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Article Excerpt
NOTE CONTENTS
INTRODUCTION I. EVICTIONS, TENANT SCREENING, AND THE PROBLEMS OF TENANT-SCREENING REPORTS A. The Realities of Eviction B. Tenant Screening and Its Problems 1. Errors and Misleading Information 2. Abuse 3. Frustration of Legislative Objectives and Public Policy II. TWO STRATEGIES FOR REGULATING TENANT-SCREENING REPORTS: ENSURING ACCURACY AND LIMITING ACCESS A. The Standard Approach: Ensuring Accuracy B. The Better Approach: Limiting Access 1. California's First Attempt: Censoring Unfair Items 2. California's Second Attempt: An Access-Based Approach C. Why Accuracy Isn't Enough III. A DEFENSE OF OUTCOME-BASED RESTRICTIONS A. Reasons To Keep Eviction Records Private by Default 1. Efficiency 2. Privacy 3. Legislative Priorities 4. Fairness and Due Process B. Reasons To Keep Eviction Records Public by Default 1. First Amendment Doctrine and the Common Law 2. Other Values C. Examples and Parallels CONCLUSION
INTRODUCTION
[W]ith the advent of the computerized consumer reporting industry, it has become possible [for landlords] to purchase a great deal of tenant information that would otherwise be too expensive or impractical to obtain. (1)
The trend of gathering information about tenants, which began to raise eyebrows almost thirty years ago, has continued to grow in magnitude and concern. (2) Today, landlords regularly purchase "tenant-screening reports" (3) that chronicle landlord-tenant disputes (4) and court filings, often regardless of their outcomes. (5) Indeed, the tenant-screening industry has mushroomed in recent years. Informal estimates suggest that as many as 650 companies provide tenant-screening reports, (6) and a recent trend toward consolidation (7) means that many of these companies provide reports with national scope. The ease with which these reports are obtained means that landlords increasingly rely on them at the first stage of their selection process to separate out potential bad apples. As one seller of these reports recently told the New York Times,
It is the policy of 99 percent of our [landlord] customers in New York to flat out reject anybody with a landlord-tenant record, no matter what the reason is and no matter what the outcome is, because if their dispute has escalated to going to court, art owner will view them as a pain.... (8)
In an ideal world, tenant-screening reports would help landlords know which tenants are more likely to fall behind on their rent payments, commit waste, or irritate their neighbors. (9) With good intentions, both landlords and municipalities have looked to tenant-screening reports as a potential miracle cure both for the landlord's private fear of fair housing lawsuits (by providing an objective reason to deny an application) (10) and for society's public problems of crime and drug use. (11)
But the truth is that tenant-screening reports create at least as many problems as they solve. As I elaborate in Section I.B, these reports may contain errors, are open to abuse, and may even work against democratically endorsed public policies. Therefore, for reasons of both justice and economic efficiency, I believe that there are items that these reports should and should not include. An actual eviction for nonpayment of rent would be a legitimate item, but an unmeritorious lawsuit brought by a landlord solely for "arm-twisting" would not. (12)
Errors in tenant-screening reports--the first problem noted above-arise from the practical limitations in the methods agencies use to compile their reports (13) as well as from a market that tolerates or even rewards inaccuracy in the direction of overinclusive reports. And even accurate reports can be misleading. For example, most eviction actions end in settlement, (14) yet judgment routinely enters in the landlord's favor for procedural reasons, (15) meaning that a report might appear more negative than it should. (16) Furthermore, many court records are either unclear or simply incomplete with regard to the disposition of cases. (17)
Second, screening reports are open to abuse not only because they make the threat of an eviction action a stronger tool for disciplining tenants (because the action will be "reported") but also because the item on the report is fundamentally a description of the landlord's actions (18) (whether she filed an eviction) instead of the tenant's actions. (19) Reports of such abuse are frequent in the media and in scholarship on tenant-screening reports. (20) The following "advisory" letter from a landlord to a tenant demonstrates the opportunity for abuse inherent in tenant-screening reports:
[W]e now subscribe to a service that records all filings on [eviction] actions. As this service is used by landlords, it will be impossible, in the future, to rent an apartment if you have been served a legal action. We are advising you of this, as the failure to pay your rent on time[] will result in your name being placed in the file, and you will be unable to secure any apartment in the future. (21)
While that threat might sound exaggerated, recent press accounts suggest that it is not. In New York City, vacancy rates are low (less than 1%) and landlords "can afford to be picky." (22) A recent New York Times article stated that at least 20% of apartment applicants in Manhattan received a "reject" rating from a tenant-screening agency and, furthermore, that "a history of litigation against a prior landlord usually triggers automatic disqualification." (23)
Finally, tenant-screening reports may be contrary to established public policy because, while many legislatures have passed laws to protect tenant rights during disputes with their landlord, (24) these reports punish a tenant who chooses to vindicate those rights in court. Legislatures also have regulated consumer reports to improve accuracy, (25) but those regulations alone do not prevent the misleading items that are swept up in overinclusive reports. And even if the tenant successfully invokes the protections granted by the legislature and wins the summary process action, her mere involvement in an eviction action might significantly diminish her future chances of finding housing. (26)
Three strategies have evolved to deal with the problems of tenant-screening reports and credit reports in general. The first strategy is to require that any disseminated information be accurate. Failing that, the second strategy is for legislatures simply to prohibit reporting agencies from disseminating certain types of information regardless of whether it is accurate. The third strategy--the least common but the one I ultimately endorse--is to restrict the release of government records to the reporting agencies in the first place.
Most legislatures regulating tenant-screening reports have focused on the first strategy of ensuring the accuracy of the information disseminated by reporting agencies. At the federal level, even though it focuses primarily on credit reports, the Fair Credit Reporting Act (FCRA) already provides mechanisms for tenants to correct errors, (27) including the right to be informed of decisions that rely on an adverse report, to obtain a copy of the report, to dispute items, and to add notes to their files. (28) Yet tenants usually do not learn of erroneous information in their tenant-screening reports until after they have been denied housing, limiting the usefulness of these measures. (29) Moreover, abuse remains a problem, and public policy goals are still frustrated.
States also have pursued the second strategy--prohibiting agencies from disseminating certain types of information. For example, California passed a law in the early 1980s prohibiting tenant-screening agencies from reporting on eviction actions unless the tenant lost in court. (30) But this approach forces states to strike a difficult balance between First Amendment values on the one hand and empowering tenants on the other. (31) The approach also may be ineffective; one tenant-screening agency announced its intent to circumvent the California law by not disseminating the prohibited information and instead simply opining that landlords should "reject this applicant." (32)
This Note endorses the third strategy of having courts withhold information on eviction actions until the landlord prevails in court--an approach that has been used in California for more than fifteen years. (33) It has also been endorsed by a judge in that state (34) and suggested, in the abstract, by the Supreme Court. (35) But thus far the strategy has received little scholarly discussion, (36) and no other states have pursued this approach.
The strategy of limiting access to sensitive information would be more effective at curtailing abuse than an accuracy-based approach, while it poses fewer constitutional issues than does a censorship-based approach. Under this proposal, it would become logistically easier for tenant-screening agencies to document cases in which landlords prevailed than those in which tenants prevailed or the parties settled. (37) But courtrooms would remain open and their records available to the parties in eviction lawsuits, their designees, journalists, and others upon a showing of good cause.
Part I of this Note describes the real-life effects of tenant-screening reports and the abusive behavior they enable and engender. Part II discusses existing statutes that seek to regulate these reports. Part III outlines the proposed statutory strategy and offers reasons why such statutes would be theoretically justified under principles of efficiency, privacy, legislative discretion, and judicial discretion, as well as fairness and basic practical concerns. Part III also examines parallels in the criminal context (in which records are often expunged based on the outcome of the trial) and mounts a defense of outcome-based record disclosure against criticisms that it would violate the First Amendment or principles of open government.
I. EVICTIONS, TENANT SCREENING, AND THE PROBLEMS OF TENANT-SCREENING REPORTS
A. The Realities of Eviction
Tenant-screening reports place great emphasis on past evictions, partly because they are intuitively significant to landlords and partly because evictions are easier to canvas than more detailed rental references. Though evictions have not been the subject of much empirical research, the rental housing market is dominated by low-income tenants, (38) and a few state and municipal studies have shown that evictions disproportionately affect the poor, women, and racial and ethnic minorities. (39) It stands to reason, then, that the nation's poor and marginalized populations also suffer the brunt of the harm caused by erroneous or abusive tenant-screening reports. (40) The effects of tenant-screening reports are all the more difficult to measure because eviction procedures themselves vary greatly from state to state. (41) Given the scarcity of empirical data, the following statistics draw almost exclusively from Connecticut, both because I have been able to obtain court records on evictions for this state and because New Haven evictions are among the best documented in the country. (42)
Despite variation, eviction procedures in every state allow a landlord to recover possession of the subject premises on an accelerated timeline as compared with a normal civil case. For this reason, many eviction statutes are called "summary process" statutes, although in some states the actions are also known as "unlawful detainer" suits. Most evictions occur for nonpayment of rent, (43) but a landlord may seek a summary process remedy under other conditions, such as holdover (when the lease has terminated but the tenant remains on the premises), serious nuisance, and breach of lease provisions. (44)
Just as in other kinds of litigation, the majority of landlords and tenants end up settling their differences without a court decision. In Connecticut, "nearly all contested cases are successfully settled." (45) (Of course, many are not even contested.) The rest are mostly dismissed or withdrawn. In Connecticut, judgments by default for failure to appear are the second most common disposition, occurring in about one-third of cases, (46) and they might be even more common in other states. (47) Defaults might be so frequent because tenants move out and choose to ignore the summons or because they pay up and agree with landlords to ignore the court filings. Stipulated settlement is the most common method of disposition, but these settlements usually enter as judgments for the landlord. Even though landlords received a judgment in their favor in more than 75% of all cases, they pursued that judgment to execution (actual removal of the tenant) less than one-third of the time. (48)
The fact that such a low percentage of cases ends in execution illustrates an important point: even though a judgment was entered in the landlord's favor, the dispute may have ended on amicable terms. Landlords often will file a summary process action to command the tenant's attention and effect a quick resolution. When the parties stipulate to a judgment in the landlord's favor, the landlord is entitled to a quick eviction if the tenant does not keep her word. The original dispute--whether about unpaid rent, damage or nuisance, or a simple lease violation--is therefore resolved to the landlord's satisfaction. This is why many landlords, such as housing authorities, file an eviction as soon as a rental payment is late, even if they have no expectation of seeing the eviction through: they simply want insurance in case the tenant's late payment is part of a larger problem. Once the tenant pays up (with a penalty, perhaps, for court filing fees), she could be reinstated as a tenant in good standing.
Indeed, perhaps so few cases end in eviction because landlords use the process (except when filing fees are too high) simply to apply more pressure on a tenant to pay her rent. The threat of eviction is thus "a way to up the ante to let the tenant know that [landlords] are serious," although "[i]n most of those cases, [tenants] work out some agreement to begin paying." (49)
B. Tenant Screening and Its Problems
Although tenant-screening reports often take tenants by surprise, landlords--especially professional or experienced ones--are generally quite familiar with them (50): "Many landlords find it essential to check a prospective tenant's credit history with at least one credit reporting agency...." (51)
In addition to the nationally known credit reporting agencies, scores of companies of varying sizes claim to cull local court records and build tenant-screening databases to offer a landlord insight into a tenant's desirability. (52) Although some of these databases purport to contain positive payment history information for tenants who pay their rent on time, (53) these screening reports are widely recognized as vehicles for almost exclusively negative information about the person under investigation. (54) A typical tenant-screening report includes a standard credit report (with information about missed or late payments to creditors, money judgments, and bankruptcies, among other things), a criminal background check, and a listing of possible eviction actions against the individual (either local or national in scope). (55)
The largest of the tenant-screening report companies appears to be First Advantage SafeRent, (56) which now owns California's U.D. Registry and other tenant-screening firms that once operated on a regional basis. (57) First Advantage has at least forty offices nationwide, and "[m]ore than 30,000 properties, representing over 6 million apartment homes, count on Registry-SafeRent every day to help them attain the highest quality residents and maximize profitability." (58) Its subsidiary U.D. Registry has been both a plaintiff in lawsuits to protect its method of producing tenant-screening reports (59) and a defendant in several lawsuits by individuals dissatisfied with their listings in the database. (60) The oldest of the tenant-screening companies appears to be Minnesota's Rental Research Services, Inc., (61) and it too has been the subject of a federal lawsuit. (62) Countless other tenant-screening services are listed on the Internet, although some or many of these services might merely resell reports obtained through a larger company like First Advantage.
Several law review articles have discussed these reports, (63) identifying many problems. (64) Some of the most salient concerns include error in the reports, abuse of the reporting system by landlords, and frustration of valid public policy objectives. (65) I discuss each of these in turn.
1. Errors and Misleading Information
Tenant-screening reports have two major information-related problems: errors (mismatching) and omitted or misleading information. Mismatching occurs because names are often used as the primary index for the eviction histories included in tenant-screening reports. (66) Common names only exacerbate the problem, (67) as in other contexts, such as federal immigration. (68) Tenant-screening agencies are thus forced to choose between, on the one hand, producing an overinclusive report that contains all the name matches for a person in a particular area and, on the other hand, filtering the data using other variables, resulting in a potentially underinclusive report that might omit important past evictions. Because tenant-screening agencies are not required to keep public records on complaints or corrections, it is impossible to know whether these kinds of errors turn up frequently. A recent study by a Minnesota nonprofit organization that surveyed social workers and other service providers identified "errors" as the most common complaint about tenant-screening reports. (69)
Tenant-screening agencies have been largely unwilling to disclose the steps they take to match names with court records. (70) Among those that have done so, there is no consensus on how to control for the problem of tenants with the same name--or, indeed, on whether there should be any control. (71) Two states have enacted statutes that recognize the mismatching problem and that encourage landlords to include uniquely identifying information in eviction complaints filed with the court: Minnesota asks tenant-screening services and courts to provide the tenant's date of birth when available, (72) and Oregon states that "[t]he plaintiff may include, at the plaintiffs option, the defendant's Social Security number in the complaint for the purpose of accuracy in tenant screening information." (73)
Although controlling for at least some kinds of errors should be possible, economic incentives exist against tenant-screening agencies' performing those checks. After all, tenants who know their rights, and especially tenants who defend their rights in court, probably will pose a higher potential cost to landlords than tenants who do not. Thus, landlords would prefer to pay for overinclusive, rather than underinclusive, reports.
The second major kind of defect in these reports--omitted or misleading information--can be the fault of either tenant-screening agencies or the original courthouses that provided the public record information in the first place. (74) Tenant-screening reports often mention a tenant's involvement in an eviction action without distinguishing among kinds of outcomes, such as a tenant's (1) being evicted; (2) prevailing against her landlord; (3) settling with a stipulated judgment in the landlord's favor; or (4) failing to appear in court but not being evicted.
In fact, a large class action lawsuit was brought against First Advantage for precisely this reason. After being denied an apartment, the plaintiff, Adam White, received a copy of his tenant-screening report, which...
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