Understanding HUD Regulations on Tenant Screening

Since 2016, the Department of Housing and Urban Development (HUD) has had extensive regulations on criminal background checks for access to housing and real estate. Despite pushback from landlords at the time, HUD proceeded to finalize and publish its news regulations. This notice appeared in a memorandum titled the “Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate-Related Transactions.”

The Fair Housing Act already prohibits discrimination against tenants seeking housing. However, in the face of continued unfair practices by landlords, HUD engaged in additional rule-making. Violating these guidelines could lead to lawsuits and hefty fines under the Fair Housing Act—not to mention the reputational damage property managers may suffer for breaking the law.

What Do HUD Guidelines Say? 

The memorandum published by HUD provides clarification and guidance about how the government applies the Fair Housing Act in the event of discrimination allegations. HUD does not prohibit landlords from using criminal background checks as a part of their hiring process. However, the agency stresses that such checks must be used only in alignment with best practices for preventing discrimination. There are several vital points to consider:

• Landlords may not use screening policies that unduly affect protected classes, even if there was no intent to discriminate.
• Screening policies must have legal justifications for their existence and use.
• Policies may not include blanket exclusions – including denying applicants purely because of arrest records or the presence of prior convictions.
• Landlords must demonstrate that any denials based on criminal records occurred because of a legal and substantive interest in safety.
• Even narrow blanket exclusions are on shaky legal ground, and landlords must be able to show why they have such a policy and that it is non-discriminatory.
• Landlords must consider the nature and severity of convictions.

While these rules do not prohibit background checks, they clarify that landlords must have a transparent and legal purpose for using them. Blanket bans on tenants with conviction histories are illegal. Using arrest records to negate your consideration is unlawful. The law also does not protect the selective application of standards for different individuals. 

Does HUD Want to Go Farther Than This? 

Yes. HUD currently employs numerous individuals known as “fair housing testers.” Testers attempt to obtain housing through FHA-backed landlords and providers to evaluate whether such groups comply with the law. Previously, individuals with felony convictions and other criminal histories were not eligible to be testers. As of a proposal created in 2023 and under evaluation throughout 2024, these restrictions would no longer be in place.

As a result, fair housing landlords may be more likely to encounter individuals with complex criminal histories—and mishandling their cases could lead to HUD lawsuits. The proposed rules had a public comment period through 2024 and remain under consideration.

The Complexities of Landlord Compliance 

Nationwide, tenant selection and criminal background screening rules continue to grow more complicated. More locales now restrict or limit what landlords may consider during the process. This increasingly complex regulatory environment means that backgroundchecks.com no longer allows using its services for tenant and credit report screening. Effective October 2024, we ended the availability of these products for landlords, property managers, and others conducting tenant screening.

Monitor HUD bulletins for additional guidance on building screening policies that align with the current state of the federal law. Remain up-to-date on any regulations in your state or local area.