New York City's Fair Chance Housing Law Restricts Criminal Background Checks

New York City's Fair Chance for Housing Act (known as Local Law 24 or the Fair Chance Law) became effective on Jan. 1, 2025. The Fair Chance Law prohibits housing discrimination on the basis of a purchaser's or tenant's criminal history. Landlords, owners, brokers and boards (referred to as "Covered Entities") may not consider the criminal record of a potential purchaser or tenant of housing (an "Applicant") until after determining the Applicant's other qualifications and tentatively approving the Applicant's application. In the event an owner or landlord then discovers the Applicant's criminal record, the Applicant has to be provided with the information the owner/landlord has learned and an explanation of the relevance of the crime to the sale or lease – and it also has to be relevant to the owner or landlord's business interest.

Summary of the Fair Chance Housing Law

1. Covered Entities and their employees, managers and members cannot seek information on an Applicant's criminal background until the Applicant receives a) an acceptance conditioned upon the Covered Entity's review of a criminal background check and b) a copy of the contract, lease or other document that the Applicant will be asked to sign, so it cannot be changed as a result of the criminal background check.
2. Prior to a Covered Entity seeking a criminal background check, it must advise Applicant of the Fair Chance Law and provide Applicant with a copy of the Fair Chance Housing Notice issued by the Human Rights Commission.
3. If the background check reveals a Reviewable Criminal History (as hereinafter defined), the conditional acceptance can be rescinded only after the "Fair Chance Housing Process," which requires that the Applicant receive all information regarding the Applicant's criminal background even if it was not considered by the Covered Entity in its decision.
4. The only criminal convictions that can be considered are: a) registered sex offenses, b) convictions for misdemeanors for three years after incarceration or sentencing, or c) convictions for felonies for five years after incarceration or sentencing. Earlier convictions are not permitted to be considered.
5. Applicant must be given at least five business days to submit information correcting or mitigating the report.
6. The Covered Entity must then conduct an individualized assessment of the information received.
7. If the Covered Entity rescinds the conditional acceptance, the Applicant must be notified in writing and advised in detail as to how the Reviewable Criminal History was relevant to the Covered Entity's "legitimate business interest" and how the Covered Entity considered the information.
8. Failure to comply with the foregoing is considered discrimination by the New York City Commission on Human Rights and could subject the Covered Entity to fines and civil penalties.

Key Provisions of the Fair Chance Law

Reviewable Criminal History

Covered Entities may consider the Applicant's criminal background only if the Applicant has committed a) registered sex offenses, b) misdemeanors during three years after release from incarceration or sentencing, or c) felonies during five years after completion of a prison sentence or incarceration (the "Reviewable Criminal History"). If an Applicant is rejected because of the Reviewable Criminal History, the Covered Entity must provide a written explanation for why the rejection was due to a legitimate business interest. After five years of the Applicant being released from prison (or if the punishment did not include incarceration, after five years from sentencing), the crime – even a crime such as murder or bank robbery – cannot be considered under the Fair Chance Law, even if the Applicant was convicted multiple times.

The law does not apply where federal, state or local laws – including laws protecting victims of domestic violence, sex offenses or stalking – require or permit exclusion based on criminal history. The law also does not apply to two-family, owner-occupied housing or rooms in owner-occupied housing.

A criminal background check includes:

1. asking an individual, orally or in writing, if they have a criminal history
2. searching publicly available records (i.e., a simple Google search) or records gathered through a third party, such as a consumer reporting agency, private database or website, for information about an individual's criminal history
3. gathering records or information relating to an individual's criminal history

Excludable matters include a criminal action that was resolved in favor of an individual, including termination in favor of the individual, adjudication as a youthful offender or for juvenile delinquency, conviction of a violation, conviction that has been sealed, or criminal charges pending for which a court has issued an adjournment in contemplation of dismissal.

Unlawful Discriminatory Practices

It is an unlawful discriminatory practice for the owner, lessor, lessee, sublessee, assignee or managing agent of, or other person having the right to sell, rent or lease or approve the sale, rental or lease of a housing accommodation, or any real estate broker or agent or employee thereof to:

1. Refuse to sell, rent or lease, approve the sale, rental or lease, or otherwise deny or withhold from any individual a housing accommodation or an interest therein because of such individual's criminal history, other than an individual's Reviewable Criminal History.
2. Discriminate against any individual in the terms, conditions or privileges of the sale, rental or lease of a housing accommodation or an interest therein, or in the furnishing of facilities or services in connection therewith, because of such Reviewable Criminal History.
3. Represent to any individual that any housing accommodation or an interest therein is not available for inspection, sale, rental or lease because of such individual's Reviewable Criminal History, except when consideration of such criminal history is permitted by, and the Covered Entity has complied with, the foregoing procedures.
4. Declare, print or circulate any statement, advertisement or publication, or use any form of application for the purchase, rental or lease of such a housing accommodation or an interest therein, which expresses, directly or indirectly, any limitation, specification or discrimination in housing because of an individual's Reviewable Criminal History.

Lawful Actions and Related Requirements

Nothing prohibits a Covered Entity from taking any lawful adverse action against an individual, including a current occupant, for reasons other than such individual's Reviewable Criminal History, including acts of physical violence committed by such individual against other persons or property on the premises, or other acts that would adversely affect the health, safety or welfare of other residents.

Moreover, nothing prohibits a Covered Entity from denying a housing accommodation based on an Applicant's Reviewable Criminal History where such denial is required or specifically authorized by federal, state or local law, rule or regulation, provided that the Covered Entity provides such individual with notice of the law, rule or regulation that requires or specifically authorizes such action. Nothing prohibits a Covered Entity from conducting a criminal background check pursuant to any federal, state or local law, rule or regulation that requires or specifically authorizes a criminal background check for housing eligibility.

In addition, a Covered Entity that intends on conducting a criminal background check of an individual in connection with a prospective purchase, or prospective or continuing rental or lease, may not conduct such criminal background check until the Covered Entity has taken the following actions: a) in the case of a transaction involving the purchase of housing or shares in housing, the seller has accepted an offer and agreed in writing that the seller will not revoke the acceptance or change the conditions of the deal on the basis of the buyer's criminal history except as permitted by the law; b) in the case of any other transaction involving a lease or rental, the Covered Entity has provided to such individual a rental or lease agreement that commits the housing accommodation to the Applicant, which may be revoked only based on a criminal background check conducted in accordance with the Fair Chance Housing Law or upon an unrelated material omission, misrepresentation or change in the qualifications for tenancy that was not known at the time of the conditional offer; and c) in all such cases, has provided such individual notice of such criminal background check and a written copy of the Fair Chance Housing Notice.

After providing notice of a criminal background check, and prior to taking any adverse action because of an Applicant's Reviewable Criminal History, except where such action conflicts with a requirement of federal or state law, rule or regulation, the Covered Entity shall provide the applicant a written copy of: a) any information or records about Reviewable Criminal History based on which the Covered Entity intends to take adverse action; b) any information about such individual's criminal history, other than the individual's Reviewable Criminal History, that the Covered Entity received, even if the Covered Entity did not consider such information in making its determination; c) notice that such individual may, no later than five business days following the receipt of such information, submit to the Covered Entity any information identifying errors in the criminal history information provided by the Covered Entity; and d) any supplemental or mitigating information in support of the individual's application for purchase, rental or lease.

If, after conducting the process described above, a Covered Entity considers taking adverse action because of an individual's Reviewable Criminal History, the Covered Entity shall first conduct an individualized assessment of the individual's Reviewable Criminal History and timely information submitted by such individual and provide such individual with a written copy of the reason for the adverse action, including: a) a copy of supporting documents that were reviewed and b) a written statement of the reason for such adverse action, demonstrating how the individual's Reviewable Criminal History is relevant to a legitimate business interest of the property owner and how any information submitted in support of such individual's tenancy was taken into account.

In the event a Covered Entity utilizes a third party to conduct a consumer background check or criminal background check, the Covered Entity must take reasonable steps to ensure that the criminal background check was conducted consistent with the law. Except where a Covered Entity's actions are required or authorized pursuant to federal, state or local law, a Covered Entity may be liable for relying on criminal history other than Reviewable Criminal History if the Covered Entity failed to take reasonable steps to ensure compliance with the Fair Chance Law. Where a Covered Entity knowingly receives criminal history information other than Reviewable Criminal History information, such receipt creates a rebuttable presumption that the Covered Entity relied on the information in violation of the Fair Chance Law, which the Covered Entity may rebut by affirmatively demonstrating that they complied with the fair housing process and did not rely on such information in making a determination about a sale, rental or lease.

Other Considerations

The Fair Chance Law provides that a Covered Entity is immune from liability in any civil action arising as a result of an alleged act of an individual with a criminal history based on the claim that the Covered Entity should not have sold, rented or leased, or otherwise granted a housing accommodation or an interest therein, to such individual or as a result of a Covered Entity's decision not to perform a criminal background check.

It is important to note that the Covered Entity must demonstrate in its response how the criminal history impacts a legitimate business interest. The existence of a conviction is not a sufficient reason, nor is a statement such as "the residents do not want criminals in the building." The Applicant then has five days to respond.

The Covered Entity can withdraw the acceptance after receiving the criminal background check, but if the Applicant disagrees with the rejection or has evidence supporting his or her position, the Applicant can proceed to file a complaint with the New York City Commission on Human Rights. The Commission, which is charged with enforcing the Fair Chance Law and investigating alleged violations of same, will decide if the Covered Entity's actions are proper. Violations of the Fair Chance Law could result in substantial fines up to $250,000. In addition, the Applicant could elect to commence a civil action.

For more information or questions about a specific situation, contact the author.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.