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Do You Now Have To Rent To Felons?

HUD recently announced some new guidelines that have been causing quite a stir in the landlording world.   You might think the stir was all caused by the catchy title, “Guidance on Application of Fair Housing Standards to the Use of Criminal Records by Providers of Housing and Real Estate Related Transactions.”  Instead the stir was caused by the misconception that HUD was telling landlords they could no longer discriminate against those with felony convictions. That those with murder, rape or child pornography convictions could no longer be denied housing on that basis alone.

That would certainly cause quite a stir, but it is not the case.

However, these new guidelines from HUD do mean that landlords will have to rethink and retool their rental standards.

Vena Jones-Cox over at did a nice job of explaining the new guidelines and what they mean to us landlords. With permission, I reprint her analysis below.

“So Now I Have to Rent to FELONS?” What the new HUD rule actually says about applicants with criminal records

On April 4th, HUD released a statement entitled “Guidance on Application of Fair Housing Standards to the Use of Criminal Records by Providers of Housing and Real Estate Related Transactions” that immediately set the landlording world abuzz with the news that we could no longer “discriminate” against felons.

Like most incursions by the government into our private property rights, this one spawned a great deal of wrath, and a lot of angry speculation and half-truths regarding what the statement actually “means”.

First, to be clear, this is NOT a new “law”.

It’s what is euphemistically called “guidance” by HUD, which, in this case, is acting as the arbiter and policing force behind fair housing law. So while no actual change to federal law has occurred, we can assume that, going forward, this “guidance” has the force of law, at least insofar as fair housing testing and enforcement is concerned.

In other words, while congress has made no law, and the courts have made no decision in regards to this new policy, it IS one that HUD will use to prosecute housing providers that “break” it.

Second, in order to understand why HUD thinks that whether or not you rent to felons is a discrimination issue AT ALL, it’s important to understand the “Doctrine of Disparate Impact”.

Back in 1968, when the Civil Rights Act defined housing discrimination as the “refusal to sell or rent a dwelling to any person because of his race, color, religion, or national origin” (other categories of “protected classes” were added later in both the Federal and State and Local laws), discrimination was understood to be an intentional, if not overt, act.

It was widely recognized that housing providers, sellers, agents, and lenders who intended to keep members of certain classes out of housing didn’t always just say “No Chinese Allowed”—instead, they engaged in subtle behaviors like “steering” (“I think you’d be happier in this neighborhood over here than in the one you said you wanted”), claiming units were rented when members of one class called but available when others did, and other discriminatory conduct.

What these had in common with more run-of-the-mill “We don’t rent to your kind”  acts was that they were all intentional efforts to keep certain people out of certain neighborhoods or properties based on their membership in a protected class. As such, they clearly fit into the definition of “discrimination”, and thus were violations of the law.

However, as time passed (and both overt and covert real discrimination lessened in the U.S.), fair housing “thinking” began to evolve to include the idea that even completely unintentional acts, if the effects of those acts served to limit the housing choices of protected classes, could be discriminatory, illegal, and punishable by law.

One of the early situations to which the disparate impact doctrine was applied was in occupancy limits. Landlords who created policies that limited the number of people allowed in a unit—for instance, “I won’t rent my 2 bedroom apartment to more than 3 people”, were accused of discriminating against families with children because, obviously, such families would be more impacted by such a policy than families without children

The fact that the reason behind these policies has to do with the economics of owning rentals (more occupants use more utilities and do more damage) does not stop them, under the Doctrine of Disparate Impact, from being illegal.

While the idea that you can be prosecuted for unknowingly and unintentionally discriminating might seem dangerous and unfair, the Supreme Court did uphold it in a 2015 decision, saying that the Civil Rights Act does govern any and all policies that create “artificial, arbitrary, and unnecessary barriers” to housing based on “statistical disparities”.

So what has disparate impact and statistical disparities got to do with felons?

Please read the rest here.

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