Summary of U.S. Department of HUD Guidance on Application of Fair Housing Standards to the Use of Criminal Records by Providers of Housing and Real Estate Related Transactions

• On April 4, 2016 HUD’s Office of General Counsel provided guidance on how the Fair Housing Act applies to the use of criminal records in applicant screening.

• Specifically, the guidance addresses how the discriminatory effects and disparate treatment methods of proof apply in Fair Housing Act cases in which a housing provider justifies an adverse housing action – such as refusal to rent or renew a lease – based on an individual’s criminal history.

• The guidance points out that many formerly incarcerated individuals, as well as convicted and not incarcerated individuals encounter significant barriers to securing housing – including public and other federally-subsidized housing, specifically due to their criminal histories.

• Across the U.S., African Americans and Hispanics are arrested, convicted and incarcerated at rates disproportionate to their share of the general population.

• Consequently, criminal records-based barriers to housing are likely to have a disproportionate impact on minority home seekers.

• While having a criminal record is not a protected characteristic under the FHA, criminal history based restrictions on housing opportunities violate the Act if, without justification, their burden falls more often on renters or other housing market participants of one race or national origin over another (i.e., discriminatory effects - also known as disparate impact liability).

• A housing provider violates the FHA when the provider’s policy or practice has an unjustified discriminatory effect, even when the provider had no intent to discriminate.

• A policy or practice that restricts access to housing on the basis of criminal history could be unlawful under the FHA if the policy or practice is not necessary to serve a substantial, legitimate, nondiscriminatory interest of the housing provider, or if such interest could be served by another practice that has a less discriminatory effect.

• Liability for discriminatory effects is assessed under a three-step burden-shifting standard requiring a fact-specific analysis.

• Step one – Plaintiff (or HUD in an administrative adjudication) must prove that the criminal history practice has a discriminatory effect – that the policy results in a disparate impact on a group of persons because of their race or national origin.

• This burden is satisfied by presenting evidence proving the challenged practice actually or predictably results in a disparate impact.

• Local, state or national statistics may be presented. National statistics provide grounds for HUD to investigate complaints challenging criminal history policies. Statistics show that both African Americans and Hispanics were incarcerated at a rate of nearly three times their proportion of the population.

data www.amrent.com | [email protected] • Additional evidence, such as applicant data, tenant files, census demographics and localized criminal justice data may be relevant in determining whether local statistics are consistent with national statistics.

• These statistics are used to determine whether there is reasonable cause to believe the challenged policy or practice causes a disparate impact.

• Whether in the context of an investigation or administrative enforcement action by HUD or private litigation, a housing provider may offer evidence to refute the claim that its policy or practice causes a disparate impact on one or more protected classes.

• Regardless of the data used, determining whether a policy or practice results in disparate impact is ultimately a fact-specific and case-specific inquiry.

• Step two – Evaluating whether the challenged policy or practice is necessary to achieve a substantial, legitimate, nondiscriminatory interest.

• In this step, the burden shifts to the housing provider to prove that the challenged policy or practice is justified – that it is necessary to achieve a substantial, legitimate, nondiscriminatory interest of the provider.

• The housing provider must be able to provide evidence proving both that the housing provider has a substantial, legitimate, nondiscriminatory interest supporting the challenged policy and that the challenged policy actually achieves that interest.

• Ensuring resident safety and protecting property are often considered to be fundamental responsibilities of a housing provider.

• Courts may consider such interests to be both substantial and legitimate assuming they are the actual reasons for the policy or practice.

• A housing provider must, however, be able to prove through reasonable evidence that its policy or practice actually assists in protecting resident safety and/or property.

• Bald assertions, generalizations or stereotypes about individuals with criminal histories posing a greater risk than any other individual are not sufficient to satisfy this burden.

• Examples of polices or practices that will not satisfy housing provider’s burden:

• Exclusions due to prior record

• Blanket prohibition due to prior conviction record

• Criminal conduct that doesn’t indicate a demonstrable risk to resident safety and/or property.

• Policy/practice that fails to take into account nature and severity of a criminal conviction.

• Policy/practice that fails to take into account the amount of time that has passed since the criminal conduct.

• Step three – Evaluating whether there is a less discriminatory alternative

• This step is applicable only if a housing provider successfully proves that its criminal history policy or practice is necessary to achieve its substantial, legitimate, nondiscriminatory interest.

data www.amrent.com | [email protected] • In this step, the burden shifts back to the plaintiff or HUD to prove that such interest could be served by another practice that has a less discriminatory effect.

• Individualized assessments of criminal records are likely to have a less discriminatory effect than categorical exclusions.

• Housing providers may also want to delay the consideration of criminal histories until after an individual’s financial and other qualifications are verified.

• Statutory Exemption from FHA Liability

• Exclusion because of illegal manufacture or distribution of a controlled substance

• A housing provider will not be liable under the FHA for excluding individuals because they have been convicted of one or more of the specified drug , regardless of any discriminatory effect that may result from such policy.

• Limitation – only applies to disparate impact claims based on a conviction not arrest and is limited to manufacturing and distribution – Not possession of a drug.

• Conclusion

• The FHA prohibits both intentional housing discrimination and practices that have an unjustified discriminatory effect because of protected classes. While the Act does not prohibit housing providers from appropriately considering criminal histories, an arbitrary and overbroad criminal history-related bans are likely to lack a legally sufficient justification. Thus, a discriminatory effect resulting from a policy or practice that denies housing to anyone with a prior arrest or any kind of criminal conviction cannot be justified. Therefore, such a practice would violate the FHA.

• Policies that exclude persons based on criminal history must be tailored to serve the housing provider’s substantial, legitimate, nondiscriminatory interest and take into consideration factors such as the type of and the length of time since conviction.

• Where a policy or practice excludes individuals with only certain types of convictions, a housing provider will still bear the burden of proving that any discriminatory effect caused by the policy or practice is justified. Determinations are made on a case-by-case basis.

data www.amrent.com | [email protected] Terminology

Disparate Treatment - Housing provider uses a policy as pretext for treating applicants or tenants differently because of their race, national origin, or other protected characteristics.

Disparate Impact - Facially neutral policy that may violate the FHA if the policy has a disproportionate effect on members of a protected class or classes, regardless of whether the housing provider intended to discriminate. Because racial and ethnic minorities are over-represented in the population of Americans with arrest and incarceration records, policies excluding applicants with criminal histories from qualifying for housing may have a disparate impact on African Americans or Hispanics.

Individualized Assessment – A review of an applicant’s criminal record circumstances. Relevant, individualized evidence might include: 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 or conduct; and evidence of rehabilitation efforts.

Arrest - A seizure or forcible restraint; an exercise of the power to deprive a person of his or her liberty; the taking or keeping of a person in custody by legal authority, especially, in response to a criminal event.

Criminal Charge - A formal accusation made by a governmental authority asserting that somebody has committed a crime. A charging document, which contains one or more criminal charges or counts, can take several forms, including: complaint, information, .

Criminal Pending Charge – Until final disposition of a criminal charge, a charge is considered pending.

Criminal Acquitted Charge - Releases a from the criminal charges that have been brought against them. This may happen if the jury finds the defendant not guilty, or if a judge decides that the case should be closed (for instance due to a lack of evidence). An acquittal cannot be re-filed in the future.

Criminal Dismissed Charge - Often occurs before a case even begins, or shortly after the indictment hearing. A judge may dismiss a case before it begins, again due to lack of evidence, or if it’s clear that the prosecution’s case has no bearing. Thus, a dismissal can often save the court much time and resources, by not trying a case whose outcome is clear from the beginning. With a dismissal, the question of the defendant’s guilt never gets tried. As such, a case that is dismissed can sometimes be re-filed in the future.

Indictable offense - A crime (offense) for which a grand jury rules that there is enough evidence to charge defendant with a felony (a crime punishable by death or a term in the state penitentiary). These crimes include , manslaughter, rape, kidnaping, grand theft, robbery, burglary, arson, conspiracy, fraud, and other major crimes, as well as attempts to commit them.

Summary process for above definitions:

A criminal case usually gets started with a arrest report. The prosecutor then decides what criminal charges to file, if any. Some cases can then go to a grand jury for a criminal indictment or to a preliminary hearing, where a judge decides if there is enough evidence to proceed. Here’s how this all works.

Arrest Reports and Criminal Charges After an arrest, the police report goes to a prosecutor, whose job it is to initiate and prosecute cases. An arrest report summarizes the events leading up to the arrest and provides numerous details, such as dates, times, locations, and witness names and addresses (if available). The prosecutor will typically either:

data www.amrent.com | [email protected] • determine that the case should be charged (as a felony or a ), and file a“complaint” (the charging document may go by a different name) with the court

• decide that the case would be a felony and should go to a grand jury, which will decide what charges, if any, to file, or

• decide not to pursue the case.

A police officer specifies the crime or crimes that serve(s) as the basis for an arrest. Officers may recommend that the prosecution file additional charges, too. But prosecutors get to make the ultimate decision on what the charges will be.

A defendant typically learns what the formal charges will be at the first court appearance.

Keep in mind that prosecutors’ initial charges are subject to change. For example, a prosecutor may not make a final decision on what charges to file until after a preliminary hearing, which may take place more than a month after arrest.

The Role of a Grand Jury If a felony is involved, prosecutors sometimes leave it to grand juries to decide whether charges should be filed. Grand juries are similar to regular trial juries (called “petit juries”) in that they are made up of randomly selected individuals. The grand jurors listen to evidence and decide whether charges should be brought against an individual—that is, they decide whether to “indict” someone.

However, unlike petit juries, which sit only on one case, grand juries involve a time commitment that typically lasts between six and 18 months. The grand jurors may address many cases in the course of their service. In addition, these crucial differences exist:

• Petit jurors decide whether are guilty. Grand juries decide whether there is enough evidence to warrant a trial.

• Grand juries meet in secret proceedings. Petit juries serve during public trials.

• Grand juries tend to be bigger than petit juries. In federal court, for example, they consist of 16 to 23 people. By contrast, a petit jury usually comprises six to 12 people.

• Petit juries generally have to be unanimous to convict a defendant. Grand juries need not be unanimous to indict. In the federal system, for example, an indictment may be returned if 12 or more jurors agree to indict.

How a Grand Jury Works When a prosecutor brings a case to a grand jury, he presents the jurors with a “bill” (the charges) and introduces evidence—usually the minimum necessary, in the prosecutor’s opinion—to secure an indictment. The proceedings are secret; it is standard practice to call witnesses to testify against the suspect without the suspect or the suspect’s lawyer present. But indicted suspects can sometimes later obtain transcripts of grand jury proceedings; the availability of a transcript is a big reason why prosecutors like to keep the evidence to the minimum.

Although prosecutors can also call suspects as witnesses, they typically don’t. When suspects are called, they often refuse to testify by invoking their privilege against self-incrimination under the Fifth Amendment to the U.S. Constitution.

data www.amrent.com | [email protected] If the grand jury decides to indict, it returns what is called a “true bill.” If not, the grand jury returns a “no bill”. But even if the grand jury returns a no bill, the case isn’t always closed. Prosecutors can return to the same grand jury with more evidence, present the same evidence to a second grand jury, or (in jurisdictions that give prosecutors a choice) bypass the grand jury altogether and file a criminal complaint.

How a Preliminary Hearing Works Typically, if the prosecutor decides to file a complaint rather than present the case to a grand jury, and the case is a felony, the defendant is entitled to a preliminary hearing. At that hearing, the prosecutor must show that the state has enough evidence of the crime to warrant a trial.

But normally, if the case proceeds by grand jury indictment, no preliminary hearing need be held.

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