The Fair Chance Housing Ordinance is a new law in Oakland that affects tenant selection and criminal background checks. Steve Rosenberg, VP of Investor Education at Mynd Property Management and Giles Imrie, VP of Corporate Counsel at Mynd are discussing what this means for local landlords and Oakland real estate investors.

What is the Fair Chance Housing Ordinance in Oakland?

The Oakland City Council unanimously approved the Fair Chance Housing Ordinance, and the final vote is scheduled for February 4, 2020. The presumption is that once the ordinance is officially passed, it will go into effect immediately. There’s a built-in grace period of six months for landlords to comply, and there are some nuances in terms of exemptions.

However, the law essentially bans the use of criminal background checks in the screening process. If you’re renting out a residential property in the city of Oakland, you can no longer ask for permission to do criminal background checks on your rental applications. You cannot conduct them in the course of approving or denying a tenant for your property.

There is a similar ordinance in Seattle, but this Oakland law is the first one of its kind in California. It’s a permanent new ordinance which has the potential to trigger similar legislation in communities like Berkeley and Richmond. Once the law passes, additional cities are likely to adopt something similar.

Oakland’s Rental Market and the Availability of Housing

This law was proposed by tenants’ rights groups and other advocates who are worried about the lack of affordable housing in Oakland. They believe that it’s difficult for people to find housing in the city, and if they have any kind of criminal background, it’s nearly impossible. Their argument is that a crime someone committed 10 years ago shouldn’t prevent them from finding a place to live.

In reality, however, this may not solve the housing problem in Oakland. It’s an outright ban on any criminal background checks.

  • Landlords cannot ask applicants if they’ve ever been convicted of a crime.
  • Landlords cannot ask for permission to run a background check before a tenant is approved.
  • Landlords cannot look at criminal history when they’re making their decisions.

In essence, outside of the exemptions which are discussed a bit later, you cannot run a criminal background check or require your applicants to agree to a criminal background check during the screening process.

Instead, landlords and rental property owners in Oakland will have to make decisions based on their other screening criteria. You can still approve or deny a tenant based on financial factors such as credit checks and income verifications. You can still measure prior landlord references.

When you’re looking for a new tenant to occupy your property, there are some things you will now have to take off your application.

Your advertising must be compliant as well. Any advertising for a property in Oakland or directed at tenants in Oakland cannot indicate that they must pass a criminal background check. You can’t infer it or specify that you’ll deny anyone because of a criminal background.

Exceptions to the Fair Chance Housing Law in Oakland

Every landlord and rental property owner has to adopt this new law and comply, unless they fall into one of these categories. You are exempt under these circumstances:

If you’re an owner and you occupy a unit or part of the property that a tenant is moving into. So, if you own and occupy a single-family home and you’re renting out a room, you’re exempt. If you own a duplex or a triplex and you’re living in one of the units, you are exempt from this law.

If you are a tenant in an existing residency and you want to add a roommate or do a sublease, you are exempt.

If you’re actually living in the home, you have discretion about who is living with you in the property. So, you can make criminal backgrounds a part of your screening process. But, if you’re not living in an owner-occupied property, you cannot claim to be exempt from this law.

It may sound like you have to accept any tenant with a criminal past, despite the crime that was committed. But, there are also exemptions written into this ordinance that cover sexual offenders.

You do not have to accept a tenant who is on the lifetime federal sexual offender list. However, you cannot check that list until the tenant has been approved through your normal screening criteria. Once you have approved a tenant, you can send a conditional approval and let the tenant know you’ll be running a check against the lifetime sex offender list.

If you’re renting out a property that’s part of the affordable housing program, you can also check for prior convictions that involve the manufacturing of methamphetamines.

Coming into Compliance: Resources for Oakland Landlords

If you denied an applicant yesterday based on a criminal background check, you won’t face any look-back repercussions. If the law goes into effect on or immediately after February 4, it would be implemented from that point forward. There’s also a six-month grace period for landlords to comply. If you have to change your rental applications or your screening process, you have six months to do it.

The six-month compliance window does not apply to you if you’ve already received a warning letter from the city of Oakland, however. If a complaint is filed against you and the city notifies you of the warning, you have to come into compliance right away.

Unfortunately, it’s difficult for landlords to find specific resources or help with this new law. If you check the city council’s website, you can read the language of this ordinance. That’s about all that’s available right now.

Once the law does go into effect, the city is required to publish an information sheet that will describe the requirements of landlords and the rights of tenants. Applicants will be provided with different resources and legal avenues they can take if they believe they were wronged. Landlords will have to include that info sheet in their application materials.

If you own rental property in Oakland, you can expect to soon have more information available instead of just the ordinance itself.

In the meantime, talk to your Oakland property management company. Property managers will have the processes and the flexibility to understand what this means for you and help you come into compliance quickly.

Oakland Fair Chance Housing Ordinance and Unintended Consequences

Any time you have legislation like this, there can be a series of unintended consequences.

This law will likely drive landlords to get tighter with their screening requirements in other areas.

If you can’t rely on a criminal background check, you’re going to need to look closer at the things you are still permitted to consider. Credit requirements may get higher and more income may be necessary to get approved for an Oakland rental property.

Existing federal fair housing laws require that you use criminal background searches responsibly. Landlords are already required to avoid disparate impact denials. Most landlords use the criminal screening to consider what type of criminal activity exists and how long ago it took place. When you’re placing tenants, you’re thinking about the safety of your property and the neighbors. This law takes that away. If someone was convicted of a homicide two years ago, you cannot use that information or even access it when you’re deciding whether or not that applicant should be able to move into your property.

Landlords and investors will need to adjust their screening criteria.

There may be some liability as well. If you can’t do a background check on a resident and they commit a crime in your apartment complex, are you liable for putting that resident in place? It would be difficult to say you are, since you weren’t able to do a criminal background check. Many landlords may feel like their hands are tied.

Even with the sex offender exemption, you have to approve the tenant conditionally before you even run the check. You’ll need to inform your conditionally approved tenants in advance that you’re going to check the federal lifetime sex offender registry. Then, they’ll need to provide written consent to that, or they can withdraw their application.

As you can see, this is a very nuanced process. We’re expecting some big changes and some unintended consequences. Now is the time to learn more about the evolving law and to talk with your Oakland property management company.

If you own rental real estate in Oakland, this affects you right now. If you own rental real estate in other California communities or you’re thinking about buying here, you’ll want to get to know as much as possible about this new law because it may eventually touch other markets in the state.

We’re happy to be your Oakland property management resource. Check back with us regularly to find more information and updates about how this ordinance is being implemented. We will be following it closely and providing additional information. Until then, contact us at Mynd Property Management with any questions or concerns.