How far can REALTORS® go with criminal background checks?

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Tyler Craddock of the National Association of Residential Property Managers warned REALTOR® attendees at last week’s NAR Property Management Forum that if their leasing policies disallow tenants who have committed a felony, it could have a “disparate impact” on a certain group of people — which is a violation of fair housing law. Unfortunately, he said, the U.S. Department of Housing and Urban Development (HUD) guidelines on this issue are vague.

Property managers cannot consider arrest records when considering tenant applications, according to HUD, and only convictions related to threats to property or other tenants are relevant. “You have to look at the nature of the crime, the severity, the age of the [prospective tenant] at the time of the crime, and how much time has passed since conviction,” NAR’s Megan Booth said. She suggested property managers consider only the last seven years of a prospective tenant’s criminal history.

Look at work history and check credit on prospective tenants before conducting a criminal background check, said Booth. If the credit history and work history do not meet the owner/property management company’s standards, then a criminal background check may not need to be done.

When denying prospective tenants based on their criminal background, said Booth, property managers should be honest about that and give tenants an opportunity to explain their situation.