Many community associations throughout Florida require that prospective sales and leases be reviewed and approved or disapproved by the board of directors prior to the transaction being completed. Among the factors that are often reviewed in making the decision are the results of a criminal background check. In light of a publication on April 4, 2016, from the Office of General Counsel for the U.S. Department of Housing and Urban Development (HUD), using the criminal background to disapprove could result in a successful claim for discrimination under Fair Housing laws.
In its published “Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate-Related Transactions” (“Guidance”), HUD has indicated that, although “criminal record” is not a protected class under Fair Housing laws, HUD is of the opinion that criminal history-based restrictions on housing opportunities can be found to violate the Fair Housing Act if, without justification, the application of the restriction falls more often on individuals within a protected class (such as race or national origin). In the publication, HUD cites to national statistics that reflect a disproportionately higher percentage of African Americans and Hispanics as having a criminal record relative to the general population. By this analysis, HUD has stated that it is possible to conclude that application of a “criminal record” standard in denying housing opportunities could have what it calls a “disparate affect” on the protected classes, which results in discrimination under the Fair Housing laws.
HUD indicates that a violation of the Fair Housing Act can occur by an association when the policy or practice has an unjustified discriminatory effect, even when the association had no intent to discriminate. It warns that certain policies that have a discriminatory effect violate the Act if the policy is not supported by a legally sufficient justification. To avoid that conclusion, the policy must be necessary to serve a substantial, legitimate nondiscriminatory interest of the association or there is no other method that has a less discriminatory effect available.
When such a claim of discrimination is made, the association will be required to prove that the challenged policy is justified, being necessary to achieve a substantial, legitimate, nondiscriminatory interest of the association. It may not be hypothetical or speculative. Evidence must be provided by the association of the required interest, and that the policy actually achieves that interest. HUD recognizes as a legitimate concern the interest of ensuring resident safety and protecting property to support a policy that evaluates the criminal background of an applicant as a basis for denial. Proving that the policy actually assists in protecting resident safety and/or property will be required. Having a blanket policy of disapproving any applicant with a criminal conviction will not be sufficient to avoid a finding of discrimination if such a claim is made.
HUD further warns that excluding individuals because of only an arrest, without a conviction or guilty plea, will not be able to meet the burden of proof for the association that is required under the guidelines. With prior convictions, HUD also indicates the need to be mindful of the types of crimes that are included to only those in which there is a demonstrable risk to resident safety and/or property and not including those that do not. The nature and severity of the conviction must also be identified, as well as the amount of time that has passed since the criminal conduct occurred. In short, the nature, severity, and recency of the criminal conduct are required elements of such policy. In all instances, the claims will be evaluated on a case-by-case basis. For example, a conviction for shoplifting from 25 years prior to the application will likely not be a sufficient basis for denying an application.
If the association is able to meet its burden of demonstrating that the policy is justified, HUD must then identify whether the interest of the association could be served by another practice that has a less discriminatory effect. It is suggested in the Guidance that a policy that contains individualized assessment of the criminal conduct of the applicant or relevant mitigating information will be more supportable. Such individualized information includes: the facts or circumstances surrounding the criminal conduct; the age of the individual at the time of the conduct; evidence that the individual has maintained a good tenant history before and/or after the conviction; and, evidence of rehabilitation efforts. It also suggests that the association delay consideration of criminal history until after the financial and other qualifications are verified. This way, if other issues are sufficient to reach a conclusion of disapproval, the criminal background will not be an issue of concern.
One statutory exemption that is allowed under a blanket prohibition policy is a person who has been convicted of the illegal manufacture or distribution of a controlled substance, as defined by statute. However, this does not extend to a conviction only for possession of the controlled substance.
While criminal background may still be used by associations in deciding whether or not to approve or disapprove a proposed sale or lease, since there is now a heightened risk of a possible discrimination claim, associations must now be more careful and specific in setting the standards for circumstances that will result in a disapproval. Only convictions of crimes that are of a nature and severity that might threaten the safety of other residents should be included, as well as reasonable limitations as to the time that has passed since the conviction. Such policies should be in written form within the association records and published to all owners. Prior to setting up such criteria in the approval procedures of the association, consultation with the association attorney should be undertaken to be certain that the association exposure is minimized.