What is it and who should do it?
Background screening is a very important part of renting any property and by default so is Adverse Action For Resident Screening.
First you should have a rental policy which gives a guideline to rent to an applicant. This is very important. If you are reported to Fair Housing or find yourself in a lawsuit for a violation, you must have a policy.
Once you request background check from a CRA (ACUTRAQ) on an applicant and the results would preclude you from renting your property, or renting the property you manage. You must fulfill the requirements of the Fair Credit Reporting Act (FCRA) Adverse Action protocol.
You, the landlord, are the ultimate party responsible and liable for the process. ACUTRAQ can assist your company in upholding a fully compliant Adverse Action For Resident Screening protocol.
PLEASE NOTE: This article does not equal legal advising; it is written with the intention of product guidance. For questions regarding the protocol about Adverse Action or other processes such as adjudication, please consult with your legal advisor.
What is an Adverse Action? Why are they important for landlords?
When dealing with background screening, Adverse Action means any actions your company takes based on any information in a screening report that could negatively impact an applicant’s ability to rent the property or rent with conditions.
Adverse action for resident screening affects people by nature, so it is important to comply with the FCRA requirements. Lawyers are looking for ways to sue landlords or companies who they think may have violated the Fair Credit Reporting Act (FCRA).
The steps in Adverse Action are crucial as they allow the applicant to safely raise concerns about their background screening report. All landlords, as well as end users, are required by the FCRA to comply with the Adverse Action protocol. Commonly, landlords wish to ignore any declined applicant, however, if there is not an Adverse Action process strictly followed, there could be potential legal issues.
What is an Adverse Action Protocol?
To ensure that you are compliant and avoid any incoming legal issues springing from improperly dealing with Adverse Action, you are required by the FCRA to follow a process.
If a background screening report returns a criminal record, this is not a reason to immediately disqualify the applicant. Create a detailed, consistent process for adjudication that allows the nature of any crimes to be considered. Distinctions could include the severity of the crime as well as the time which has passed since the crime was committed.
An Adverse Action process that is compliant for deciding renting to an applicant should include these elements:
In 2012, the Equal Employment Opportunity Commission, or EEOC established a guidance for employers to consider arrest and conviction records. That guidance is called Individualized Assessment. Recently, HUD adopted part of this assessment. First, landlords need a written policy that sets the base line for how its assessment process will take place.
The criteria a landlord should consider:
- The nature and severity of the crime, offense, or behavior
- The amount of time since the incident or since the completion of any sentencing
The goal of the guidance was to help people in demographic groups with higher incarceration rates get jobs and/or housing and not be automatically excluded from the candidate pool due to a criminal history.
You need to check the policies of your management company or if you are an affordable housing manager comply with Federal guidelines.
Once you determine you will not rent to or will require other conditions for renting to an applicant, you must give them an Adverse Action letter. The letter must tell the applicant the reason why they are getting the Adverse Action letter. The letter must also include the be Summary of Rights under the FCRA to the applicant. A copy of the report should not be given unless they ask for it. If they are denied, they have a right to see the report. Refer the applicant to ACUTRAQ for a full report.
The applicant has a right to file a dispute with the credit bureau or with ACUTRAQ for further research into the reason for the adverse information on the report.
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