An Update on Fair Chance Housing Ordinances and Tenant Background Checks

If you are a landlord in 2021, you need to pay attention to the laws and ordinances in your local jurisdiction. A movement to establish “fair chance housing” is inspiring new regulatory measures in many parts of the country, some of which limit landlords’ ability to conduct tenant background checks. In this post, we will look at recent happenings in fair chance housing and some of the ordinances that might affect how landlords approach the tenant application process.

One of the notable stories in fair chance housing this year came out of Jackson, a city of 30,000 in southern Lower Michigan. Officials in the city recently introduced a Fair Chance Hiring Ordinance to the Jackson City Council. If approved by the council, the ordinance would make it illegal for landlords in the city to automatically disqualify individuals with criminal records from housing.

The policy would effectively ban the box for housing in Jackson, barring landlords from inquiring about a prospective tenant’s criminal background until verifying that the person is otherwise in good standing to rent the property. Landlords could then offer a conditional lease agreement to the applicant, with final approval based on the findings of a criminal background check.

Jackson landlords would still be able to deny leases to individuals based on certain crimes, including violent offenses, sexual offenses, arson, damage of real estate property, drug-related offenses from the past five years, and crimes against landlords, other tenants, or management agents. It would be illegal for a landlord to use other background check findings–including arrests that didn’t lead to a conviction, expunged offenses, juvenile convictions, misdemeanor convictions from more than five years ago, civil findings, or participation in deferral programs–against a potential tenant.

While the pending Jackson ordinance is the latest in a series of fair chance housing initiatives that have reshaped landlord obligations and tenant background screening nationally, a newer trend has recently emerged in housing.

A battle rages concerning Section 8 housing vouchers, federal vouchers intended to assist “very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market.” Some landlords argue that the voucher system is unfairly burdensome on them and their private property. The voucher system includes administrative burdens, such as inspection requirements, that aren’t there if landlords rent to tenants who can pay rent without government assistance.

There is no federal law that requires landlords to accept Section 8 vouchers, and many landlords do not do so. That practice has led local governments in some parts of the country, including Cleveland, Ohio and Providence, Rhode Island, to bar landlords from discriminating against prospective tenants because they are paying with Section 8 vouchers. In Iowa, there is a bill currently in the state legislature that would strike down ordinances in Des Moines, Iowa City, and Marion that ban landlords from rejecting tenants because they receive federal housing assistance.

The debates over tenant background checks and federal housing vouchers have big implications for landlords regarding which renting policies are legal. If you are planning to turn a property that you own into a rental, understand what the ordinances in your area have to say about tenant background screening and Section 8 housing vouchers.