THE NEW YORK TIMES – April 8, 2004
Thursday, April 8, 2004
A Blacklist for Renters, by Motoko Rich
Imagine finding the perfect apartment, only to learn that the landlord is denying you the place because you are on a blacklist of supposedly high-risk renters. Nothing is wrong with your credit rating, but your name showed up on the list because a private screening service found it in housing court records about a dispute you had with a previous landlord – a dispute that was resolved in your favor.
It may sound unlikely, but it is not. In what tenant advocates say is a growing problem, renters who have previously tangled with landlords are finding themselves effectively banned from future rentals. The advocates blame services that trawl through court records, charging landlords $6.99 to $50 a search to identify problem renters.
Thomas Miller, a 37-year-old former Marine Corps sergeant who still works on accounts at a military base in Southern California, was ready to move into a two-bedroom house in San Marcos, Calif., with his wife and two sons when he learned that U.D. Registry, a tenant-screening company, had told the landlord he had been the subject of an eviction action a few months earlier. That was true, as far as it went, but it omitted the outcome of the case. Fearing that he could not pay the rent on his apartment in Escondido, Calif., Mr. Miller had arranged for a government agency to pay it for two weeks. His landlord nevertheless sued to evict him, but a month later dropped the suit.
Still, the court filing popped up in U.D. Registry’s report. For two years, that report dogged Mr. Miller and his family, which now includes a daughter, as they shuttled between his in-laws’ house and a motel before finally finding a two-bedroom apartment in Escondido through a renal agent who was a fellow veteran. Mr. Miller is now part of a lawsuit against U.D. Registry, a tenant-screening company that runs 500,000 searches a year for about 8,000 landlords and property management companies in seven states. In the complaint, which was filed in State Superior Court in Santa Ana, the tenants say the screening company provided incomplete and inaccurate information, violating California law. The plaintiffs are seeking class-actions status.
A similar case is unrolling in New York, where Adam White was set to rent a two-bedroom rent-stabilized apartment in Park Slope, Brooklyn, two years ago with his girlfriend, Judy Schneier, and their son, Jonah. But a routine screening turned up a quarrel between Mr. White and his landlord six years earlier.
Mr. White said in court papers that the landlord repeatedly failed to fix a roof leak, so he withheld two months’ rent. The landlord sued to evict him, but ultimately dropped the suit and agreed to let Mr. White keep part of his withheld rent.
After he was denied the Park Slope apartment, Mr. White called First American Registry, the screening company, to correct the record. But by then, the apartment was gone. Now he is suing First American Registry in Federal District Court in Manhattan, accusing it of supplying inaccurate information to a prospective landlord. Nevel DeHart, executive vice president of Registry Safe-Rent, a successor to First American, declined to comment on the suit.
Tenant advocates and lawyers say hundred of people, if not thousands, have been banned from rental housing because they once appeared in housing court – hardly an automatic indication of wrongdoing.
“I think it’s a huge problem,” said Elizabeth Donoghue, a lawyer who represents tenants and is chair-woman of the Housing Court Committee of the New York City Bar Association. Often, she said, a landlord will “find out that the tenant was involved in a lawsuit, but they won’t look further than that.”
Indeed, said Andrew Heiberger, president of Citi Habitats, a Manhattan brokerage firm, “The No.1 killer of deals is if you’ve had a prior problem with a landlord.” He added, “It’s the single worst blemish you can have on your credit.”
Nancy Ahlswede, executive director of the Apartment Association, California Southern Cities, a trade group representing about 4,000 landlords, said rental unit owners have every right to check housing court records, because they can be an indicator of whether prospective tenants can pay their rent. “Statistically it’s been shown that people in California who have been evicted have a higher propensity for being evicted again,” she said. But she added that she advises landlords to do other credit checks and to call previous landlords, even if a screening report show and eviction action.
Tenant advocates say, however, that landlords often do not give would-be renters the benefit of the doubt after a screening company fails to record the dismissal of a case or a decision in the tenant’s favor. James Fishman, a Manhattan lawyer who is representing Mr. White, said he has heard of at least 40 such situations in the last three years.
Screening services are popular partly because they offer landlords a quick reading on credit ratings, criminal records, eviction court appearances and employment history.
Registry SafeRent had 25,000 clients, double the number four years ago, Mr. DeHart said. It runs about six million searches a year.
Landlords and rental agents say screening companies help them make better, fairer decisions. Avalon Bay Communities of Alexandria, Va., which owns 42,000 apartments in 10 states and Washington, switched from its own scoring system to Registry SafeRent three years ago. Mona Stahling, Avalon Bay’s senor director of operations, said she was confident of the accuracy of Registry SafeRent’s information.
Harvey A. Salts, president of U.D. Registry, which was bought this week by the parent of Registry SafeRent, said his company updates court information as often as every bad. But he said it was not the company’s responsibility to keep tabs on a case. If a tenant contests information in the database, he said, the company will revisit court records and correct errors. Tenants can request a copy of their report for a fee.
Jeffrey Wilens, who is representing Mr. Miller and other clients in suits against U.D. Registry and First American Registry, said California law requires consumer reporting agencies to keep their information accurate and updated. Screening companies, he said, often claim to have procedures to correct mistakes, but “the law says they have to have procedures in place to avoid reporting inaccurate information in the first place.”
The federal Fair Credit Reporting Act requires consumer reporting agencies to have “reasonable procedures to assure maximum possible accuracy.” It also says that tenants who are turned down because of a report from a screening service have the right to dispute the report.
Some states are trying to prevent companies from looking at certain court records in the first place. Last year a law was approved in California requiring housing courts to seal all eviction cased in which the tenant prevails. Mr. Saltz, of U.S. Registry, said he plans to sue the state this year to overturn the law, calling it unconstitutional.
Under a 1999 Minnesota law, a tenant may ask the court to expunge a record of an eviction filing in cases where the court finds that the landlord’s case has no merit.
In New York, Assemblyman Daniel O’Donnell, a Manhattan Democrat, said he may propose legislation to protect tenants who withhold rent to protest a landlord’s behavior.
A law like that might have helped Mr. White and Ms. Schneier, who eventually rented a smaller ground floor garden apartment in Park Slope from a landlord who did not consult a tenant screening service. Ms. Schneier, who is a social worker, said she regretted that some of her poorer clients may have lost the option of withholding rent from landlords who do not fulfill their responsibilities.
“Now, I wouldn’t advise someone to do that,” she said, “if it could make it impossible for them to be a renter down the line.”