Legislating Against Blacklisting to Help Tenants Find Better Housing

Landlords deny that it’s done, but tenants who withhold rent to protest unhealthy living conditions often can’t find another place to live

The Pueblo City building that Yanira Cortes says is infested with rats and other vermin.
Yanira Cortes hits play and her phone displays a video of the wood-floored hallway of her Newark apartment. After a few seconds, a large brown rat scurries across the floor from one corner of the hall into an open doorway.

“My 9-year old daughter shot that at 3:45 in the morning,” says Cortes, a mother of four kids who range in age from 2 to 12. “She’s up because she’s afraid to sleep with the rats … I check them every morning for rat bites.”

This is just one problem she has faced in her federally subsidized two-bedroom apartment in the Pueblo City building; there have been problems with the heat and a leaky bathroom ceiling that brought mold. While moving would be difficult financially, Cortes has tried to secure another rental, only to fail the background check.

Blacklisting low-income tenants

Cortes is one of an untold number of people who have been “blacklisted” by tenant-screening agencies because her current landlord began eviction proceedings against her for nonpayment of rent. Cortes has been putting her rent in escrow rather than paying her landlord, as lawyers say she is legally allowed to do, because of the unsanitary conditions of her housing.

Yanira Cortes says she withheld her rent to protest unsanitary conditions in her apartment and has been blacklisted by landlords for doing so.
“Now when I try to apply to other places, they tell me, ‘You went to court for an eviction, you’re basically a bad tenant,’” said Cortes, 29. “It’s not fair to me or my children to have to live in these conditions.”

Landlords deny that they engage in blacklisting. But the practice has been under scrutiny recently in New Jersey. On Monday, U.S. Sen. Cory Booker (D-NJ) jumped into the fray, announcing federal legislation that would reform the Fair Credit Reporting Act to make tenant-rating agencies more accountable and give tenants additional protections.

Legislative efforts to block blacklisting

Booker’s legislation is only one of several measures that are being pursued. Last week, state Sens. Ronald Rice (D-Essex) and Jennifer Beck (R-Monmouth) visited several dilapidated housing sites to draw attention to the problem and to their bill, S-3270, known as the Safe and Sanitary Subsidized Rental Housing Bill of Rights. Rice is co-sponsoring another bill, S-3036, with Sen. Richard Codey (D-Essex) that would state explicitly when tenants are allowed to withhold rent. Further, they are also sponsoring with Sen. Brian Stack (D-Hudson) a bill (S-3037) that would make landlord-tenant court records private for some period.

Booker’s legislation seeks to help tenants in several ways. It would:

  • Prohibit consumer-reporting agencies from providing information on evictions or other housing court issues unless the landlord won the case;
  • Prevent the agencies from reporting on issues that are more than three years old;
  • Require the agencies to try to verify the accuracy of the information they are reporting;
  • Make a consumer’s report available to them for free once a year through a centralized clearinghouse and require a landlord who declines to rent to a person to give him a free copy of his report;
  • Have the Consumer Financial Protection Bureau report to Congress on tenant-rating agencies and their compliance with the Fair Credit Reporting Act.
  • Freedom from fear

    “Under no circumstance should a tenant fear discrimination for simply standing up for their right to safe and sustainable housing,” said Booker, who is hoping to find Republicans to co-sponsor the bill in Congress. “For far too long, landlords could utilize tenant-screening reports as a means to target low-income tenants and prevent access to quality and affordable housing. This bill takes important steps to reform tenant-screening practices by preventing landlords from unfairly penalizing tenants and providing tenants the necessary protections to ensure a fair and equitable screening process.”

    U.S. Sen. Corey Booker (D-NJ) held a roundtable to discuss the problem of blacklisting with Yanira Cortes and other tenants and advocates.
    Booker held a roundtable discussion in his Newark office with nine advocates and two tenants to hear from those affected by the problem before formally introducing the legislation.

    “It’s shocking to me that there are thousands and thousands of people around our state trying to raise a child in conditions that are traumatizing,” said Booker, who told of living in poor conditions that included mice, roaches, and no hot water, in the old Brick Towers high rise complex when he first moved to Newark. “It’s unconscionably cruel and inhumane to then be faced with homelessness … This goes to a thing, housing, that is a fundamental right of being an American.”

    “This bill is important to people like Yanira,” said Bill Good of the Greater Newark HUD Tenants Coalition. “A lot of residents won’t do what she has done because of the fear factor.”

    ‘Chilling effect’

    “The chilling effect is real,” said Paula Franzese, a professor at the Seton Hall University School of Law who teaches property law and was the co-author earlier this year of an article on issues surrounding tenant eviction proceedings and blacklisting. “Tenants are afraid to speak up. They fear appearing on that blacklist … It creates false negatives. A tenant who is a very good tenant, a worthy tenant, because the list gives no context, that tenant is denied future housing opportunities.”

    Franzese said she brought the issue to Booker’s attention earlier this year after learning about the blacklisting process and its ramifications. According to her article, companies that call themselves “credit-reporting agencies” screen a prospective tenant in exchange for a fee the tenant must pay and then report all instances in which that tenant was named as plaintiff or defendant in a landlord-tenant court action.

    “Those reports, which can sink a tenant’s prospects of finding rental housing, reveal nothing about context and do not indicate, for example, whether or not the listed tenant successfully defended the litigation or raised breach of warranty,” Franzese wrote, referring to a tenant refusing to pay rent due to conditions making an apartment uninhabitable.

    She cited the case of Maurice Smith of Newark, who used that defense in two non-payment of rent proceedings, but then wound up rejected by two property managers because his name appeared on a “Tenant Safe” report, or blacklist.

    No context, no evidence

    “To add insult to injury, as a prospective tenant at the later sites, Mr. Smith was required to pay for the very background checks that blacklisted him and sunk his rental chances,” Franzese wrote. “This occurred even though Mr. Smith presented proof to the managing agent that the previous litigation had been resolved in his favor. Apparently, there is no appeal process or chance for an affected tenant to explain to a prospective landlord how and why he came to appear on the given tenant-screening database. It was only with dogged persistence that, months later, Mr. Smith was able to convince the Tenant Safe reporting service to remove him from its listing. Thereafter, Mr. Smith was able to find a suitable apartment.”

    Geleen Donovan, executive director of Family Promise of Union County, called an eviction filing “the Scarlet E,” even if the eviction never occurs and the tenant is proven to have been correct, because once it is logged on a person’s record, landlords won’t rent to the person.

    She brought to the meeting Ada Lopez, who is living with her daughter in the organization’s shelter in Elizabeth because she cannot find a landlord willing to rent to her because she has two evictions on her record. She was only recently able to get a Section 8 rental assistance voucher but may wind up running out of time to use it before it expires on August 15.

    “I can’t find an apartment because of the evictions,” she said.

    Setting a time limit

    Donovan said she is especially grateful for the provision in Booker’s bill that would prevent consumer-reporting agencies from providing any information on evictions that are more than three years old.

    “Let’s give people a chance,” she said. “There’s a famous guy we all know who had multiple bankruptcies but he can rent a luxury apartment in New York City and he can live in a prestigious address in Washington. Grace and mercy were given to him. Where are grace and mercy to our families? The typical eviction is over 3-to-5-thousand dollars. That’s not a lot of money.”

    Booker said he is unsure when his bill might have a chance at becoming law because the pace of Congress tends to be slow and because he needs to find Republican backing. Still, he is confident that he will find widespread support once “we put in plain terms how fundamentally unfair this really is.”

    Landlords have their say

    But landlords say they need a way to evaluate prospective tenants and that credit agency reports are a fair way.

    “Once again, apparently the government is attempting to interfere with private enterprise,” said Dan Schwartz, president of the Metro Real Estate Investors Association, based in Union.

    He said he has not seen the legislation, but professional landlords treat all applicants equally and fairly, and will not put greater requirements on one prospective tenant than another.

    “Poor credit, prior evictions, criminal record, destruction of property would be a legitimate reason for not accepting a potential tenant,” Schwartz said.

    Other efforts

    As noted, Booker’s effort on the federal level is beginning around the same time several bills have been introduced in the state Legislature to address similar housing issues.

    Rice and Beck’s bill would give the state Department of Community Affairs and local housing authorities the power to withhold their portions of rental subsidies for units with significant safety and sanitary violations, including roach and rodent infestations and lack of heat and hot water. The bill, which passed the Senate Community and Urban Affairs Committee last month, also would require apartment owners to provide such contact information as addresses, emails, and phone numbers, rather than just post office boxes, so officials can more easily get in touch with them to get violations corrected.

    The measure sponsored by Rice and Codey would state explicitly that tenants can withhold rent on units that do not meet an “adequate standard of habitability” and allow a court to reduce a tenant’s rent on a substandard unit and pay him for repairs that the landlord should have made but did not to make the unit habitable.

    Finally, the bill they are sponsoring with Stack would make landlord-tenant court records private for at least a time and keep private the record of any case that does not result in an eviction victory for the landlord. It would also keep private any action brought by a tenant against a landlord unless the tenant agrees to make that record public. And this bill would specifically address the issue of blacklisting in ways similar to Booker’s bill. It would prohibit a landlord from considering all but actual evictions when evaluating a prospective renter; prevent the consideration of all actions against tenants that are more than three years old; and require a prospective landlord to give a copy of a screening report to anyone denied a rental unit.