New York City recently passed Local Law 24, also known as the Fair Chance Housing Act, which prohibits housing discrimination based on criminal history. The law will go into effect on January 1, 2025.
The law applies to all housing providers, including co-ops, condos, and HOAs. It significantly impacts how these organizations conduct background checks and approve or deny applications.
Key Provisions of the Law
- Limits on Criminal Background Checks: The law restricts when and how housing providers can conduct criminal background checks.
- Individualized Assessment: Housing providers must conduct an individualized assessment of an applicant’s criminal history. This assessment considers the nature and severity of the offense, the time elapsed since the offense, and the applicant’s rehabilitation efforts.
- Adverse Action: If a housing provider intends to take adverse action based on an applicant’s criminal history, it must provide the applicant with a written explanation of the reasons for the adverse action.
Impact on Co-ops, Condos, HOAs and their Managing Agents
Co-ops, condos, HOAs and their managing agents must comply with the Fair Chance Housing Act when reviewing purchase or rental applications. This includes:
- Modifying application procedures: Co-ops, condos and HOAs must update their application procedures to comply with the law’s restrictions on criminal background checks.
- Conducting individualized assessments: Co-ops, condos and HOAs must conduct individualized assessments of applicants with criminal histories.
- Providing written explanations for adverse actions: If they decide to take adverse action based on an applicant’s criminal history, they must provide the applicant with a written explanation of the reasons for the adverse action.
Right of First Refusal
The law does not specifically address a condo or HOAs right of first refusal. It speaks in terms of refusing to sell, rent or lease and approving such like a coop approves a transfer of shares to a coop apartment. The law, however, includes a paragraph outlawing discrimination against an individual in the terms, conditions or privileges of the sale, rental or lease because of such individual’s criminal history. We expect an argument to be made that a condo board’s decision as to whether to exercise a right of first refusal concerning a sale or lease of a unit based on criminal history covered by the law, would be discrimination. So, coop, condo and HOA boards have to be careful in their application processes and decision making where criminal history is being considered and decided upon.
Recommendations for Boards and their Property Managers
- Consult with an attorney: Boards and their property managers (who are also covered by the law) should consult with their attorney to ensure that their policies and procedures comply with the Fair Chance Housing Act.
- Update application forms: Application forms should be updated to remove any questions about criminal history and criminal background checks should be performed after initial affirmative decisions are made and then a final decision can be made in compliance with the Act. If a denial of a transfer application or exercising of the right of first refusal is made without a criminal background check, then there is no need to even perform one and the decision can be relayed to the appropriate parties so that there is not even a question as to whether there was a violation of the Act.
- Train staff and board members: Property managers and board members should be trained on the requirements of the Fair Chance Housing Act to make sure there is compliance.
The Fair Chance Housing Act is a significant change to New York City’s housing laws. Community association boards and their managers must take steps to comply with the law before it takes effect on January 1, 2025. Failure to comply could result in legal liability.
Here is the law.
