Property managers handle many responsibilities, but few involve as many regulatory requirements as tenant screening. These laws change frequently and vary dramatically by location, so if you have properties in multiple jurisdictions, your screening system needs to be built to comply with each area's specific requirements—and you need to stay current with ongoing changes. 

"There are a couple of buckets of tenant screening laws, and they pertain to an individual's credit history, to their housing history, and then to their criminal history," explains Sangeetha Raghunathan, General Counsel at Findigs. "At the highest level, screening laws are often focused on ensuring that individuals are being evaluated on final outcomes of actions that may indicate problems with a potential tenancy, but not just initial flags, which may not be indicative of what the true facts are."

Between federal regulations, state statutes, and local ordinances, the rules governing how you evaluate rental applications can feel overwhelming. That’s why many property management companies find it valuable to use a tenant screening solution that can take this burden off their shoulders. This helps them gain confidence in their compliance while expanding access to housing. Here's an overview of the main types of tenant screening laws and what you need to know to stay up to speed.

The purpose behind tenant screening laws

Tenant screening laws aim to prevent housing discrimination and ensure equal access to housing for all qualified applicants. These regulations emerge from America's history of discriminatory practices, from Jim Crow laws that enforced racial segregation to systematic government-sponsored redlining. Today's housing crisis adds urgency to the need to expand access to housing. More than 770,000 people were counted as homeless in 2024, marking an 18% jump from the previous year. 

The foundation of tenant screening laws stems from the recognition that housing is a basic human need, and decisions about who gets housing should be based on relevant qualifications—not personal characteristics or circumstances beyond someone's control. 

These laws also aim to ensure that screening decisions are based on actual outcomes rather than preliminary actions—for example, requiring final eviction judgments rather than mere eviction filings, or criminal convictions rather than arrests that didn't result in convictions. 

In addition, certain laws go toward protecting consumers from fraudulent practices, ensuring accurate reporting of information, and preserving applicants' rights to fair consideration for housing in the event that they may need special accommodations.

Federal tenant screening laws

Several federal laws create the baseline requirements for tenant screening across the country, regardless of where your properties are located.

Fair Housing Act

The Fair Housing Act, passed in 1968 as a major part of Dr. Martin Luther King Jr.'s civil rights legacy, prohibits housing discrimination based on race, color, religion, sex, national origin, familial status, or disability—known as "protected classes." 

For tenant screening, this means your criteria and processes must be applied consistently to all applicants regardless of these protected classes. 

For instance, you cannot:

• Ask questions about protected classes during the application process
• Set different income or credit requirements based on protected status
• Use screening criteria that disproportionately exclude protected groups without business justification
• Refuse reasonable accommodations for applicants with disabilities

Fair housing violations can happen even unintentionally. For example, requiring higher security deposits for families with children or using vague criteria like "good character" that allow personal biases to influence decisions can all be Fair Housing violations. 

Regarding disabilities, Fair Housing protects individuals with disabilities who may need the assistance of a service animal or emotional support animal. Service animals are protected under the Americans with Disabilities Act, while emotional support animals are protected under the Fair Housing Act. The law also applies to military families and military individuals who may be unexpectedly deployed.

Fair Credit Reporting Act (FCRA)

Enacted in 1970 and overseen by the Federal Trade Commission and Consumer Financial Protection Bureau, the Fair Credit Reporting Act governs how you use consumer reports for tenant screening. It requires written consent before running background checks and establishes important consumer protections and time limits for how long information can be reported.

Under the FCRA, information about a lawsuit or a judgment can only be reported for seven years or until the statute of limitations runs out, whichever is longer. Bankruptcies can stay on your report for up to 10 years. There is no time limit for criminal convictions at a federal level; however, states and locales have imposed their own “lookback” limits and restrictions about criminal history reporting.

"The Fair Credit Reporting Act requires that property managers use a consumer report only for the purposes of tenant screening," explains Raghunathan. "It's what's called permissible purpose—if you're going to get this pretty sensitive private information, property managers are only allowed to use it for the purposes of tenant screening, and they're only allowed to use it one time."

The law also requires specific notifications through adverse action notices. "A decline has to be communicated with very specific reasons. It can't just be a generic decline," says Raghunathan. 

For instance, the notice must also tell the applicant which reporting agency provided the information and how they can dispute any inaccuracies. And if someone disputes their background check results, you need to work with them and the reporting agency to resolve any errors. 

"The Fair Credit Reporting Act is really a law around giving consumers the right to dispute information and have it be accurate and updated because this information is being pulled by all the credit bureaus," notes Raghunathan.

HUD guidance on criminal history

In 2016, the Department of Housing and Urban Development issued guidance on the Application of Fair Housing Act Standards to the Use of Criminal Records by Housing Providers. This guidance significantly influences how courts interpret fair housing violations related to criminal history screening.

The guidance warns that blanket bans on applicants with any criminal record can violate fair housing laws due to disparate impact on protected groups. Key principles include:

• You cannot use arrest records that didn't result in convictions
• Automatic denials for any criminal history are discouraged
• You should consider the nature, severity, and timing of any conviction
• Individual assessment is recommended over blanket policies

"A person can be arrested under many circumstances,” says Raghunathan. “That doesn't mean that they're guilty. And so there's a lot of focus around just ensuring that you're using final conviction, an actual conviction versus an arrest record, because simply because someone was arrested does not indicate that they are guilty of a crime.”

Major categories of state and local laws

Beyond federal requirements and guidance, states and localities have added their own layers of regulation that determine compliance for screening tenants.

Criminal history restrictions

Criminal history restrictions vary significantly between jurisdictions. Under federal law, there is no time limit for criminal convictions on consumer reports, but many states have imposed their own restrictions. Some cities like Oakland and Berkeley have essentially banned considering criminal history in housing decisions, unless certain exclusions apply. 

Many states have adopted lookback limits that are stricter than federal requirements. For example, Colorado's Rental Application Fairness Act, enacted in 2019, restricts criminal background checks to convictions within the past five years (with exceptions for serious violent crimes). California's consumer reporting laws effectively create a seven-year limit by preventing reporting of older convictions. 

Several states and jurisdictions including New Jersey and Washington, D.C.,  have adopted "fair chance" or "ban the box" ordinances. These typically require you to:

• Evaluate applicants on income, credit, and rental history first
• Make a conditional housing offer before checking criminal history
• Provide detailed reasons if you withdraw an offer based on criminal records
• Allow applicants to respond with evidence of rehabilitation

"Fair chance ordinances say that just because somebody had a criminal conviction in the past doesn't mean that you should immediately not consider them for a unit," explains Raghunathan. "You want to do what's called an individualized assessment."

What is an individualized assessment?

An individualized assessment means you evaluate each applicant's criminal history in context rather than applying blanket policies. 

"You would typically evaluate a person based on their income and their credit and their housing history and make them a conditional offer of housing. And only then you would look at their criminal history," explains Raghunathan. "And then even then you might look at their criminal history and say, ‘OK, look, that happened seven years ago. It was a very low level drug offense. You were young, now you're a different person, you have a job, you're stable. So I'm going to make an individualized assessment and override my own criminal policy.’"

This approach recognizes that circumstances from years ago may not reflect someone's current ability to be a responsible tenant.

Income and credit criteria

States increasingly regulate how you can use income and credit requirements. Colorado's law has capped income requirements at twice the monthly rent—meaning you can't require applicants to earn three times the rent, which has been a common industry standard.

Many states now protect "source of income" as a class, meaning you must count rental assistance, Section 8 vouchers, and other legal income sources when evaluating applications. 

Some jurisdictions also restrict how you can use credit scores for applicants with rental assistance, requiring you to accept alternative evidence of ability to pay if their credit score is low.

Eviction history

Several states have moved to limit how eviction records can be used in screening decisions. In California, eviction filings remain sealed unless the property manager obtains a judgment within 60 days. This means you can't see or use mere eviction filings that didn't result in actual evictions.

"A property manager can file an eviction notice against anyone for any reason—maybe they want to move their family in," notes Raghunathan. "A notice of eviction doesn't necessarily indicate that a tenant has done something wrong. It just means they may need to move out for various reasons."

New Jersey sealed eviction records from the COVID-19 period, recognizing that pandemic-related housing instability shouldn't permanently impact someone's ability to find housing (though protections were ended in 2022).

The trend across multiple jurisdictions is toward distinguishing between eviction filings (which can happen for many reasons) and actual eviction judgments (which indicate a court found cause for removal).

Emerging areas of regulation

New types of tenant protection laws may continue to emerge as legislators look for ways to remove barriers to housing.

Application fees

Many states now cap or regulate application fees. California ties its cap to inflation (currently around $64.50, as of June 2025), while some states like Colorado require fees to only cover actual screening costs—no profit allowed.

"The idea is to prevent property managers from using application fees as a source of revenue," explains Raghunathan.

Several states have also implemented what are called portable tenant screening reports.

"When you apply to an apartment or unit, you might be applying to multiple units across different properties, when the application fees are upward of $50 or $60, it can get prohibitively expensive to apply. And so states have put into place laws around what they call portable tenant screening reports," explains Raghunathan.

Six states have passed some type of portable tenant screening report legislation, with the idea that renters could pay a one-time fee to obtain a tenant screening report that they could then reuse throughout their housing search. Colorado has one of the more comprehensive laws, requiring landlords to accept portable reports—comprehensive background/credit reports prepared within the last 30 days—in lieu of charging a new application fee.

Positive rent reporting

A newer trend is toward allowing tenants the option to have their on-time rent payments reported to credit bureaus. Rental payment history is often the strongest predictor of future tenancy success—stronger than credit scores or income ratios. California's SB 1157 mandates this for larger assisted housing developments, helping tenants build credit through responsible rent payment.

"One of the most important pieces of data that you should be looking at for an applicant for housing is whether they paid rent on time," says Raghunathan. "People prioritize paying rent, and they should be given credit for that."

How laws vary by location

The regulatory environment varies dramatically depending on where your properties are located. States like California, New York, Illinois, Oregon, and New Jersey tend to have more comprehensive tenant protection laws, often driven by affordable housing shortages.

"Housing is very much regulated at the state and local level," notes Raghunathan. "It's at the local level that regulators care most about getting people into housing."

Local ordinances can be even more specific. San Francisco requires a 14-day process for applicants to respond to potential criminal history denials. Newark pioneered many fair chance housing concepts that later became state law in New Jersey as the landmark Fair Chance in Housing Act, signed into law in 2021.

How Findigs helps you stay compliant

Managing compliance across multiple jurisdictions can be overwhelming, especially when laws change frequently. This is where technology can help.

Built-in compliance features

At Findigs, "we track laws at the federal, state and local level, and we proactively build features to make it easy to comply," explains Raghunathan. "Rather than just building software and expecting property managers to figure out compliance on their own, we partner with them to navigate requirements."

For example, where fair chance ordinances require two-phase screening, "we just don't allow a property management customer to look at the criminal record until the right time in the process. We've set up our processes to help them stay compliant."

Still, some compliance responsibilities remain with property managers. "We can guide the process and build guardrails, but customers need to understand their local requirements and make sure their policies align with applicable laws,” Raghunathan adds.

Automated workflows reduce human error

Rather than relying on your team to remember each jurisdiction's requirements, Findigs builds compliance into automated workflows. "If you have to do things in a certain order, we will do that for you in a certain order," says Raghunathan. The system handles document collection, verification, and evaluation in the proper sequence for each location's requirements.

Fair housing protection through automation

This approach also helps with fair housing compliance. "Automation is extremely beneficial because it runs all the applications that come in against the same ruleset," explains Raghunathan. "We don't have any sense of demographic data when we do our automated screening. Automation allows you to be blind to the demographics that lend to subjectivity."

Staying current with changes

Laws in this area change frequently. Findigs tracks legislation and updates the platform on at least a quarterly basis. This proactive approach means you don't have to worry about staying current with changing regulations across multiple jurisdictions.

What this means for your operations

Understanding these laws is just the first step—you also need to implement processes that help you stay compliant in practice.

Document everything

Whether required by law or not, maintaining detailed records of your screening decisions protects you in case of disputes. Your process should be consistent and clearly documented, showing you applied the same criteria to all applicants. Findigs logs every step taken during the screening process and documents all decisions made. 

Build compliance into your process

The best approach is working with screening providers who build compliance into their platform rather than leaving it up to you to remember each jurisdiction's requirements. This includes automating the order of operations (like not showing criminal history until after a conditional offer in jurisdictions that require it) and maintaining detailed audit trails.

The cost of getting it wrong

Non-compliance can be expensive and damaging to your business in multiple ways.

Financial penalties

Violations can result in:

• Regulatory fines in the tens (or hundreds) of thousands
• Class action lawsuits
• Operational disruptions while you fix compliance issues
• Damage to your brand

"Class actions are incredibly expensive. They can range from anywhere from $5 to $10 million," warns Raghunathan. "In California in particular, they're especially expensive because every single violation can add damages individually."

Reputation damage

Beyond financial costs, "the brand damage is huge. If you suddenly start getting a reputation as a company that discriminates, you're not going to get quality applicants applying to your properties." Reputation damage can spread quickly and take years to repair.

Common compliance blind spots

Based on Findigs' experience working with property managers, certain areas frequently catch people off guard:

Application fee caps: "Oftentimes, especially smaller property managers will be unaware that their state has passed a fee cap," explains Raghunathan. "They're genuinely surprised to learn from us that they can only recover $25 or whatever it is from an applicant."

Criminal history limitations: Many property managers don't realize they can't access unlimited criminal records. "We only get records back for 10 years (sometimes less), and we only get final judgments," notes Raghunathan. "Property managers are surprised by the fact that they can't just have unlimited access to arrest records and unlimited criminal history."

When property managers ask about older records that don't appear in reports, it's not an error—"that's by design," explains Raghunathan.

What's ahead for tenant screening regulation

The trend is toward more regulation, not less. Legislators want to remove barriers to housing while still allowing property managers to assess risk appropriately. This means we'll likely see more individualized assessment requirements, expanded income source protections, and limits on using older negative information. When you have compliance built into your processes from the start, adapting to new requirements becomes much simpler. 

"Our goal is really around ensuring that property managers can focus on what they do best—managing properties and filling vacancies—while we handle the complexity of staying compliant across multiple jurisdictions," says Raghunathan.

When property managers can efficiently evaluate applicants using fair, consistent criteria—while still protecting their investments—everyone benefits from a more accessible and equitable housing market.

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Disclaimer: As a friendly reminder, this blog post is meant to be used for educational purposes only, and is not legal advice. The legal requirements and regulations discussed are accurate to the best of our knowledge as of the time of publishing on 05.28.2025; however you should always research and consult legal counsel regarding the most up-to-date laws for your jurisdiction.