Podcast 258: Criminal Records are Changing

Criminal records are being expunged and moved to the back of the tenant screening process. Hear how recent news is affecting landlords nationwide…


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Show Transcription:

00:00 Hey everybody. Welcome back to another episode of Rentprep for landlords is episode 258. I am your host Eric Worral. And in this episode we’re gonna be talking about some recent news articles that affect landlords, property managers, real estate investors, specifically relating around criminal activity of tenants and what you can and can’t accept as information when you are screening your tenants. There’s been some more updates in this area. We’re going to get to that right after this.

00:29 1,2,3,4 ya ya ya…. Welcome to the RentPrep for landlords podcast. And now your host, Steven White and Eric Worral.

00:36 So I came across a recent news article from News observer.com the author is David Blufe and Mark Holden and the title of the article said, clear more criminal records to give people a fresh start. So this is from my April 30th and give you just kind of the gist of it. It’s talking about North Carolina that leaders are considering legislation that would substantially expand the number of people who are eligible to clear their criminal record and simplify the process for doing so.

01:05 Uh, what they’re finding is that North Carolina, there are nearly 100,000 convictions each year, but there are fewer than 2000 people who have had a conviction expunged, which means to clear or seal the record. Uh, so it can’t be used against you whether you’re trying to get housing a job or anything between. And one of the interesting things about this article is that it’s highlighting kind of a, a larger trend that we’re seeing. Uh, I believe I’ve mentioned this on a previous podcast, but in San Francisco they’re using algorithms and, uh, these are developers have put together that will help people identify records that should be expunged and removed from their records, uh, and is automatically wiping those clean, especially around cannabis, uh, where in 2016 it was legalized. And you still have these records of all these people who, you know, maybe they were caught in public, uh, with a bag of marijuana, um, or the, uh, we’re dealing. And some of those are no longer breaking the law. So this algorithm in San Francisco has identified this and what they found as they went through all these records that used to take hundreds, thousands of hours to go through and is taking minutes. So they are starting to use these algorithms and other cities. Um, uh, San Fernando, Los Angeles is doing this as well, where they’re relying on these algorithms to find records that need to be expunged. And now what we’re seeing in North Carolina is that they’re actually looking to expand. Um, the amount of records that can be expunged.

02:33 Article doesn’t go into real specifics on what type of records it says that they’re trying to , get removed. But it does kind of go into some details as far as the number of people who have a criminal record, it says that as many as one third of Americans have a criminal record, roughly the same number as those with college degrees and one and two has a family member who has been incarcerated. I don’t love that stat because saying one and two has a family member who has been incarcerated. Like, I don’t know. You starting to get into the Kevin Bacon effect where you’re like, everybody’s seven degrees or six degrees of separation. Um, to me that’s kind of just a sensationalized, number in some ways. Uh, but the, uh, the fact that one third of Americans have a criminal record is extremely high.

03:16 It says that researchers estimate that time in prison and felony records drain every 87 billion from our annual gross domestic product. So with this, uh, knowledge and understanding what they’re trying to do is increase the amount of records that can be expunged in North Carolina. Uh, we’ve been seeing this hop up in states all over the place. I was talking with Steve earlier today and we were on a, a newsletter from the Naa PBS, the National Association of professional background screening companies. And, we get these updates of when states are trying to put a new initiative forward, whether they’re trying to change, you know, the way you’re looking at criminal records or a tenant rights and things of that nature. And he was saying how, you know, sometimes it used to be like six months before you’d even get any kind of mention of any state doing anything. And now that weekly newsletter is coming through and it’s got like nine states on there and there’s seven different things that are being discussed on being updated.

04:11 So right now we are definitely in a timeframe and era where there is a lot of , movement happening for social change, social justice, social cause. And what I believe we’re going to find is more and more states, more and more cities are going to be moving towards a removing criminal data like Seattle has in the past or trying to change the way that you can use criminal, uh, information in your screening process. So to give you another example, a recent article from the Chicago Sun Times in their editorials, uh, was a titled don’t punish landlords to make housing available for ex offenders. So this particular article was highlighting a recent changes that have been pushed through a in Cook County, which is where Chicago is based out of. And it said that this was approved last Thursday by the county board, which attempts to limit how and when I learned lard can ask about somebody’s criminal past. So it says the landlord under the new rules still will be allowed to ask about an applicant’s criminal past, but only as a discrete second step in the vetting process. The landlord, first will have to complete the rest of the vetting process, is just determining whether the applicant has a sufficient income and acceptable credit rating.

05:28 So the idea behind this process, and I’ve seen this pop up in other cities and areas as well, is that the landlord is forced to go through the intend entire tenant screening process and then get down to their final list of applicants. And then at that point they can look at criminal activity so they can run that background check and make sure that there’s no criminal activity that would deny this person from being in the rental. So with that said, you know, you’re getting pushed back because people don’t like change. You don’t like things being moved. But I believe what they’re trying to do here is they’re trying to make it very easy to identify when discrimination is happening. So it can’t just be lumped in into the process earlier where somebody will be like, oh yeah, they just failed my criteria. And that could mean, you know, rent to income ratio, smoking, uh, all sorts of different things that don’t have anything to do with the criminal activity.

06:18 They may point to something else even though really they didn’t want that person in because of a specific criminal record. So, the really trying to isolate that part of the tenant screening process and move it to the very end to make it easier to identify when they believe that a landlord or property manager is using discriminatory practices when placing a tenant applicant of course this makes it a little bit more difficult to a landlord to go through the process. Uh, it also, um, makes it a little bit harder for the, uh, the person that does have that record that’s going to get denied. Let’s say they have a record and it’s something that reasonable for the landlord to consider a reason for not giving them the rental. Right. They have a history of domestic violence with let’s say they have arson on their record.

07:05 That’s a, that’s a pretty good reason not to give somebody, um, a rental and I’ll probably hold up in court so that person go through the entire process and now they’re just going to get denied later in the process where before they may have been denied earlier in the process. So that’s something that consider I, if you’re not familiar, definitely research the laws around the Fha. They did change it in 2016 early April, 2016 and their interpretation of criminal records where they no longer allow you to just have a blanket policy. So you can’t just say, I won’t accept somebody with a criminal record. You have to make a distinction, a connection a lot of times called the nexus between what that criminal record is and why they would not be a suitable tenant for your apartment. So you can’t say that somebody, you know, I’m just kind of coming up with something on top of my head.

07:55 Let’s say hypothetically they got a um, you know, for being obnoxious, they’re obnoxious at a concert and they got, you know, pulled into the tank or something in the drunk tank. Can you make the connection that they would not be a good tenant? That is different from, like I mentioned earlier, somebody who, has been convicted of arson. Um, there’s a lot of different things that you can, um, you can look at and research on this. I will include a link to the official Fha, interpretation that came out in April, 2016 so you can read through that. It’s about five, six pages. It’s a, it’s a fantastic read him by fantastic, I mean, pretty boring, but that’s also one of the issues that they kind of run into is they come up with these interpretations, but they’re still very loose. Like I can’t tell you specifically what’s a yes and what’s a no.

08:41 They kind of leave it vague and tell you, well you can consider this but don’t consider this and you might want to think about like the length of time it’s been since that conviction happened, but in my opinion they should be the. Just be telling you, hey consider it if it’s three years or newer, if it’s over three years, throw it out. If it’s this type of conviction. Instead they kind of put the emphasis on the landlord to interpret things and come up with their own interpretation but then say, hey, don’t be subconsciously discriminate with your interpretation, which I think is not a great system and the way that it’s currently delegated in some ways if they were actually more specific, which again we’re create more regulation of rules, they’d be a little bit easier because then you wouldn’t be left up to interpreting what the rules and guidelines are.

09:29 That kind of has some loose rules and guidelines to them. One of the things that comes up a lot in the Facebook group too is like some people will mention like, oh the Fha doesn’t apply to me. I’m an owner occupied situation. If you’re not familiar with that, it’s the fact that FHA applies to almost everybody but not all types of housing to apply. So I’m taking this from nolo.com which I found to be a great resource.These are kind of the bullet points of when the FAA or when the fair housing act applies. It says the owner occupied buildings with for a few units. The FHA generally isn’t applicable when a building has two to four units and the owner lives in one of them. Also, single family homes run it without a broker. The FHA doesn’t apply when a single family houses sold or rented without a broker.

10:11 So long as the owner doesn’t own more than three houses. Uh, I’m going to skip ahead on a few. I don’t think there are probably as relevant unless you have senior housing, private clubs or religious organization. But it’s important that even if your property is exempt from the Fha, because one of the reasons listed above, you must still comply with the law as ban on issuing discriminatory statements, notices or advertising, additional considerations. If the Fha doesn’t apply to your property. There may be a local or state fair housing law that does, they give a great example here of a or one where it says, while the Fha generally doesn’t apply to owner occupied buildings with for fewer units, Massachusetts Fair housing law generally applies to all but owner occupied two family houses. So, you know, it’s a, it’s one of those things where every state, every city might have a different ruling on what the Fha does apply to.

11:03 So that’s why it’s so important to know your local state and city county laws. And it’s a lot to consider. But you got to do that research and figure that out. And one of the last things I wanted to mention on here, um, is just, you know, do the research, take the time to figure out what does apply to you, what doesn’t. Will include some resources to today’s podcast. And our show notes. But just be aware of that things are changing. They’re tending to lean towards removing criminal records. Um, and this is most likely, uh, just a natural cause of having so many people incarcerated that they’re running into issues where it’s just like the rates of recidivism, which, uh, means like the percentage of the likelihood that somebody would go back to prison, those rates are pretty high because when somebody gets out of prison and then they can’t find a place live and they can’t find a place to work because of their records, it makes it very difficult to not resort back to the same reasons that possibly put you in prison.

12:01 So what they’re trying to do is not punish people who’ve already been punished in prison, but give them a second chance, give them the opportunity to find housing, to find a place to work. And, that’s something to be very aware and cognizant of because a landlord if you’re gonna see more and more rulings, um, protecting people with criminal records popping up, whether you like it or not. That is the situation in the climate that we’re in currently. So you want to be aware of this and make sure that you’re keeping, keeping an ear out for what’s going on in your local area. All right, guys, until next week, have a great rest of your week and I look forward to catching up with you next week. Take care.