Loyola University Chicago School of Law, LLM 2021
Covid-19 has not only damaged the health and physical well-being of those stricken by the potentially deadly coronavirus, but it has also ravaged the livelihoods and financial stability of many millions more people around the world. The virus spread across the U.S. with incredible speed as more than 100,000 people had already been infected by early March. In many ways the unexpected and quick arrival of the pandemic caught many households financially unprepared and ill-equipped to survive the economic shutdown unscathed. For those that have experienced rent hardship and have, or will soon, be subject to an eviction for non-payment of rent, they must recover not only from the short-term challenges of finding shelter and putting their lives back together, but also the long-term struggle of finding suitable housing with an often disqualifying and indelible mark on their rental history.
The long-lasting effects of eviction records and the need for a privacy remedy
Renters experience tremendous challenges when attempting to secure housing after being evicted. Eviction records can cause renters to be denied a rental unit or a home mortgage. In addition to including the eviction in renters’ credit reports, the eviction will also have a negative effect on a renter’s overall credit score. Many landlords, including some public housing authorities, automatically deem an applicant ineligible based on prior evictions.
As a result, an eviction typically leads renters to significantly less safe, lower quality, and less desirable housing. Homelessness is also a likely outcome for renters that cannot find suitable alternatives. The anticipated historic number of eviction filings across the country could potentially create an entire generation of children that have had their childhoods scarred with the trauma of homelessness. Evicted families are victims of the pandemic, not the cause. And public policy dictates that the government must provide a remedy to allow those unhoused by the pandemic to move on from this ordeal, free from the punitive effects of an eviction record in their consumer reports and rental history.
Problems with ABA’s Resolution 10H proposed remedy
The policy-making body of the American Bar Association (“ABA”) adopted a resolution that calls on state and federal governments to pass legislation prohibiting landlords from using COVID-19-related eviction records in tenant screening processes in an effort to prevent severe and long-term harm to renters.
Resolution 10H proposes an impractical, impossible to enforce, and ineffective regulatory model for protecting tenant’s eviction privacy. Nearly 50% of all rental units are made up of 1-4 unit properties. Mom and pop-sized property management companies operate 77% of 2-4 unit properties, while 42% of all rental properties have their day-to-day operations managed by the actual owners. Thus, tenant screenings for a substantial percentage of the rental housing market are performed, at least in part, by individuals and small organizations that do not have the resources or the oversight necessary to implement effective privacy controls into their tenant screening processes.
Notwithstanding adoption of the proposed legislation, landlords will still need to rely on rental history and credit reports to inform their leasing decisions. This information typically includes data about the applicant’s credit accounts, payment history, bankruptcy, and debt collections. Eviction records are only a single piece of the credit worthiness picture. The ABA’s proposed remedy essentially asks that when landlords procure the applicant’s credit report and rental history to conduct tenant screening, that they voluntarily turn a blind eye to the eviction information it contains. This approach is akin to leaving the fox to guard the hen house.
Designing a more effective eviction privacy remedy
Regulating credit reporting agencies’ and data brokers’ collection, retention, use, sale, disclosure, and deletion of eviction data is substantially more effective than the ABA’s proposed remedy, but it still can be improved upon. It’s a commonsense proposition that regulating the information suppliers (i.e. CRAs, data brokers) is a much more effective regulatory model than regulating the information consumers (i.e. landlords). However, the most effective approach is to (1) regulate the information manufacturers, which would be the state courts that publish eviction filings as public records; and (2) limit the landlord’s ability to compel disclosure of the eviction information directly from rental applicants.
Credit reporting agencies deal in the collection, acquisition, buying, and selling of personal information about consumers. Credit reporting is a heavily-regulated industry that must comply with FACTA and FCRA, among other laws, to ensure that the information they collect and sell, is a fair and accurate summary of a consumer’s credit history. Thus, the industry is already equipped with the infrastructure needed to implement eviction privacy into its tenant screening products and services because regulated companies already operate risk and compliance programs focused on consumer privacy. In terms of effectiveness, this approach is better than the ABA’s proposal because landlords are not even given an opportunity to obtain the eviction data.
The most effective approach, and the regulatory model recommended here, is to require state courts to seal pandemic eviction records so they are not published as public records, nor accessible by request. This effectively prevents the flow of information and limits it to the court systems that create the data. Otherwise there is a potential for a black market to develop in the trade of eviction records, supplied by third parties that are not regulated as CRAs, nor registered as data brokers.
A supplemental safeguard that must be implemented in addition to the recommended regulatory model is a prohibition against landlords asking applicants about pandemic-related evictions. With no access to the eviction data from third parties, landlords may try to compel disclosures directly from rental applicants. Landlords may refuse to accept applications without eviction disclosures and then force the applicant to certify that all information provided is complete and accurate. Landlords’ violation of the restriction can easily be proven by obtaining evidence of the landlord’s request for eviction information, likely made in writing, and communicated in the landlord’s application document.