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Should Condos or HOAs Screen Renters or Owners?
Should Condos or HOAs Screen Renters or Owners? Some Thoughts and Possible Consequences of Screening Applicants
In April of this year, a Nova Southeastern University professor, Joseph Morrissey, was slain in his home. The alleged killer, Randy W. Tundidor, had rented a townhome from Mr. Morrissey at The Vineyards of Plantation in South Florida. On it's surface, it appeared to be a random tragedy.
But in July Mrs. Morrissey, Joseph's widow, filed a wrongful death lawsuit against the management company and the condominium association for The Vineyards, despite the facts that the death didn't occur in the community and that Mr. Morrissey didn't live in the community. Her claim? That because the association had screened Mr. Tundidor before allowing him to rent the unit, they had a duty to uncover and report past events, such as prior evictions, that would have identified Mr. Tundidor as a problematic tenant, potentially avoiding Mr. Morrissey's death. You can read more about her lawsuit here: http://www.miamiherald.com/2010/07/17/1734529/widow-of-slain-nsu-professor-files.html
Now, I imagine that a few of you are reading this open-mouthed, and I have to admit that this legal claim seems extremely thin. For one thing, Florida state law prevents associations from divulging any information obtained through tenant screening. For another, we would have to believe that the failure to uncover benign events, such as prior evictions, could proximately cause the professor's death—that it was reasonable to assume that a tenant who had been evicted in the past was a physical danger to either the association or the renter. Seems like a stretch.
But, regardless of the outcome of the lawsuit, it illustrates just one of the usually unseen pitfalls of a condo association or HOA choosing to screen potential rental or sale applicants. So I wanted to spend some time in this series of blogs discussing screening in general—what are the benefits, what are some of the drawbacks, and how can board members and associations protect themselves effectively?
Step 1: Determining Whether Screening is Legal
Before your condo or HOA board decides to screen owners or tenants, understand at the outset that, despite the prevalence of the procedure around the country, it's not universally legal. First, you have to check with your state law to see if screenings are even permitted by condos or HOAs. But even further, you have to check your own documents. Condos and HOAs only have those powers that are granted to them in their documents. If the documents never mention screening, or even the ability to restrict rentals or ownership in some way, it's really doubtful if screening is authorized. And even if it is authorized, what are you going to do with the screening information? If your association has no power to bar tenants or owners, what is the point of doing a background check? Are you planning to put up a flier in the mailroom identifying an owner as a former criminal, or perhaps someone who was previously evicted from a home? Since screening information is almost universally confidential, that wouldn't be a prudent decision.
However, many condos and HOAs do have specific provisions in their documents that allow very detailed screening of rental or sale applicants, and some even allow the association to restrict rentals for almost no reason. But if your documents give your association the power to screen, are you sure it's a good idea to do so?
Step 2: Determining Whether Screening is a Good Idea
One thing I can say with certainty, both from speaking to condo and HOA owners from around the country at conventions, as well as from interactions with owners at my own property, the idea of screening is really, really popular. Some of it is clearly due to societal changes over the past 20 or so years, and I honestly believe a lot of it dates back to 9/11. For good reason, the events of 9/11 scared people throughout the United States. The attack on the World Trade Center, which has been followed by scores of very publicized workplace shootings and various terrorist threats (such as the recent Times Square bomb scare), not to mention the publicity that the various "Megan's Laws" have brought to the existence of sex offenders, have made people feel uneasy about their day-to-day personal security. And it's basic human nature that when your environment is out of control, you look for some way to control your environment. For most of us, our home is the last possible bastion of personal security. We can try to barricade ourselves in and shut out the ever more dangerous world, but the basic nature of Shared Ownership Communities (like condos and HOAs) has encouraged people to try to spread their safety net outside of their front doors.
But is it possible? Whenever someone tells me that they want their Condo or HOA to start screening tenants or owners, I always ask them to back up a bit and to determine their end game first. I'm a big believer in "end games." If you don't know where you are trying to go, how do you plan how to get there?
So let's work through a typical thought process. Mr. Condo Owner tells me that he wants to screen so that he can protect his family from potentially dangerous people—murders, sex offenders and the like. The conversation usually goes something like this:
Mr. Condo Owner: "I want my association to screen potential tenants or owners--we need to figure whether or not they're sex offenders."
My answer: "Understandable, but you can do that without a screening process. Sex offenders are easily identifiable online at a hundred different Megan's Law websites."
"Well what if he's a criminal? We can't have dangerous criminals running around our community."
"What type of criminal? All criminals? Only persons convicted of particular types of crimes? And who gets to decide which crimes are bad, and which are excusable?"
"Felons at least, I think we at least need to identify felons."
"Fair enough. What if you find out that a potential owner took a car for a joy ride 40 years ago when he was 18. He spent 3 years in jail for the felony and is now a well-respected businessperson in the community. Do you ban him?"
"Of course that's not the kind of person I'm worried about. I'm thinking more about dangerous criminals. Like drug crimes."
"Sure. So what about this guy—he was arrested for smoking a joint at a U2 concert. You going to ban him from buying a unit?"
"Well not that guy either. Heck, I could BE that guy!"
"Fair enough, and I wouldn't want to ban him either. So what exactly are you going to look out for?"
"Well how about people who were involved in violent crimes."
"What about a man who was caught in a bar fight."
"I'm starting to see the problem here…"
The problem, really, is that screening doesn't do what people think it does. Screening applicants is not automatically going to protect you from dangerous people. What it will do is impose on an association board, or worse, on a manager, the responsibility of making tough, hairline decisions based on private, confidential information that almost no board member or manager has the training or ability to differentiate appropriately.
Furthermore, as is illustrated by the story at the opening of this article, the simple act of screening applicants may open your association to lawsuits by owners for a host of reasons—you rejected their applicant unfairly, you failed to reject an applicant whom you should have rejected, an applicant that you screened failed to pay his rent, and applicant you screened committed a crime, etc. Now, I'm not saying that these lawsuits are legitimate or likely to succeed—I'm simply saying that the existence of a screening process will invite lawsuits that your association wouldn't otherwise have to stomach.
So, given all of the difficulties I've just outlined, why would any association choose to screen tenants or owners? Well, some association documents may require screening—or the demand from owners may simply be too great to ignore. Still, the issue is quite a bit more complex than most people assume, and any board considering a screening process, or looking to revise their own procedures, should consider the caveats I've described above. But let's assume that, damn the torpedoes, your association is going to screen—here's some tips on how to make sure that your procedures are as bulletproof as possible.
Step 3: Creating a Screening Procedure that's Consistent and Fair
The worst possible situation for any board of directors (and a nightmare for any manager) is for the board to make screening decisions carte blanche, with absolutely no guidelines of any kind. Sure, that's been done in co-ops for years, but co-ops are notorious, and somewhat reviled, for their ability to reject applicants on a whim. As a board member, you do not want the responsibility or the power to reject community residents for any or no reason at all—it's just asking for trouble. Instead, if your community is going to implement a screening process, I strongly recommend that you consider instituting the following procedures:
- Keep it Confidential. The vast majority of background checks are, by law, confidential, and they should be kept confidential by whoever is making the final screening decision (usually the board). Regardless of how tempted you may be, do not reveal anything you find in a background check, no matter how juicy, to your neighbors—or even your family. When your dealing with confidential information, never assume that anyone is trustworthy. The fewer people who know a secret, the less likely it is to slip. When the background check is done, and the screening process is completed, make sure that the files are permanently sealed in a way that owners or residents can't see them. If your lawyer says you can discard them, that's even better.
- Keep it Consistent. The acceptance or rejection of an applicant should never be based on gut feeling or whim. Instead, the board should have specific, written guidelines that it uses for every single person, and from which it never varies. For example, a board could decide that it will reject anyone who has served more than 5 years in prison for a felony conviction. That's an easy guideline to follow—if (a), then (b). Or, maybe a board with the power to use financial guidelines sets a minimum net income for owners (and by the way, as horrible and elitist as such a guideline sounds, it is one way to ensure that owners have the financial wherewithal to afford their maintenance payments, without which any association would be dead in the water). But it should never be "let's look over the whole file and make a gut decision." To avoid allegations of discrimination or bias, make sure that your standards are specific, well developed and written down. Even better, make these decisions at an open board meeting, and publish the guidelines to your members.
- Keep it Fair. Once your board has developed appropriate guidelines for screening candidates, and has decided what to do with the information, just do it. Never, ever make exceptions for friends, family or sad cases. The second that guidelines are ignored, you are opening up the board to allegations of collusion, cronyism or nepotism. Even if your guidelines would keep out someone that the board would otherwise approve, you should still reject the candidate if they don't meet your specific qualifications. That's the whole point of having a system. If you don't like the end result, you can later consider changing your qualifications as a whole, for every candidate, but don't assume that you can let one slip under the radar without inviting the legitimate criticism of at least some members of your community.
Overall, I'm not a big fan of screening procedures—not because I think they're unfair, but because I don't think they accomplish their goals (greater personal and community security or stability) and are ripe for misuse and abuse. Still, I recognize how popular these programs are, so consider using the guidelines I've offered as a way to make your own screening process as unassailable as possible.
About the Author
Ryan Poliakoff is an expert on Condo Living and is the owner and author of http://www.PoliakoffOnCondoHoaLiving.com/">Condo and HOA Management blog He is also the coauthor along with his Father, Gary Poliakoff of a http://www.newneighborhoodspublishing.com/">Condo and HOA Management Book titled "New Neighborhoods".