Minneapolis, Minnesota, has passed a strict new law regulating the ability of landlords to screen potential tenants by researching their credit scores, criminal backgrounds, and eviction histories.
On Friday, the City Council unanimously approved an update to the city's Renter Protection Ordinance, requiring landlords to apply "inclusive screening criteria" when selecting applicants or else follow an onerous "individualized assessment" process.
"This ordinance provides a necessary protection for residents by ensuring they are not exploited with excessive move-in costs and have a fair opportunity to access housing," said City Council President Lisa Bender in a statement following the vote.
Under the inclusive screening process, property owners are forbidden from rejecting a potential tenant for having an insufficient credit score, or for having insufficient credit history.
Landlords are also forbidden from turning down potential tenants for any misdemeanor convictions older than three years and for most felony convictions older than seven years. The law does allow landlords to reject applicants that have been convicted of murder, manslaughter, kidnapping, or first-degree criminal sexual conduct, but only if those convictions were within the last 10 years.
The inclusive screening process also prevents landlords from rejecting tenants for evictions older than three years.
Rental property owners who use the individualized assessment process are allowed to reject applicants because of their criminal record, credit score, or eviction history. Before they do so, however, the landlords must first give tenants the opportunity to provide supplemental information about the nature and severity of potentially disqualifying past behavior. A landlord who still wants to reject someone after considering this supplemental information must provide a written reason for denying their application, a copy of which must be filed with the city.
The new Minneapolis law also forbids landlords from charging security deposits that exceed a single month's rent.
City landlords are predictably upset about the new requirements, saying that it gives them little room to decide who they rent their properties to while raising their costs of doing business.
One landlord told the Star Tribune that the new screening requirements would leave him "at a loss for how we're supposed to figure out who the good tenants are and who the bad tenants are." He said that he would likely raise rents at his properties or sell them in response to the new law.
Other landlords, in public comments submitted to the city council, said that the ordinance would raise insurance rates, and therefore rents, at rental properties. Still others complained that the individualized assessment procedures outlined in the law are unworkable and will leave landlords vulnerable to housing discrimination lawsuits.
The Minneapolis law also raises some constitutional red flags, says Ethan Blevins, an attorney with the Pacific Legal Foundation, a public interest law firm.
"You have a fundamental right with respect to the right to exclude people from your property and you don't abandon that when you decide to become a landlord," says Blevins. "Arguably these things burden that right because you are unable to use relevant factors in deciding whether or not you want someone to occupy your property."
Blevins and the Pacific Legal Foundation are currently suing Seattle, Washington, over similar rental regulations that bar landlords from considering tenants' criminal history.
Proponents of such regulations have argued that a criminal record is a poor predictor of tenant behavior, and that credit scores don't accurately reflect people's history of paying rent. Using these metrics to screen tenants, they say, makes finding housing even harder for folks who are already struggling.
Given that landlords are the ones assuming the risk of renting to a tenant, however, it seems reasonable to leave it to them to decide how to screen their tenants.
Blevins argues that it's up to the government to tackle any disproportionate impact from landlords' use of sensible screening methods, possibly by making it easier to expunge one's criminal history, or by creating a certification program for rehabilitated ex-offenders.
Minneapolis' new tenant screening regulations go into effect in June 2020 for landlords who own 15 or more units. Those with fewer units have until December 2020 to comply with the new law.
Rent Free is a weekly newsletter from Christian Britschgi on urbanism and the fight for less regulation, more housing, more property rights, and more freedom in America's cities.