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Arresting Developments: Property Managers Scramble to Comply with Criminal History Guidance

November 18, 2016 | Beth Wanless

One of the hottest stories in real estate of 2016 is the guidance HUD’s Office of General Counsel (OGC) published earlier in the year. The guidance directed housing providers on whether or not they can use the criminal history of a prospective tenant to approve their application to rent a property. Much to many property managers’ concern, the guidance said landlords cannot deny a person’s application based on their arrest history. And if they have been convicted of a crime, it may not be enough to deny their application. Property managers across the nation are scrambling to ensure they are complying with the guidance, and also protecting other tenants against potentially dangerous neighbors.

During the IREM Fall Conference in San Diego last month, a session was held to address the guidance and help property managers understand how they can be compliant and create policies to keep everyone safe. Caroline Elmendorf, Senior Compliance Officer at The Bozzuto Group, led the session and explained that managers should already be revising screening policies to ensure compliance. She urged the audience to read HUD OGC’s guidance, check for state and local laws, and, of course, be sure to make owners and the insurance company aware of any and all policy changes. She said this will require some education of all parties involved.

Here are a few ways you can update your policies and procedures:

  • Avoid putting language on a lease that states the property is “crime free.” Crime is impossible to prevent and you should not lead your tenants to believe the property is free from crime at any time.
  • Have a written procedure detailing the steps your company takes to search criminal background history.
  • Do not conduct any searches for or ask about arrest history; only search for criminal convictions related to violent felonies that occurred within the last seven years.
  • If housing providers want to be extra cautious, you may allow persons who have been excluded based on their criminal background to appeal that decision by providing extenuating circumstances. “If you do this,” said Ms. Elmendorf, “you’ll be in a great position and in compliance.”

Ms. Elmendorf also stated that although this guidance does require some changes, there is a silver lining in that property managers can be more inclusive and allow more people to rent units. It can truly be a “win-win” situation for everyone.

During the post-session interview, IREM staff asked: If we could take away just one key point from the presentation, what would it be? Ms. Elmendorf said to only exclude violent criminal convictions that occurred in the last seven years.

About the Author
Beth Wanless is the Senior Manager of Government Affairs at IREM and is responsible for all things public policy. She monitors legislation at the federal, state, and local level and creates advocacy strategies to enact or fight certain policy propositions.

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