We’ve spoken (and written) for years about the “disparate impact” form of employment and housing discrimination – a legal theory with limited precedent… until recently, that is.
Until now, the emphasis has been on the use of criminal records for tenant and employment screening purposes. But there’s been little doubt that (as HUD calls it) the “discriminatory effects standard” would one day apply to use of eviction records for tenant screening purposes. That day has come.
In Nakita D. Smith (Plaintiff) vs. Wasatch Property Management, Inc., and Wasatch Pool Holdings LLC. (Defendants), filed in U.S. District Court in Western Washington on March 30, 2017, the Plaintiff claims that Defendant’s blanket policy to refuse to rent to all applicants with unlawful detainer records (without regard to the circumstances) disproportionately impacts black women in violation of the Fair Housing Act.
The lawsuit, filed by the ACLU, ACLU of Washington, Northwest Justice Project and Virginia Poverty Law Center on Smith’s behalf, first asserts that “African-Americans in King County Washington are almost four times as likely as white applicants to have been sued for unlawful detainer” and that African-American women are more than five times as likely to be sued for Unlawful Detainer (UD) as households headed by white men.
The complaint cites an article written by Harvard Scholar Matthew Desmond in the Journal of Sociology. Desmond remarks that “If incarceration has become typical in the lives of men from impoverished black neighborhoods, eviction has become typical in the lives of women from these neighborhoods”.
Under HUD’s burden-shifting framework the burden will likely shift to defendant Wasatch to persuade the court that the practice is a “business necessity” and that there is no less discriminatory way to assess the risk that an applicant will fail to fulfill the terms of the rental agreement. Anticipating this defense, the complaint further asserts that there are “…equally effective methods by which the (defendant) can avoid problem tenants while having a less discriminatory effect – notably use of rental history.
In a Nutshell…
Plaintiff alleges Defendant refused to consider Ms. Smith’s application because Ms. Smith had been sued for UD and without considering the facts of the case or that Smith had been issued a Housing Choice Voucher – substantially reducing the risk that she would default on her rent obligation.
Assuming the court buys Plaintiff’s argument that a blanket policy to deny tenancy solely because the applicant is named in UD lawsuit has a disparate impact black women, Wasatch will find itself in the unenviable position of defending what is potentially a precedent-setting lawsuit in federal court – at great cost in time & treasure.
Industry advocates argue (correctly in our view) that the majority of filings are legitimate – though most are dismissed (by the landlord) before they go to trial. They are dismissed because the resident either moved out or cured the breach and because the odds of collecting on rental debt can be quite low. That said, there are exceptions – UD actions motivated by something other than a failure to comply with the terms of the rental agreement – UD actions that are simply unfair. See Hundtofte v. Encarnación
Assume for a moment, however, that the goal of tenant screening is to approve (not deny) prospective residents. It is… or at least it should be! Let’s further assume (accept) that a blanket policy to deny tenancy solely because the applicant is named in an UD lawsuit (regardless of the outcome and other factors) puts us in the fair housing crosshairs. It does!!
The question becomes… “Is there a less discriminatory, equal or better way to underwrite rental risk?” The answer, of course, is… “Absolutely… there most certainly is!”
Action – What to Do?
If you have a blanket policy to deny tenancy to anyone named in an UD lawsuit, STOP IT! The risk is at once considerable and unnecessary – since there are tenant screening companies with the tools and expertise to deliver quality (arguably superior) tenant screening products by relying on a combination of public records data and rental references to better understand the behavior that may have triggered the UD filing – whether the prospective resident was truly culpable and whether the behavior represents an elevated rental risk.
The answer is comprehensive tenant screening reports – including a close look at evictions records to determine whether records are correctly associated with the applicant, and exactly what behavior triggered the filing in the first place. We can do the Don Quixote thing – tilt at windmills (rail against government overreach). Or we can partner with others in the industry – agreeing to return thorough and accurate rental references – – and by being open to the facts of the case and other information the applicant may provide
Most agree that it is unfair to deny applicants who fall victim to a bogus filing or one who prevails (when there is a judgment in favor of the resident).
Finally, there is a perception that the alternative – coupling eviction records search and analysis with rental verifications – is too expensive and time-consuming – when in practice doing so is relatively quick and not at all cost prohibitive (to the applicant!).
If the goal is to approve (versus deny) well qualified applicants, reduce the risk of a disparate impact-based Fair Housing claim and to treat folks fairly in the process- we are wise to avoid use of blanket policies in general, a policy that denies tenancy based solely on the fact that the individual was named in a U.D. lawsuit.
Comprehensive tenant screening reports – including a careful review of the public record, combined with rental verifications – to determine whether the case has merit and if taken to judgment and/or writ, who prevails are readily available, cost effective and timely. Moco’s/MyScreeningReport.com® comprehensive tenant screening reports are returned in 1-2 days on average – including weekends. It is hard to imagine a well-qualified applicant – who is truly sold on a property – walking away over the day or two it takes to do a thorough search and get final approval.
Categorised in: Tenant Screening