Eliminating Bias in Tenant Background Checks

While some municipalities have taken steps in recent years to limit how landlords vet prospective tenants, tenant background checks are still legal in most places with restrictions. For instance, in Portland, a landlord cannot use a felony conviction as a reason to deny a tenant application if the conviction occurred more than seven years ago; misdemeanors are only fair game for consideration if they happened within the past three years. Portland’s rules on the matter are more liberal than in many other parts of the country, but a rising movement is pushing for the creation of more lenient tenant screening policies across the country and the elimination of discrimination and bias from the process.

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

The housing management company was not considering the age, severity, or relevance of tenant convictions; it maintained a blanket policy and refused rental opportunities to anyone with a criminal background. That policy prompted a lawsuit from Housing Opportunities Made Equal of Virginia (HOME), 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 Latinx communities.”

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

The problem in this case was not that Kay Management was running background checks or even that it was using criminal history information in its rental decisions. Rather, the company was using an overly broad tenant screening policy that had a disproportionate impact on members of protected minority classes. Going forward, Kay Management will be focusing on considering more recent criminal convictions, and only if they relate to serious crimes such as violence, sex offenses, and major drug offenses.

The story of Kay Management puts a spotlight on bias in tenant screening and why landlords need to be aware of it. Any rental practice that may have a negative impact on 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 are not allowed to ask any 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 loud?”) can betray bias and violate FHA laws.

Being a landlord can be a lucrative full-time job or source of extra, mostly 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 take steps to correct these biases are at risk for a range of legal ramifications and costs. Before you start renting out a property, take time to learn about relevant laws, from the FHA to the specific legal statutes that are on the books in your state or municipality. It may be worth a sit-down with a lawyer to talk through your legal obligations and create a tenant screening model that does not tip into bias territory.

At backgroundchecks.com, we can help you to structure an effective, compliant approach for tenant background checks. Contact us today to learn more.