Tenant screening

The Department of Justice is cracking down on property managers and landlords using screening procedures that may have a discriminatory effect on potential tenants.

Federal policy prohibits blanket bans on tenants with criminal histories; instead, evaluations of potential tenants with a criminal history should consider all circumstances such as the nature, severity and timing of criminal conduct and will accurately distinguish between criminal acts that suggest a risk to resident safety or property and conduct that does not.

This is not to say that landlords cannot perform a criminal background check. “A critical step that a landlord can take to protect a rental property is to use a reputable screening service. Preferred PARtner TransUnion SmartMove online tenant screening is the solution for great reports, great convenience and great tenants. Designed for the independent landlord, SmartMove users receive a TransUnion credit report formatted exclusively for rental screening purposes, a criminal report drawing from hundreds of millions of national and statewide criminal records, a national eviction report and income insights report, along with a clear, reliable leasing recommendation,” said Jason Norton, vice president of TransUnion SmartMove.

Two lawsuits have been recently filed – one in Chicago and another in Tennessee – against property managers for alleged violations of the Fair Housing Act, both stemming from the managers’ rejection of tenants who have a criminal background. Both cases allege that minority applicants were treated differently than similarly-situated Caucasian applicants, which ranged from having a rental application denied to being completely banished from the property. If found liable, the property managers could be forced to pay monetary damages to the tenant and be fined up to $55,000.

You can potentially limit your liability by having a smart and well-reasoned policy on tenant screening, which may include using an independent third party such as SmartMove to conduct the background check. Consult with your attorney to develop a plan that will protect you and your clients based on federal, state and local law.