Are landlords allowed to run background checks on tenants?

Tenant Background Checks for Landlords in New Mexico

As a landlord operating in New Mexico, it is important to understand the legal framework surrounding tenant screening, particularly the use of background checks. Conducting background checks is a common and effective practice to assess the suitability of prospective tenants. However, to ensure compliance with state and federal laws and maintain a professional rental operation, landlords must be aware of specific requirements and restrictions related to these checks.

Are Landlords Allowed to Run Background Checks on Tenants in New Mexico?

Yes. In New Mexico, landlords are permitted to run background checks on prospective tenants. Background checks typically include reviewing criminal history, credit reports, eviction records, and other pertinent information that can inform a landlord’s decision to approve or deny a rental application.

However, New Mexico landlords must conduct these checks in accordance with applicable state and federal laws, including consumer protection regulations and fair housing requirements.

Key Considerations for Conducting Background Checks in New Mexico

When running background checks on tenants, New Mexico landlords should keep the following guidelines and obligations in mind:

1. Compliance with the Fair Credit Reporting Act (FCRA)

• Use of Consumer Reporting Agencies: If you use a third-party service (consumer reporting agency) to obtain background information such as credit or criminal history, you must comply with the FCRA. This federal law governs how consumer information is obtained, used, and shared.
• Obtaining Tenant Consent: You must obtain the prospective tenant’s written permission (authorization) before requesting a background or credit check.
• Notification Requirements: If you deny a rental application based on information obtained in a background check, you are obligated under FCRA to provide an adverse action notice to the applicant, which should include:

- The name, address, and phone number of the reporting agency used - A statement that the reporting agency did not make the decision to deny the application and is unable to provide specific reasons for the denial - A notice of the tenant’s right to obtain a free copy of their report and dispute inaccurate information

2. Restrictions Under New Mexico Law Regarding Tenant Screening

• Rental Application Fees: New Mexico law allows landlords to charge prospective tenants a reasonable non-refundable application fee to cover the cost of screening, including background checks. This fee must not exceed the actual cost charged by the screening company.
• Non-Discrimination under the New Mexico Human Rights Act: Landlords must ensure that tenant screening practices comply with state anti-discrimination laws. Screening criteria cannot be used to discriminate based on:

- Race, color, national origin, sex, gender identity, sexual orientation - Religion, ancestry, familial status, source of income, or disability - Any other protected classes under New Mexico law

Avoid policies or screening criteria that disproportionately exclude applicants in protected classes unless there is a legitimate business justification.

3. Criminal History Screening in New Mexico

• Consideration of Criminal Records: Pursuant to New Mexico law and guidance from the Human Rights Commission, landlords should exercise caution when excluding applicants based on criminal records. Blanket bans on applicants with a criminal history may violate anti-discrimination provisions without individualized assessments.
• Individualized Assessment: Landlords are encouraged to consider the nature, severity, and recency of any criminal conviction, as well as any mitigating circumstances, rather than automatically disqualifying a tenant.

4. Use of Credit Reports

• Credit reports are a common component of tenant screening and provide insight into an applicant's financial responsibility.
• Like other consumer reports, landlords must obtain written consent before accessing credit reports.
• Avoid using credit reports in a way that conflicts with fair housing laws, such as unfairly excluding applicants with certain credit histories without reasonable justification.

Best Practices for New Mexico Landlords When Running Tenant Background Checks

To conduct tenant background checks lawfully and effectively, landlords in New Mexico should:

• Get written authorization: Always secure written consent prior to requesting any background check or credit report.
• Use reputable screening services: Choose reliable consumer reporting agencies that comply with all regulatory requirements.
• Charge reasonable application fees: Ensure any fees charged do not exceed the actual screening costs.
• Provide clear notice and communication: Inform applicants about the screening process upfront and provide required adverse action notices if applications are denied.
• Adopt objective screening criteria: Clearly define what information will be used to approve or deny applications to avoid potential discrimination claims.
• Consider individualized assessments: Especially when reviewing criminal history, evaluate factors on a case-by-case basis.
• Keep records securely: Maintain confidentiality of all tenant screening information in accordance with privacy requirements.

Conclusion

Landlords in New Mexico are legally permitted to run background checks on prospective tenants as part of the tenant screening process. However, these checks must be conducted in compliance with both federal laws such as the Fair Credit Reporting Act and New Mexico state laws governing non-discrimination, application fees, and tenant rights.

By following best practices—obtaining consent, using lawful screening criteria, providing required notifications, and ensuring transparency—landlords can effectively evaluate applicants while safeguarding their legal obligations. Consistent and fair tenant screening contributes to successful rental operations and helps maintain safe and stable housing for residents across New Mexico.