Last month, the United States Department of Housing and Urban Development issued guidance that all residential landlords, property managers, and brokers should be aware of: While checking a potential renter’s criminal background is not off limits when reviewing the person’s housing application, doing so in a way that has an adverse effect on a protected class of citizens or as a pretext for discrimination could subject the housing provider to liability.

The Fair Housing Act does not protect those with criminal backgrounds, and as many as 100 million U.S. adults have a criminal record. Arrest, conviction, and incarceration rates are disproportionately higher among African Americans and Hispanics, however, so “if, without justification, [the burden of background checks] falls more often on renters or other housing market participants of one race or national origin over another,” or if a housing provider uses an applicant’s criminal background as a pretext for intentional discrimination, the housing provider may face liability under the Act.

If an applicant shows that a provider’s use of criminal background checks disparately impacts a member of a protected group (on the basis, for instance, of race or national origin), the provider must then prove that its policy or practice was necessary to achieve a substantial, legitimate, and nondiscriminatory interest. This interest “may not be hypothetical or speculative.” Moreover, in its implementation, the policy may not look to “generalizations or stereotypes” but instead must be more tailored to certain types of convictions (e.g., taking into account the nature, severity, and recentness of the conviction). The Act does provide safe harbor to the exclusion of applicants based on conviction for enumerated drug crimes regardless of potential discriminatory impact.  Yet a provider relying on mere prior arrests of any kind (without conviction) “cannot satisfy its burden of showing that such policy or practice is necessary to achieve a substantial, legitimate, nondiscriminatory interest.” And even if the provider establishes that its pattern or practice is necessary, a court will still look to whether a less discriminatory alternative is available.

Housing providers likewise violate the Act if they use prior convictions as a pretext for other discrimination (for instance, telling applicants of a protected group, but not others, that they will be subject to a criminal background check).

Given this guidance from HUD, residential landlords, property managers, and brokers would be well served to take a fresh look at their policies and practices with respect to use of criminal background checks.

Jonathan Singer is a real estate attorney at Miller Nash Graham & Dunn. For more on developments and issues in the Portland and Northwest real estate market, follow Jonathan on Twitter (@CREportland).