Why landlords want (and need) criminal background checks

There is a growing movement among tenants’ rights groups to abolish or limit the use Criminal Background Checksof criminal background checks by landlords and property managers. They believe that a person who has paid for their crimes should not be denied housing due to their past history.

However, landlords have a duty to protect current tenants from the criminal activity of another renter. Keeping individual, multi-family or student rental properties safe, clean and rentable is just as important as having the rent paid on time. These investors rely on criminal background checks to minimize their risk of liability by screening out those applicants whom they view as potential threats to their tenants and/or their property.

A landlord can possibly be liable for injuries arising from the criminal activities of third parties. Running a criminal background check on a potential tenant can not only increase the safety of your tenants. It can shield you from any monetary liability that may arise from injuries to tenants due to criminal acts.

What shows up on a criminal background check?

An AAOA criminal background check is limited to convictions within the past seven years. After the seven-year period expires, legal judgments are deleted from public record and thereby from your credit report and criminal history.

If the criminal has been incarcerated, some states require that the seven years begin once they have been released from prison or released from probation and not when the crime happened.

Consumer reporting agencies can only report criminal history that involves convictions; they cannot report information about arrests. Arrest warrants and bench warrants are not part of the criminal record and will not show up on a criminal background check. 

For instance, California law prohibits any consumer report from including arrests, indictments or misdemeanors that did not result in a conviction or crimes that are spent by more than seven years.

How can a criminal background check protect tenants?

Landlords must be able to trust their tenants and vice versa. A great deal of potential harm, both physical and financial, can be avoided when a landlord runs a criminal background check on any prospective tenant over the age of 18.

Crimes of particular concern to property managers are:

  • Violent offenses
  • Sex offenses
  • Murder
  • Drug offenses
  • Domestic violence
  • Arson
  • Property damage

Again, a landlord must consider the safety of their tenants as well as the surrounding community. As for the financial damage that renting to ex-felons can incur, a landlord cannot ignore the fact that potential renters will be checking online reviews. If the property has a reputation for housing ex-convicts, it will be more difficult to rent to families and other law-abiding tenants.

The ownership of rental properties represents a large monetary investment, but the return on the investment rests upon renting to tenants that can pay the rent, maintain the property and live in harmony with the other residents. The landlord must protect both their tenants and their investment by evaluating an applicant utilizing all available sources, such as credit reports, court records and pay stubs, rather than personal knowledge. In addition, the landlord needs to evaluate the applicant’s potential for causing harm to the rental property and to the local neighborhood.

In 2014, the Bureau of Justice Statistics published a study that tracked 404,638 prisoners from 30 states who were released from prison in 2005. That study found 76.6 percent of the tracked criminals were re-arrested within five years. Without thorough screening, criminals – who are likely to commit crimes again in the future – can easily move in next door completely undetected, potentially putting families at risk.

Is it legal for a landlord to run a background check without permission?

The tenant must give permission before the landlord is allowed to obtain this information according to the Fair Credit Reporting Act (FCRA). The FCRA dictates that the consumer information is private and cannot be accessed except for “permissible purposes,” such as seeking employment or housing.

The tenant must be made aware that the landlord intends to run the criminal background screening and they must sign a document giving their permission to run the report.

If the landlord obtains information without the express consent of the applicant or tenant, the landlord could be taken to court under an FCRA claim. 

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Where does the criminal information come from?

The AAOA criminal background search covers the Circuit, Municipal, Superior and/or District Courts and includes the most current and past felony and misdemeanor convictions as well as some traffic violations. The databases are updated weekly or monthly depending upon the jurisdiction. It should also be noted that criminal search results are subject to various laws which may limit or restrict the ability to display certain results.

A criminal report will include the following information for each criminal record in the applicant’s profile:

  • Name, address, Social Security Number, date of birth and gender.
  • The category of the crime, source ID, case number and the filing date.
  • Arrest date, name of the offense and disposition.

Are criminal background checks bad for the applicant’s credit?

Criminal background checks do not affect a person’s credit rating and in fact, they will not appear on the credit report at all. Criminal background checks are separate screenings and do not even require a Social Security Number to be processed.

What is New York City’s proposed Fair Chance for Housing Act?

The Fair Chance for Housing Act, S-250 and A-1919, is an effort by New York City to eliminate any rental application that asks whether a person has been convicted of a crime. The bills would still allow a landlord to ultimately deny renting to someone with a criminal record based on certain criteria and if the landlord has a “substantial, legitimate and nondiscriminatory interest” in doing so. But failure to follow the law would subject a landlord to penalties.

A criminal record creates a major barrier to finding housing for many, and research from the Prison Policy Initiative found that formerly incarcerated people in the U.S. were nearly 10 times more likely to be homeless than the general public.

Advocates of the Fair Chance for Housing Act believe that two goals can be achieved by enabling ex-inmates to find a permanent home. It would begin to ease crowding in homeless shelters and make it easier for people with criminal records to turn their lives around. (Approximately half of the people released from prison in New York State end up in homeless shelters and about 750,000 New York City residents are people who’ve been convicted.)

How can I protect my tenants without the criminal background check?

Joseph Strasburg, who represents thousands of landlords as president of the New York Rent Stabilization Association, said the Council’s legislation is too broad and should provide exemptions. How else will landlords prevent drug dealers, gun sellers and gangs from setting up shop in one of their units, he said.

“For an owner to not have control over their property and who goes in there and the liability associated with that is hugely problematic,” he said. “I believe in redemption. I believe people should have an opportunity for a second chance in life. But we need to have a conversation around the surrounding circumstances.”

How will passage of the Fair Chance for Housing Act affect a landlord’s bottom line?

If criminal background checks are forbidden by law, rents are likely to increase since property owners will want higher rents to mitigate the risk of a potentially bad renter. This cost will be passed on to all the landlord’s renters. This will include tenants with excellent credit and rental histories who pay their rent on time and don’t damage the rental property. As a result, the Fair Chance Housing Ordinance will increase rents, not reduce them.

If the risk can be mitigated, having something negative in their past doesn’t necessarily mean a landlord will not rent a property to the tenant. By banning background checks, landlords will no longer have the discretion to adjust the rental agreement to mitigate any additional potential cost.