliminating Bias in Tenant Background Checks

While some municipalities have taken steps in recent years to curtail how landlords vet prospective potential renters, tenant background checks are illegal in some places but legal, with restrictions, in others. For instance, in Portland, a landlord cannot use a felony conviction older than seven years to deny a tenant application. Misdemeanors may only be considered if they occurred within the past three years. Portland’s rules are more liberal than many other parts of the country. Still, a growing movement advocates more lenient tenant screening policies nationwide to eliminate discrimination and bias.

The Effect on Property Owners 

In Virginia, a housing management company that manages 1,700 apartments agreed to scrap a zero-tolerance policy for tenant screening in 2020. Previously, the company had automatically disqualified any prospective tenant from consideration if their tenant background checks revealed a criminal history. 

The housing management company did not consider the age, severity, or relevance of tenant convictions but maintained a blanket policy and refused rental opportunities to anyone with a criminal background. That policy prompted a lawsuit from Housing Opportunities Made Equal (HOME) of Virginia, an organization aimed at ending discrimination in housing. HOME argued that the policy was discriminatory because it had a disproportionate impact on minority populations “due to decades of mass incarceration and over-policing of Black and Latino communities.” 

The defendant in the lawsuit, a rental company called Kay Management, agreed to change its policy after a judge ruled that it violated the Virginia Fair Housing Law and the Fair Housing Act (FHA). While these laws do not include specific limitations on tenant background checks that ordinances in cities such as Portland or Seattle do, they are still critical for landlords to understand. 

Tenant Screening Policy Pitfalls 

The problem in this case was not that Kay Management was doing background checks or even using criminal history information in its rental decisions. Instead, the company was using an unfairly expansive tenant screening policy that had a disproportionate impact on members of protected minority classes. Kay Management considers only recent criminal convictions, and only if they relate to serious crimes such as violence, sex offenses, and major drug offenses. 

Kay Management’s story highlights bias in tenant screening and why landlords must be aware of it. Any rental practice that may harm minority classes – even if that practice is not intentionally discriminatory – can violate the law and lead to costly legal problems for landlords. For instance, under the FHA, landlords cannot ask questions about race, ethnicity, neighbor preferences, religion, gender, sexuality, disability, or familial status. 

Even offhand questions asked during an interview with a tenant, such as “Where are you from, originally?”, “Are you single?” or “Are your kids noisy?” can betray bias and violate FHA laws. 

Avoid Bias in Screening 

Being a landlord can offer a lucrative full-time job or a source of extra, primarily passive, income. In either situation, it is vital to understand how class, race, ethnicity, economic status, and other factors can create implicit biases in tenant screening and selection. 

Landlords who do not correct these biases are at risk of various legal ramifications and costs. Before renting a property, learn about relevant laws, from the FHA to the specific legal statutes in your state or municipality. It may be worth a sit-down with a lawyer to discuss your legal obligations and create a tenant screening model that does not tip into biased territory. 

The current state of fair housing practices is characterized by a patchwork of inconsistent and conflicting legislation among states and cities. A complicated web of federal regulations, state laws and municipal ordinances governs how landlords and property management companies screen applicants. 

As a result, backgroundchecks.com discontinued its services for tenant and credit screening. Since this is not our core market, we cannot support its rapidly growing regulatory burdens.