Q:  I have a question regarding HOAs and background checks.  I am a homeowner in an HOA.  Is it legal for the HOA to run background checks on potential tenants or buyers?  Your input is very much appreciated.

 

A:  A community association, including a homeowner’s association, may very well have the right to run credit and background checks on potential tenants or buyers, but it depends first upon the powers granted to the association in the declaration of covenants.  A declaration may grant the association the right to approve tenants, and if so it would typically also provide broad powers to run background checks and to require relevant information that relates to the prospective tenant, and whether that tenant would be a good neighbor in the community.  Of course, the association cannot discriminate against a prospective tenant on the basis of their being a member of a protected class, such as based on race, sex, religion or national origin (there may be other protected classes according to local ordinances).  It has also become increasingly questionable whether an association can discriminate on the basis of prior criminal history, particularly on the basis of bare arrests or minor non-violent convictions (as those arrests and convictions have little causal relationship to future misbehavior, and restrictions on persons with criminal backgrounds tends to have the effect of discriminating against minority groups, thereby violating the Fair Housing Act).

 

With respect to sales, an association may have a “right of first refusal,” which right would allow it to substitute itself or a third-party buyer at the same terms as the proposed sale contract.  In the event an association has such a right, it would also typically have the right to require that buyers submit an application and other relevant information, including credit and background checks.

 

In the event that your association has no authority to approve or deny renters or sales, conducting background checks becomes more questionable.  It is possible that the Board could pass a rule requiring all new tenants and owners to submit to a background check in order to protect the security of residents.  However, such checks would have limited practical effect, as the prospective tenant or owner could not be prevented from living in the community, and the information revealed through the check would be confidential and could not be circulated to other owners.  So, it’s hard to say if a judge would consider such a rule reasonable.  Many associations do perform such checks whether or not they have approval authority, and I am not aware of these checks being challenged in court—so whether it is legal in that circumstance is subject to interpretation.

 

Ryan D. Poliakoff, Attorney at Law

 

72 DPI PNG for Signature

 

400 South Dixie Highway, Suite 420

Boca Raton, FL  33432

 

(561) 361-8535 – Voice

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rpoliakoff@bapflaw.com

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