What fair housing rules apply to tenant screening?

Tenant Screening and Fair Housing Rules in North Carolina: A Guide for Landlords

When conducting tenant screening in North Carolina, landlords must carefully navigate the state and federal fair housing laws to ensure compliance and avoid discrimination. Tenant screening is a critical part of the leasing process, but it must be carried out in a manner that respects the rights of all applicants and adheres to legal requirements.

This guide provides North Carolina landlords with an overview of the fair housing rules applicable to tenant screening, practical tips for conducting compliant screenings, and important considerations specific to the state.

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Overview of Fair Housing Laws in North Carolina

Federal Fair Housing Act (FHA)

At the national level, the Fair Housing Act prohibits discrimination in housing based on the following protected classes:

• Race
• Color
• National origin
• Religion
• Sex (including gender identity and sexual orientation under HUD guidance)
• Familial status (presence of children under 18)
• Disability (physical or mental)

These protections apply to all aspects of housing, including tenant screening, advertising, renting, and lease terms.

North Carolina Fair Housing Act

North Carolina enforces fair housing protections that mirror federal law but also provide additional state-specific protections such as:

• Protection against discrimination based on age
• Protections related to lawful source of income in some cities or counties (note: this is not statewide but worth verifying local ordinances)

Landlords in North Carolina must comply with both federal and state laws, applying the more protective standard whenever there is a difference.

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How Fair Housing Laws Apply to Tenant Screening

Tenant screening involves evaluating potential renters’ applications to decide whether to rent to them. Screening typically includes:

• Credit checks
• Criminal background checks
• Employment and income verification
• Rental history checks
• Reference checks

Fair housing laws regulate how landlords apply these screening criteria to ensure they do not discriminate against applicants on the basis of protected characteristics.

Key Fair Housing Considerations in Screening

• Consistent Standards: Apply the same screening standards to all applicants regardless of protected class.
• Neutral Criteria: Use objective, clear criteria such as credit score thresholds, income requirements (typically a ratio of income to rent), and rental history—avoiding subjective assessments that could mask discrimination.
• Avoid Discriminatory Screening Questions: Do not ask about race, religion, family status, or disability during the application or screening process.
• Reasonable Accommodations: For applicants with disabilities, landlords must consider reasonable accommodations during screening. For example, accepting alternative forms of verification or waiving certain requirements (such as a co-signer in cases of disability-related income issues).

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Practical Guidelines for Tenant Screening in North Carolina

1. Develop Clear, Written Screening Policies

• Outline specific criteria for credit scores, income, criminal history, and rental references.
• Use these criteria uniformly for every applicant.
• Keep a copy of your policies and provide a copy to prospective tenants if requested.

2. Use Consistent Application Forms

• Use a standardized rental application that does not inquire about protected characteristics.
• Focus on factual information relevant to tenancy qualifications.

3. Credit and Income Checks

• Set minimum income requirements (e.g., monthly income should be 2.5 to 3 times the rent).
• Use third-party agencies to pull credit reports and criminal background reports uniformly.
• Employ scoring models or numerical thresholds that apply equally.

4. Criminal History Screening Considerations

North Carolina landlords may consider criminal history in screening, but the following precautions are essential:

• Avoid blanket bans on applicants with any criminal record.
• Consider the nature, severity, and timing of the offense relative to tenancy risk.
• Recognize that using criminal history disproportionately affects certain protected groups, so justify your policies with safety and security risk assessments.
• Be aware of recent trends advocating for "fair chance" renting policies, aimed at providing opportunities for applicants with past criminal records.

5. Handling Requests for Reasonable Accommodations

• If an applicant discloses a disability, ask if any accommodation is needed to complete the application or lease process.
• Examples include waiving pet restrictions for service animals or allowing additional time to provide verification.
• Document accommodation requests and your responses.

6. Providing Adverse Action Notices

If you deny an applicant based on screening results:

• Provide a written adverse action notice that includes:

- The reason for denial or that it was based on information in a consumer report. - The contact information of the screening company. - The applicant’s right to obtain a free copy of the report and dispute inaccurate information.

This is required under the federal Fair Credit Reporting Act (FCRA).

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Local North Carolina Considerations

While North Carolina’s fair housing laws align largely with federal standards, landlords should also:

• Check for any local ordinances in cities like Charlotte, Raleigh, or Durham which may have enhanced fair housing protections or rules on source of income.
• Be aware of North Carolina’s laws on tenant rights to review reports used in screening.
• Understand the impact of the state’s laws on eviction records, particularly recent rules on how eviction history can be used and disclosed.

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Summary Checklist for North Carolina Landlords

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By understanding and complying with North Carolina’s fair housing rules, landlords can foster a lawful and inclusive tenant screening process that protects their interests while upholding the rights of applicants. Consistency, transparency, and respect for all applicants are the cornerstones of compliant tenant screening in the state.