New HUD Guidance Limits the Use of Background Checks for Associations to Prohibit Discrimination

On April 4, 2016, HUD published guidance limiting housing providers’, including Associations’, use of criminal records in qualifying potential purchasers, tenants and occupants under the Fair Housing Act. What does this mean for Associations? It should be noted at the outset that HUD Guidance is not binding law, but it interprets how the law may apply to certain situations. As with any new guideline, the legal ramifications will develop on a case-bycase basis as matters are heard in court and the guidance is considered.


The federal and Florida Fair Housing Acts (“FHA”), in part, prohibit discrimination in the sale or rental of dwellings based upon race, color, religion, sex, disability (handicap), familial status or national origin. Discrimination claims are evaluated under a disparate treatment or disparate impact analysis. Disparate treatment occurs where an individual of a protected group is shown to have been singled out and treated less favorably than others similarly situated on the basis of an impermissible criterion. These claims generally involve intent. Disparate impact claims do not require a showing of intent or malice, but rather acknowledge fault based upon the effects of certain conduct or policies. Disparate impact claims usually rely on statistical data and analysis to establish that a policy that appears facially neutral actually has a disproportionate effect on a protected class.

HUD’s new fair housing policy regarding background checks is one of the first regulations using the disparate impact standard since the Supreme Court’s landmark case last summer in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc. The Supreme Court unequivocally ruled that HUD and other agencies may use disparate impact as a cognizable cause of action to redress alleged discrimination.

HUD’s Guidance Regarding Background Checks

HUD states that this guidance was issued “concerning how the Fair Housing Act applies to the use of criminal history by providers or operators of housing and realestate related transactions.” At first blush, it is unclear how the FHA applies to this issue since having a criminal record is not a protected class. HUD explains that while having a criminal history is not a protected characteristic, criminal history-based restrictions on housing opportunities violate the Act if, without justification, their burden falls more often on renters or other housing market participants of one race or national origin over another. Using statistical data, HUD explains that nearly one-third of the United States population has a criminal record of some kind. “As of 2012, the United States accounted for only about five percent of the world’s population, yet almost one quarter of the world’s prisoners were held in American prisons.”

Importantly, in the United States, African Americans and Hispanics are arrested, convicted and incarcerated at rates disproportionate to their share of the general population. Accordingly, criminal recordsbased barriers to housing are likely to have a disproportionate impact on minority members searching for housing. While HUD recognizes that there are certain situations in which a criminal history could warrant a denial of housing, the policy must be supported by a legally sufficient justification. In other words, where a policy or practice that restricts housing based upon criminal history has a disparate impact on members of a protected class, such as race or national origin, the policy or practice will violate the FHA if it is not necessary to serve a “substantial, legitimate, nondiscriminatory interest of the housing provider”.

It is important to note that this guidance does not entirely prohibit Association’s from disqualifying those with previous criminal records. Those convicted of violent crimes or felonies may still be disqualified from some kinds of housing under certain conditions. HUD’s guidance provides a three part test to evaluate whether or not the policy or practice is discriminatory.

In the first step of the analysis, a person or agency must file a complaint and prove that the criminal history policy has a disparate impact in a group of people because of their race or national origin. The complaining party or agency must present evidence, such as local, state, and national statistics, to prove that the policy disproportionately affects minorities and other “protected classes” under the Fair Housing Act.

Once a plaintiff or agency establishes through statistical data that a policy or practice disparately impacts people based upon race or national origin, the burden then shifts to the Association to demonstrate that the policy is justified – meaning – it is necessary to “achieve a substantial, legitimate, nondiscriminatory interest of the provider.” The Association must use statistics and evidence to prove that the goal of the policy may not be achieved by other means. HUD notes that the interests that underlie a criminal history or practice often involve the protection of other residents and their property. “Ensuring resident safety and protecting property are often considered to be among the fundamental responsibilities of a housing provider, and courts may consider such interests to be both substantial and legitimate….” The Association must be able to demonstrate, through reliable evidence, that its criminal history policy or practice actually assists in protecting residents’ safety or property.

Bald generalizations and stereotypes that people with arrest or conviction records pose a greater threat than those without such a record are insufficient to satisfy this burden. It should also be noted that HUD explicitly states that a policy or practice of refusing housing based upon one or more prior arrests, without convictions, cannot satisfy the burden of showing the necessity of the policy. Since an arrest, in and of itself, does not establish that a crime was committed, it cannot be used to exclude potential owners, tenants or occupants.

Similarly, “a housing provider that imposes a blanket prohibition on any person with any conviction record – no matter when the conviction occurred, what the underlying conduct entailed, or what the convicted person has done since then – will be unable to meet this burden.” A criminal history policy or practice must be narrowly tailored and must consider the nature, severity and recency of the crime in order to satisfy step two of the test

The third step shifts the burden back to the plaintiff or agency to prove that the housing provider’s interest could be served by another practice that has a less discriminatory effect. HUD suggests that the housing provider should conduct an “individualized assessment” of relevant mitigating factors instead of categorical exclusions. These factors might include the facts or circumstances surrounding the conduct; evidence that the applicant has maintained a good tenant history before or after the conviction; and evidence of rehabilitation efforts. This requires a subjective analysis of the facts surrounding each individual crime and the applicant him/herself. However, those convicted of the illegal manufacture or distribution of a controlled substance can be refused housing without any liability under the FHA. This does not include convictions for possession of drugs.

It goes without saying that an Association may discriminate against any person based upon any of the protected classes. Criminal history cannot be used as a pretext to exclude certain protected class members. For example, a policy of refusing housing to African American’s who have drug distribution convictions, while allowing whites with the same conviction to reside in a community is considered intentional discrimination.

To avoid the inherent pitfalls, to the extent possible, the best practices are:

• Do not impose blanket bans on renting to those with criminal history or arrest records.

• In analyzing a conviction, the Board must consider the nature and severity of the crime and how long ago the criminal conduct took place. • Educate and train all those who will come in contact with applicants concerning these issues.

• Keep screening policies pertaining to arrest records and criminal history specifically related to the safety of persons and property. The policy must distinguish between criminal conduct that indicates a demonstrable risk to resident safety and property (such as violent crimes) and criminal conduct that does not.

• Use a standard screening policy in compliance with Fair Housing and HUD regulations, and apply it equally to anyone who applies.


Written by JoAnn Nesta Burnett, Esq. Originally posted on Becker & Poliakoff Community Update