The U.S. Department of Housing and Urban Development (HUD) provided new guidance for landlords in April of 2016.  This guidance stated, among other things, that a blanket policies of refusing to rent because of an individual’s prior criminal conviction violates the Fair Housing Act (FHA) were improper.

“Right now, many housing providers use the fact of a conviction, any conviction, regardless of what it was for or how long ago it happened, to indefinitely bar folks from housing opportunities…” wrote HUD Secretary Julian Castro.

The blanket prohibition on renting to those with criminal convictions is now actionable under the theory of Disparate Impact. Disparate Impact was the topic of the recent United State Supreme Court decision of Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc.  The case held that a Fair Housing Claim claims could be brought against landlords if the policy leading to an adverse housing decisions had an unjustified Disparate Impact on protected groups.  Protected groups under the FHA are race, color, national origin, religion, sex, disability, and familial status (i.e., presence of children in the household).  HUD guidance specifically discusses the disproportionate incarceration rates for African Americans and Hispanics in support of the FHA’s applicability to individuals with criminal convictions in support of this applicability.

Unfortunately, HUD’s new guidance fails to provide the bright-line rules that a landlord needs.  HUD states that landlords should modify such existing policy and look at an individual on a case-by-case basis to determine if the “criminal conduct that indicates a demonstrable risk to resident safety and/or property and criminal conduct that does not.”  A landlord can only use a criminal conviction screening by demonstrating that such a practice serves a “substantial, legitimate, nondiscriminatory interest of the provider.”  The screening policy must individually “assess factors such as the nature and severity of the underlying crime and the amount of time that has passed since the criminal conduct occurred.”  Landlords need to document that analysis and be aware that seemingly race-neutral policies can nevertheless violate the FHA.

HUD’s guidance is applicable to housing owned by private or nonprofit landlords covered by the FHA.