Saturday, February 29, 2020

Oakland: Rental Criminal Background Checks Now Illegal!

It is my belief and often state or federal law that it's wrong to mistreat someone for an immutable characteristic. Refusing to hire or rent to someone because of race or religion is wrong. 

Assuming a young woman woman will become pregnant and declining to hire or promote her is wrong. And so on. 

Now unfortunately there are loopholes in and ways around all of those restrictions.  A racist can't legally place a "No N*****s!!!"  clause in her company's hiring policy but no one can force her to mentor Black employees with the same vigor that she does for others. Still, laws that prevent mistreatment for race, religion, ethnicity are good things. It's trickier when we make laws to prevent differential treatment for actual individual past wrong doing. The city of Oakland has banned most background check usage by landlords.

Oakland became the first city in California to ban criminal background checks in most housing applications for private and other rental units under a measure adopted by the City Council on Tuesday. The council unanimously passed a “fair chance housing” ordinance that bars landlords from conducting criminal background checks on prospective tenants. 

The ordinance in Oakland is the first to include rental units outside subsidized affordable and nonprofit housing. The measure, supporters say, could prevent homelessness and bring down the recidivism rate. 
“There is only one place in America that any one of us is guaranteed a roof over our heads and that is in prison,” said John Jones III, campaign director for Alameda County Fair Chance to Housing Coalition. “All of us seek to have safe shelter. That should not be a matter of privilege.”

Applicants who believe they were discriminated against due to their criminal background can file a complaint with the city or a lawsuit. The city can issue penalties of up to $1,000 per violation.
If a private action is filed, a court could award damages

I'm leery of this. I have been a landlord. I will be one again. I'm indifferent to a prospective tenant's religion, race, ethnicity, sexuality, gender, etc.

do care about receiving my rent on time and without hassle, ensuring that the tenants don't damage the property, knowing that the tenants will leave the property without incident at the lease's end, and knowing that when I visit my property the tenants won't pull out guns and "encourage" me to hand over my vehicle or money. I'd like to know that the tenants haven't turned other properties into drug houses, chop shops or brothels.

The background check is not a 100% predictor of future behavior. Many people with criminal records are now fine upstanding citizens. But there are also fine upstanding citizens who have never been convicted of writing bad checks or stealing their landlord's furnace.

All else equal, I prefer renting to law abiding people. Or at least I want to know about my tenant's past issues. I'll be more careful and cautious. It's relevant which crime the tenant committed. Did he bootleg concert t-shirts or did he hit his previous landlord in the head with a hammer? Which crime do you think will concern a landlord more?

It's a question of risk. A huge corporation can risk renting to people with criminal backgrounds.

For a large firm that receives thousands or even millions of dollars in monthly rent, the legal fees, evictions, security, extra repairs and other costs associated with bad tenants are just a cost of doing business. 

The higher costs from a handful of bad tenants can be swamped by the profits from dozens, hundreds or thousands of good tenants.

But for a smaller leasing company or an individual landlord with limited resources, just one bad tenant can sharply reduce or even eliminate profit for the entire year. A smaller landlord just can't afford that risk. Getting good tenants is a nice to have for a large company but it's absolutely critical for a Mom-n-Pop operation. Once you rent to someone it's often very costly and difficult to remove them before the lease is up.

I think that the Oakland law will cause an exodus of smaller landlords, a reduction of available rental units and a market consolidation among larger firms. This isn't good for renters. If this became Michigan law I could not make the moves I want to make. It's not economically rational for similarly situated California landlords to expose themselves to this risk. Selling the property to a Jared Kushner type becomes the smart move.

Companies review applicant backgrounds to verify that the person's work history and educational achievement are accurate. I don't mind the state strongly suggesting that companies consider people with different work histories or education that doesn't include the Ivy League. But I don't think the state should tell companies that simply asking about education and work experience is illegal. That would be silly. I feel the same way about this new Oakland law.  I understand that Oakland wants to fight homelessness. But this is not the way.

But time will tell.
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