Now that the Supreme Court has definitively found that the federal Fair Housing Act, 42 U.S.C. §§3601-3631, prohibits practices that have a disparate impact on protected groups, see Tex. Dept of Hous. & Comty. Affairs v. Inclusive Comtys. Project, Inc., 135 S. Ct. 2507 (U.S. 2015), consequences of that decision are becoming more clear. On April 4, 2016, the Office of General Counsel for the U.S. Department of Housing and Urban Development (HUD) issued a Guidance on the application of the Fair Housing Act to decisions by landlords and sellers related to tenants and buyers with criminal records. Office of General Counsel on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real-Estate Related Transactions (Apr. 4, 2016). The Guidance notes that a greater percentage of African Americans and Latinos than whites have criminal records. The refusal to rent or sell to persons with criminal records may therefore have a disparate impact on race and perhaps national origin. The Guidance explains:
When individuals are released from prisons and jails, their ability to access safe, secure and affordable housing is critical to their successful reentry to society. Yet many formerly incarcerated individuals, as well as individuals who were convicted but not incarcerated, encounter significant barriers to securing housing, including public and other federally-subsidized housing, because of their criminal history.”
If the burden of being denied housing is not justified, and if the burden “falls more often on renters or other housing market participants of one race or national origin over another), this may violate the Fair Housing Act.
The Guidance allows national statistics to be used to show a disparate impact, although local statistics are preferred. That burden is illegal unless it can be justified by a “substantial, legitimate, nondiscriminatory interest.” 24 C.F.R. §100.500(c)(2). The Guidance explains that a mere prior arrest is not a substantial or legitimate reason not to rent to an individual. Nor may landlords refuse to rent to all persons with criminal records; they may only exclude tenants with criminal records that pose a “demonstrable risk to resident safety.”
Even if there is some risk to resident safety, a less discriminatory alternative to exclusion is an individualized assessment of the potential tenant’s risk to others.
The Guidance reminds the reader that the Fair Housing Act allows discrimination against tenants or buyer who have been convicted of manufacture or distribution of drugs. 42 U.S.C. § 3607(b)(4).
The Guidance also notes that housing providers would be engaging in intentional discrimination if they treat potential tenants or buyers differently because of their race. Thus if landlords rent to white tenants with a particular criminal record but does not rent to African American tenants with that same record, they may be liable for discriminatory treatment.