NYC Law

Background

“Little imagination is needed to understand the paramount importance of eliminating unfair discrimination in housing.”[1] To combat such discrimination the  New York City Council is planning to pass the Fair Chance for Housing Act (FCHA), a bill sponsored by 26 New York City Council members and the New York City Public Advocate that prohibits landlords and building owners, including co-op boards, from discriminating against a prospective tenant, purchaser, lessee or occupant on the basis of criminal history or arrest record. Not surprisingly, the bill resembles the NYC Fair Chance Act passed a few years ago, which similarly was aimed at reducing discrimination and advancing diversity and inclusion by giving individuals from all backgrounds and circumstances a fair chance in employment.[2]

Advocates for the FCHA bill argue that housing is a human right, and equal access to safe and stable housing will strengthen our communities and “make us all safer.”[3] Indeed, adequate, safe, stable, affordable housing was first recognized as a human right in the 1948 Universal Declaration of Human Rights and has since been reaffirmed in many international treaties, resolutions, and declarations.[4]

Of relevance, the right to adequate housing includes the right to physical safety.[5] So, while the notion that denying housing to people with criminal convictions increases safety can be deeply misguided, the question whether the proposed bill will resolve or at the very least assist to resolve problems related to housing remains unclear. What is clear is that passage of the bill will spur additional litigation affecting New York City landlords, building owners, cooperative boards, landowners, as well as the insurance carriers for each of them.

Details of the FCHA Bill

The FCHA bill as written prohibits landlords and building owners from obtaining (e.g., through a background check) and inquiring into (presumably even by “Googling” the applicant) the criminal history or criminal records of a prospective tenant, purchaser, lessee or occupant, with a few exceptions.

Like other New York City and State discrimination laws, someone who believes he or she has been discriminated against because of criminal history, or believes a criminal background inquiry has been performed, could file a lawsuit for damages against the building owner (e.g., the cooperative corporation), as well as the managing agent and potentially any board member who participated in (“aided or abetted”) the rejection or the inquiry.

Potential Pitfalls

Clearly, the FCHA bill is grounded in a noble purpose: it aims to end a chronic homelessness problem that has proved impossible to solve in New York City and to address the ‘second chance’ goal of criminal justice reform.[6] Despite the good intentions, however, there are several problems with the bill and a few consequences likely not considered by the bill’s advocates.

From the perspective of the landlords, building owners, cooperative boards, landowners, the FCHA bill produces more questions than answers regarding the issue of liability. For example:

  1. The FCHA bill allows rejection of a prospective tenant, purchaser, lessee or occupant where such exclusion is required pursuant to “any federal, state, or local law or rule or regulation”. However, it is unclear how the basis of such exclusion can be determined without permitting an inquiry into same.
  2. Further, it is not clear whether a “federal, state, or local law or rule or regulation” includes a court order. The bill language seems to indicate that it does not, which means that a civil court contempt order with attendant criminal penalties (for example, prohibiting the prospective tenant from going near the premises /or someone already living on the premises), (a) could not be inquired into, and (b) would not serve as a justification for rejecting the prospective tenant, purchaser, lessee, or occupant.
  3. The FCHA bill allows a limited inquiry into the New York State Sex Offender Registry (albeit under certain conditions). However, it is silent whether any other state’s sex offender registry may be checked, even for an out of state tenant applicant.
  4. Does the FCHA bill apply to condominium boards? Presumably it does, but many condominium boards do not have the right to approve a unit owner’s sale to a prospective purchaser. Some boards, however, have a right of first refusal whereby the board (or a contiguous existing unit owner) is permitted to purchase the unit in place of the prospective buyer. In this instance, is a condominium board (or the contiguous unit owner) also subject to the prohibitions found in the proposed bill?  Or is it merely another bidder for the unit perhaps not subject to the prohibition on criminal background inquiry?
  5. Similarly, if there are multiple buyers bidding on a property for rent, and one of them voluntarily (and cleverly) allows a criminal background check, can such check then be done by the owner/landlord/agent? Can that applicant – assuming a clean criminal history - then be accepted by all other bidders without liability under the FCHA bill? The bill does not come close to answering these questions.
  6. Finally, but most critically, the proposed bill seems to attempt to modify centuries-old common law in New York, which holds that landlords have a duty to protect occupants from reasonably foreseeable harm, including foreseeable criminal acts of third parties, on the premises. See, e.g., Q. v. Estate of Rockefeller, 2021 U.S. Dist. LEXIS 203563, *16 (S.D.N.Y. Oct. 21, 2021). How does the FCHA bill’s prohibition against criminal inquiry affect the common law duty? If a board president already knows the criminal history of the prospective tenant, purchaser, lessee, or occupant’s criminal history, must he/she ignore that knowledge and approve the applicant and thereby potentially breach the duty to others in the building?

Due to the bill’s lack of clarity, and the potential for liability, G + B believes the takeaway from this proposed bill for landowners and co-ops is mainly prophylactic: (1) get all insurance coverages in order, including general liability, EPL, and D&O, making sure that the ownership entity, managing agents, and board members qualify as insureds; and (2) get all indemnifications for owners, board members and managing agents in order, especially where sales, tenancies, and background checks are outsourced.

[1] THE FAIR HOUSING ACT AND INSURANCE: AN UPDATE AND THE QUESTION OF DISABILITY   DISCRIMINATION, 31 Hofstra L. Rev. 141, 141.

[2] The Fair Chance Act made it illegal for most employers in New York City to ask about the criminal record of job applicants before making a job offer, which meant prohibiting inquiries (including ads, applications, and interview questions)  into an applicant's criminal record  See https://www.nyc.gov/site/cchr/law/fair-chance-law.page  [last visited on January 4, 2023].

[3]  See: https://www.fairchancehousing.org/about [last visited on January 4, 2023]

[4] See: https://www.un.org/en/about-us/udhr/history-of-the-declaration [last visited on January 4, 2023]

[5] Id.

[6]  As of October 2022, the total number of homeless people sleeping in New York City’s main municipal shelter system was 65,633, including 20,751 homeless children. See: https://www.coalitionforthehomeless.org/basic-facts-about-homelessness-new-york-city-data-and-charts/ [last visited on January 4, 2023].