Tenant Screening Avoiding Lawsuits & Regulatory Action

Agenda Part I – The Exposure (Risk) Disparate Impact Theory Negligent Leasing (Liability) Exposure Consumer Reporting Law (State & Federal) Part II – Risk Management (Best Practices) Rental Criteria Negligent Leasing (Report Quality) Compliance

Elements of a meritorious claim –Facially neutral practice –Disproportionate impact on protected individuals –Arguable business necessity – reasonable alternative Discussion –Criminal? –Civil (eviction)? –Credit? Defense –Business necessity – no reasonable alternative Disparate Impact Discrimination

Elements of a meritorious claim –Tortious act of resident –Within scope of residency –Discoverable propensity –Lack of (or insufficient) due diligence Negligent leasing cases –Charlotte Housing Authority –Wilmette Real Estate & Management Negligent Leasing Exposure

Facts –Charlottetown Terrace – for elderly & disabled –Dunlap-Green murdered by neighbor (2007) –NC criminal search conducted by the Housing Authority –Lengthy (discoverable) criminal history – Maryland Finding –In favor of plaintiff (2010) –Plaintiff estate awarded $132,000 (v $10 million sought) Lesson? –Criminal search methodology – it matters! –Report quality – “maximum possible accuracy” Charlotte Housing Authority

Facts –Chicago apartment community –Melissa Dorner, 21 –Raped, beaten and strangled to death by another resident –Unverifiable SSN Finding –In favor of plaintiff (2012) –Awarded $10 million –10% assigned to Wilmette Lesson? Wilmette Real Estate and Management Company

Federal Fair Credit Reporting Act (FCRA) –Reporting Restrictions –Requirements on Users Relation to state laws –Access & Use Restrictions? Legal & Regulatory Actions –Disputes –Disclosures Consumer Reporting Law

Criminal Records Criteria –Arrests –Convictions (Felony v Misdemeanor) –Pending Cases –Dates of Final Disposition –Blanket Policy v. Schedule of Offenses Eviction Records Criteria –Filings –Paid vs. Unpaid –Findings in Favor of Defendant (Resident) –Verifications v Eviction Records Verifications… more important than ever!! Best Practices Disparate Impact Exposure

Criminal Records Search Methodology –AKA’s –Additional Addresses – Disclosed & Undisclosed –Record Matching Criteria Control Best Practices Negligent Leasing Exposure

End User (Landlord) –Permissible Purpose –Written Authorization –Notice of Adverse Action –Records Retention & Disposal CRA (Screening Company) –Accuracy –Report Restrictions –Dispute Handling –Consumer Request for Report Best Practices Consumer Reporting Law