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HUD Tenant Screening Policy Update

In April 2016, the U.S. Department of Housing and Urban Development (HUD) announced new guidance (HUD 10-page policy update) for taking adverse actions based on an individual’s criminal history. The guidance states that it is HUD’s position that criminal background screening policies employed by housing providers have the potential to have an impermissible disparate impact on certain protected groups.

Distinguishing Between Arrest and Conviction

This does not mean that criminal history cannot be considered at all during the tenant screening process. Instead, HUD is basically telling landlords and property managers:

  • You cannot institute a blanket ban on all applicants with a criminal history.
  • You cannot reject a tenant based upon an arrest that did not result in conviction.
  • You must treat comparable criminal histories similarly without consideration of race, national origin, or other protected classes.

New Guidelines for Tenant Screening

HUD’s new policy memo has the downside of making the tenant screening process more complicated than it already is. It muddies the waters in terms of how landlords and property managers evaluate criminal history, as there is no guidance on which crimes should generally considered acceptable and which are not. Landlords and property managers are asked to use their discretion, with the memo acknowledging the need to look at circumstances on a case-by-case basis.

Here are a few tips to help you to comply with the new HUD policy:

  • Screen tenants based on their financial and other qualifications first. Only conduct a background check if a person appears to be otherwise qualified. This will protect you from denying a tenant based upon another qualification, and having the tenant argue that they were denied based upon their criminal background.
  • If a background check reveals a criminal history, evaluate the nature of the crime (see questions above). If you plan to deny a person based upon this information, put a note in your internal file explaining why you felt a denial was appropriate (e.g. how this protects you, other tenants, and the property). Sign and date the note. This will protect you if the applicant ever alleges discrimination.
  • Review all existing rental policies and tenant verification procedures. Some landlords or companies may be facing a complete overhaul given the new HUD guidelines. Be sure that all members of your team clearly understand the new policies so they can be implemented uniformly by all.

Contact our office today and learn how Insight Screening Solutions addresses the affordable housing industry's tenant screening needs.

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