Disparate Impact Theory and Fair Housing Law

The Florida Bar recently published an article authored by Allison K. Bethel entitled “Fair Housing and Criminal Records Policies” (The Florida Bar Out-of-State Division, Summer 2017, p. 6). The content of this article, and possible future fair housing legal trends, should be understood and considered by property managers when using a rental application criteria, as they are bound to comply with Federal Fair Housing laws.

In this article, Bethel argues that the Federal Fair Housing laws should cover situations where housing providers discriminate against rental applicants based on criminal history. She argues,

While persons with criminal records are not expressly protected under the Act, overly restrictive screening policies have a disproportionate impact on persons of color, persons with disabilities and other protected classes.

She notes that there should be a reasonable “look-back period” to consider a renter applicants criminal history, namely, 7 years. Bethel also states that housing providers should evaluate “mitigating factors” of the conviction and argues that arrests that do not lead to convictions should not be considered at all. Bethel further believes that guidelines should be given on what kind of criminal convictions should even be considered for housing.

Bethel supports her arguments on the legal theory that renting practices or policies that are neutral on their face but have a discriminatory effect (the “disparate impact theory”) (FN1) should be prohibited by fair housing laws. She even cites a case where housing discrimination was found on this legal theory, namely in Texas Department of Housing & Community Affairs v. The Inclusive Communities Project, Inc., 135 S. Ct. 2507 (2015). Bethel argues that a “policy adversely impacting protected classes may survive if it is supported by a legally sufficient justification and there is no less discriminatory alternative.”

Bethel added more examples of when the “disparate impact theory” could be used to prove discrimination in violation of Fair Housing laws. She said,

overly restrictive occupancy standards may adversely impact persons with disabilities needing live-in caregivers, families with children and/or persons from ethnic backgrounds where multi- generational living is common. Additionally, crime-free policies and nuisance ordinances requiring providers to evict tenants who cause the police to come to the premises may constitute sex discrimination as they discourage victims of domestic violence, disproportionate numbers of which are female, from calling for assistance.

She continued,

Blanket prohibitions on voucher holders or others receiving government assistance may adversely impact on the basis of race, color and/or disability.

Bethel concludes her article with some advice,

In sum, housing providers should evaluate applicants individually, taking into consideration relevant factors such as resources and rental history, and avoid creating broad exclusionary policies based on generalizations.

While Bethel’s article contains mostly opinion and not binding legal precedent, her view of how Fair Housing laws should be applied is not uncommon among the legal community and is similarly held by some judges.

So what does this mean for property managers? It means property managers need to have proper procedures in place and implement them objectively in every case, and that objective standard should be based on reasonable criteria given the goals of finding a reliable and responsible tenant. Below are a few suggestions in the criminal history regard.

First, a property manager should adopt a reasonable criminal-history look-back period. Bethel says 7 years is reasonable. Whether the magic number is 7 or greater or lesser, if a court applies the “disparate impact theory” to a plaintiff’s case alleging housing discrimination, it would be helpful for the property manager to show the judge or jury that he had an objective and reasonable look-back period when considering the applicant’s criminal history.

Too, the property manager could apply a different look-back period depending on the crime. For example, the look-back period could be shorter for non-violent, non-damaging misdemeanor crimes and longer for felony crimes. And perhaps the same could be applied to non-violent crimes versus victimless crimes; or crimes damaging property and crimes not damaging property. Reasonably considered, the more violent and damaging the criminal history, the longer the look-back history could be, and vice versa.

Second, a property manager may consider the nature of the criminal history and weigh those properly when considering the application. For example, a person convicted of driving without a valid driver license should not be treated the same as a person who has five felony convictions some of which include violent or property-damaging crimes. Knowing there is a difference between the nature of crimes and categories of crimes, a property manager should have an objective way of considering the differences between them.

Third, as it relates to a person’s criminal history, the rental application should elicit sufficient information that will give the property manager a full range of knowledge about the applicant, like the following:

  • list every adult criminal conviction, the date of the conviction(s), the jurisdiction in which the conviction(s) happened, and the sentence imposed.
  • list every adult crime to which you were found guilty or pled guilty or no contest that resulted in a deferred sentence or in a dismissal of the charge(s), the date of your plea, and the jurisdiction in which the charge occurred.
  • have you ever been found guilty or plead guilty or no contest to any crime wherein you were alleged to have damaged or harmed person or property, placed someone in apprehension of bodily harm, created a risk of causing bodily harm to someone, or brandished or used a weapon in violation of the law?
  • is there any person who will be a co-tenant or occupant in the residence for which you are applying who was a complaining witness or who was the named victim in a criminal action wherein you were charged with committing a crime against that person? If so, name that person, list the date of the alleged offense, state whether a criminal charge was pursued or filed against you, and the result of the case.
  • has police ever investigated you for an alleged crime? If so, explain.
  • are you currently serving a sentence for any crime?
  • are you currently being supervised by a state or federal jurisdiction?
  • what date where you most recently released or discharged from a criminal sentence and for what crime(s) were you serving that sentence?
  • have you ever been subject to or named as a respondent in an action wherein a person was seeking a restraining order against you? if so, what dates did the restraining order apply to you and what was the allegation made against you in the petition for restraining order? if the restraining order was lifted or vacated, what date did that happen and why was it lifted or vacated?
  • are you or have you ever been charged with a fugitive from justice? If yes, explain.
  • have you ever renounced your U.S. citizenship? If so, explain.
  • do you currently have any warrants outstanding against you? If so, explain.
  • have you ever been or are you currently prohibited from owning or possessing a firearm under state or federal law? if so explain.
  • have you ever been or are you currently being denied the issuance of a concealed carry permit by state or federal jurisdictions? If so, explain.
  • are you currently addicted to any controlled substance? If yes, explain.

Bethel’s article highlights potential pitfalls that a property manager may encounter if he simply denies all applicants with any criminal history regardless of how remote, isolated or minor. Property managers need an objective criteria, and that criteria must be reasonable and should consider the “disparate impact theory”.


FN1. “To establish a prima facie case under this theory, the plaintiff must show ‘(1) the occurrence of certain outwardly neutral practices, and (2) a significantly adverse or disproportionate impact on persons of a particular type produced by the defendant’s facially neutral  acts or practices.'” Ayyad-Ramallo v. Marine Terrace Assocs. LLC, 2014 U.S. Dist. LEXIS 74411, *34-36, 2014 WL 2993448 (E.D.N.Y. May 30, 2014), citing Tsombanidis v. West Haven Fire Dep’t, 352 F.3d 565, 574-75 (2d Cir. 2003).