Are landlords allowed to run background checks on tenants?

Tenant Screening and Background Checks for Landlords in New York

As a landlord in New York, conducting thorough tenant screening is a critical step in the rental process. Running background checks allows landlords to assess applicants’ suitability for tenancy, helping to mitigate the risks of non-payment, property damage, and other lease violations. However, New York has specific laws and regulations governing what landlords can and cannot do when screening prospective tenants. This guide provides a comprehensive overview of your rights and responsibilities regarding background checks on tenants in New York.

Can New York Landlords Run Background Checks?

Yes, landlords in New York are permitted to run background checks on prospective tenants. These checks typically include:

• Credit Reports: To assess the tenant’s financial responsibility and repayment history.
• Criminal Background Checks: To screen for certain criminal convictions that could impact the safety and well-being of other residents.
• Rental History: Verifying previous tenancy, payment history, and any evictions.
• Employment Verification: Confirming income and employment status to ensure the tenant can afford rent.

It is important to understand the legal framework that governs how and when these checks can be performed.

Legal Requirements and Restrictions

1. Fair Credit Reporting Act (FCRA)

Under federal law, the Fair Credit Reporting Act (FCRA) regulates background checks that involve consumer reports, such as credit and criminal reports provided by consumer reporting agencies. Key points include:

• Disclosure and Consent: Before obtaining a credit or criminal background report, landlords must provide the tenant with a written disclosure that such a report will be obtained. This disclosure must be clear and conspicuous.
• Written Authorization: Landlords must receive the tenant’s written permission before pulling these reports.
• Notice of Adverse Action: If a landlord decides to deny an applicant based on information in the report (for example, a poor credit score or a criminal record), they must provide the tenant with a pre-adverse action notice that includes a copy of the report and a summary of their rights under the FCRA. If the tenant is ultimately denied, the landlord must notify them by sending an adverse action notice with the name and contact information of the reporting agency.

2. New York State Human Rights Law (NYSHRL)

New York’s human rights laws impose additional protections to ensure fair housing and prevent discrimination. These include:

• Prohibition Against Discrimination: Landlords cannot use background checks in a manner that discriminates against tenants based on protected characteristics such as race, color, national origin, sex, disability, familial status, age, sexual orientation, or lawful source of income.
• Criminal Background Checks: Under recent amendments, New York restricts the use of criminal history in housing decisions unless the landlord can demonstrate that the specific conviction is directly related to the tenancy or the safety of others and that the denial is consistent with business necessity. Blanket policies that exclude tenants based on any criminal conviction without individualized review may violate state law.
• Ban the Box Legislation: Certain municipalities in New York have adopted “ban the box” rules that restrict when and how landlords can inquire about an applicant’s criminal history. It's important to check local city or county ordinances for additional requirements.

3. New York State Tenant Screening Report Act

New York requires landlords who use third-party tenant screening services to comply with the Tenant Screening Report Act, which includes:

• Providing tenants with a written disclosure and obtaining consent before ordering a tenant screening report.
• Informing tenants of their right to dispute inaccurate or incomplete information in their screening reports.
• Using only reliable and commonly accepted tenant screening practices.

Practical Guidance for New York Landlords

When conducting background checks on tenants, landlords should follow these best practices to comply with New York laws and protect themselves legally:

Step 1: Inform the Applicant and Obtain Authorization

• Provide the prospective tenant with a clear written disclosure that details what types of reports will be obtained (credit, criminal, rental history, etc.).
• Obtain written consent from the tenant before running any background checks.
• Keep records of disclosures and signed consents for your files.

Step 2: Use a Reputable Screening Service

• Utilize established consumer reporting agencies that specialize in tenant screening.
• Verify that your screening company complies with FCRA and state requirements.
• Ensure the screening agency provides a clear and accurate report with relevant information.

Step 3: Evaluate Background Check Results Legally and Fairly

• Carefully review credit scores, criminal history, and other relevant data.
• Avoid automatic rejections based solely on criminal convictions without assessing individual circumstances and relevance to tenancy.
• Consider contextual factors such as time elapsed since conviction, the nature of the offense, and evidence of rehabilitation.

Step 4: Provide Required Notices if Denying Tenancy

• If you intend to reject a tenant based on background check information, send the pre-adverse action notice providing the consumer report and a summary of rights.
• After finalizing the decision, send the adverse action notice with contact information for the screening agency.

Step 5: Avoid Discrimination

• Apply tenant screening criteria consistently to all applicants.
• Do not discriminate based on protected classes.
• Document all screening decisions to demonstrate compliance and fairness.

Summary

Landlords in New York are legally allowed to run background checks on prospective tenants, including credit reports and criminal history. However, compliance with federal and state laws is essential. You must obtain written consent, provide necessary disclosures and notices, and ensure that your tenant screening process is free from illegal discrimination. Additionally, recent legal developments emphasize careful, individualized consideration of criminal background information.

By following these guidelines and adopting thorough but fair screening practices, New York landlords can protect their rental properties while respecting tenants’ rights and adhering to the law.