On April 4, the Federal Department of Housing and Urban Development issued a guidance detailing the agency’s interpretation of how the fair housing law applies to Landlord policies that exclude people with criminal records, a group that is not explicitly protected by the Act but falls under it in certain circumstances.
In this incredible pronouncement, HUD recognizes that “African Americans and Hispanics are arrested, convicted and incarcerated at rates disproportionate to their share of the general population.” Therefore, according to HUD, blanket bans on criminals violate the Fair Housing Act because criminals are more likely to be minorities (known in legal parlance as disparate impact liability). The landlord is liable for violating the Fair Housing Act even if the landlord has no discriminatory intent (i.e. applies the policy evenly to all applicants).
So, the solution is not to run background checks, right? No so fast. Compounding the problem is the potential for premises liability for foreseeable criminal acts. See, generally, Ctr. Mgmt. Corp. v. Bowman, 526 N.E.2d 228 (Ind. Ct. App. 1988); Nalls v. Blank, 571 N.E.2d 1321, 1323 (Ind. Ct. App. 1991). Under Indiana law, a landlord can be liable to a tenant if the landlord assumes a duty to protect the tenant and then negligently performs those acts.
The dilemma landlords now face is very real. If a landlord has a blanket ban on convicted felons, the landlord is in violation of the Fair Housing Act. If the Landlord rents to a convicted felon and that felon commits a crime against a tenant, the landlord could be liable to the tenant for failing to protect the tenant from a foreseeable criminal act. Now more than ever, you need a lawyer that can carefully tailor your application and leasing process that complies with the fair housing law while at the same time protects your tenants. A competent real estate lawyer can craft a case specific approach that meets your business’s needs. A small investment on the front-end can help reduce your exposure to HUD fines and tort liability and keep your real estate investments on the right track. To continue a discussion of the issues presented in this article, please contact Justin Leverton (firstname.lastname@example.org) or any of our attorney’s here. It would be our pleasure to assist you.