Need to Know!

March 14, 2014 7:21 pm

Consumer Financial Protection Bureau (CFPB) – Notice to Users of Consumer Reports

The Fair Credit Reporting Act (FCRA) imposes significant obligations on landlords and employers who use Consumer Reports, as defined by the FCRA.  Tenant and employee screening reports clearly fall within the definition of a Consumer Report.  The Consumer Financial Protection Bureau (CFPB) publishes a document titled “Notice to Users of Consumer Reports: Obligations of Users under the FCRA“.  It is a nicely organized summary of requirements imposed on landlords and employers (among others) who rely (in whole or in part) on tenant and employee screening reports to decide whether to hire or grant tenancy. The CFPB (and FTC) have become quite vigorous in their enforcement of the FCRA, so it pays to review the Notice to Users… from time to time.  Here are a few of the high points. Permissible Purpose Users must have a Permissible Purpose (as defined by Section 604 of the FCRA) before procuring a Consumer Report.  ... View Article

March 7, 2014 11:44 pm

Tenant Screening – Between a Rock and a Hard Place

Landlords are truly caught between a rock and a hard place when it comes to tenant screening. The Rock A failure to adequately screen prospective residents can have a devastating impact on the bottom line – NOI & equity. Further, there is a well-established duty to exercise care in screening prospective residents.  A failure to do so has resulted in disaster – followed by substantial civil penalties.  The Hard Place There has never been a more hostile legal and regulatory environment when it comes to tenant screening. First, there is a large and evolving body of law regulating consumer reporting (including tenant screening).  There is, of course, the federal Fair Credit Reporting Act (FCRA) as amended by the FACT Act.  States often have their own consumer reporting statutes – which may or may not align neatly with the FCRA.  Bottom line – these laws impose specific requirements on landlords (End-users... View Article

January 23, 2014 5:58 pm

Limits on Access to Juvenile Records – Washington State

Washington lawmakers are again considering limits on access to juvenile records.  House Bill 1651 (SB 1651), originally introduced in 2013, has been reintroduced in 2014. SB 1651 states the “The official juvenile court file of any alleged or proven juvenile offender shall be confidential unless the juvenile has been adjudicated of a sex offense… a serious violent offense as defined in RCW 9.94A.030, arson in the first degree or criminal solicitation of or criminal conspiracy to commit arson in the first degree, assault of a child in the second degree, kidnapping in the second degree, leading organized crime, or malicious placement of an explosive in the first degree….” “Serious violent offenses” is a subcategory of violent offense and means: Murder in the first degree; Homicide by abuse; Murder in the second degree; Manslaughter in the first degree; Assault in the first degree; Kidnapping in the first degree; Rape in the... View Article

January 21, 2014 7:25 pm

Washington Tenant Screening Bill – Well Intended but Misses the Mark

There is no doubt that low income individuals are more likely than others to pay multiple tenant screening fees before finding a landlord or property manager who will work with them.  Housing advocates are well aware of the problem and relentless in their pursuit of a solution – primarily through the legislature.  2014 will be no exception. Washington Senate Bill 6291, introduced by Senator David Frockt (D-North Seattle), attempts to resolve the problem with a change to the Residential Landlord Tenant Act that: First defines a so-called “Comprehensive Screening Report” – which in theory will be acceptable to the majority of landlords; and then Prohibits landlords from charging a tenant screening fee if such a report (prepared within 30 days of the application date) is made available to them – presumably via the tenant screening company. SB 6291 is well intended but will not work.  Here’s why. Fair Credit Reporting... View Article

December 27, 2013 8:57 pm

Tenant & Employee Screening Reports – Content Restrictions

Did you know that… (1) The Fair Credit Reporting Act (FCRA) imposes specific limits on the type of information Consumer Reporting Agencies (CRA’s) may include in tenant and employee screening reports; and that (2) State law often imposes additional limitations? Section 605 of the FCRA states that with few exceptions, “…no consumer reporting agency may make… consumer reports containing any of the following items of information: (1) Cases under Title 11[United States Code] or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years. (2) Civil suits, civil judgments, and records of arrest that, from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period. (3) Paid tax liens which, from date... View Article

December 11, 2013 11:36 pm

Use of Criminal Records Data for Employment Screening Purposes

There has been a marked increase in the number of bills dropped (in state legislatures), federal regulatory actions and lawsuits targeting access to (and use of) criminal records data for employment screening purposes.  The trend is likely to continue and accelerate, since it is supported by legislators on both ends of the political spectrum – conservatives motivated by privacy concerns and liberals concerned with the “disparate impact” form of discrimination in housing and employment.  The federal Equal Employment Opportunity Commission (EEOC) recently updated their enforcement guidelines regarding use of criminal records for employment screening purpose.  They made clear that use of criminal records data, in some instances violates the prohibition against employment discrimination under Title VII of the Civil Rights Act of 1964.  The focus is so-called “neutral policies”  that have a disproportionate (or disparate) impact on protected groups.  According to the EEOC, “National data supports a finding that criminal... View Article

November 7, 2013 7:28 pm

Oregon Residential Landlord-Tenant Law – Limits Use of Public Records

Oregon Senate Bill 91(SB91) was passed by the legislature and signed by the governor in June of this year (2013).  The bill added new provisions and amended some chapters of ORS Chapter 90 – Oregon’s Residential Landlord and Tenant law.  It is effective on January 1, 2014.  Section 3 of the bill imposes specific limits on the landlord’s use of the public record for tenant screening purposes.  What you don’t know may well hurt you in this case, so here goes: Eviction Records Section 3(1) states that landlords may not consider “actions to recover possession” that were “…dismissed or resulted in a general judgment for the applicant (prospective resident) before the applicant submits the application or general judgments against the applicant entered five or more years prior to submission of the application. This restriction does not apply “…if the action has not resulted in a dismissal or general judgment at... View Article

October 10, 2013 5:01 pm

Seattle Criminal Records Ordinance – Effective November 1!!

Half the battle in managing a successful business these days is making sense of (and navigating) the mind-numbingly complex, at times ambiguous and often conflicting patchwork of federal, state and local laws.  That is certainly the case when it comes to equal employment opportunity (EEO) law.  In less than a year the federal Equal Employment Opportunity Commission (EEOC) and the Seattle City Council took action to limit use of criminal records for employment screening purposes.  What follows is a discussion of those actions and specific suggestions as to how you might navigate this increasingly complex legal environment. Equal Employment Opportunity Commission The EEOC recently published updated Enforcement Guidance regarding use of criminal records for employment screening purposes.  The Guidance states that use of criminal records in making employment decisions in some instances violates the prohibition against employment discrimination under Title VII of the Civil Rights Act of 1964.  The EEOC’s position... View Article

October 3, 2013 5:29 pm

Tenant & Employee Screening – Take the Legal High Road!

The rapid pace of legal and regulator change affecting resident and employee background checks shows no sign of abating. Staying on top of changes in state, federal and now local law, and adapting to those changes, can be overwhelming – especially for those who operate across multiple jurisdictions.  That’s the bad news.  The good news is that there are specific (best) practices that, if followed, make it possible to thoroughly vet prospective residents (and employees) and NOT become a target for regulators or trial lawyers. Background There are several factors driving the changing legal and regulatory landscape, including the: Disparate impact legal theory; Increase in the number of applicants (consumers) with criminal records – combined with the correlation between joblessness on repeat offenses; Current economy (unemployment); and Ease of access to credit and public records (criminal and eviction) data – combined with questions of accuracy. The disparate impact discrimination theory... View Article

July 29, 2013 9:37 pm

Screen Prospective Tenants – Reduce Problems & Improve the Bottom Line

Carefully screening prospective tenants does more to reduce problems and improve the bottom line than just about anything else a landlord can do.  Yet there are those who, due to financial pressures or lack of experience either fail to screen tenants or do so poorly. Poorly screened tenants are more likely to damage the property, be the subject of noise complaints, make late payments and otherwise fail to comply with the terms of the lease.  They increase turnover due to their impact on others and, ultimately, reduce rents, decrease net operating income and hammer owner equity. That is not to say that screening prospective tenants is easy.  Landlords must navigate a rapidly evolving and increasingly complex legal and regulatory environment, state and federal fair housing and consumer reporting law.  There are vast differences in the quality (completeness and accuracy) of data provided by tenant background check services. Step one in... View Article