On February 4, the Oakland City Council in California forbade the use of criminal background checks in most housing applications. The stated purpose of the law, the Fair Chance Housing Ordinance, is to allow formerly incarcerated individuals an increased opportunity to compete for rental housing, reintegrate into their communities, and avoid homelessness.

The property owners and managers who typically have ordered background checks on tenant-applicants obviously must adapt. The law also targets the groups actually conducting those background checks – consumer reporting and tenant screening agencies. Sections of the ordinance contain language that could subject a company or agent who screens a potential tenant to hefty fines, or even criminal charges.

Section 8.25.060 H. of the FCHO, “Civil Damages” states:

Any Housing Provider who violates, and any person who aids a Housing Provider to violate, any provision of this Ordinance shall be liable for the following monetary damages…

The ordinance allows would-be tenants to seek actual damages, including mental or emotional distress, one month’s rent, and/or the Department of Housing and Urban Development’s Small Area Fair Market Rent of the unit at issue. The court presiding over a potential dispute also has discretion to triple those sums or award punitive damages to an aggrieved tenant-applicant. Considering high rent prices in the Bay Area, these awards could prove to be substantial.

The following section on “Criminal Penalties,” 8.25.060 I., might also apply to tenant screeners:

(1) Infraction. Any Housing Provider who violates, or any person who aids a Housing Provider to violate, any provision of this Ordinance shall be guilty of an infraction for the first offense.

(2) Misdemeanor. Any Housing Provider who knowingly and willfully violates, or any person who knowingly and willfully aids a Housing Provider to violate, any provision of this ordinance shall be guilty of a misdemeanor.

If the FCHO prohibited conducting any background checks for all forms of Oakland housing, compliance would prove simple. Yet, the ordinance’s exceptions muddy the waters. For instance, the ordinance permits background checks on applicants for “a dwelling unit in a residential property that is divided into a maximum of three units, one of which is occupied by the owner as his or her principal residence.” Does this exception apply to in-law units on the same lot, but disconnected from the main structure itself? With what frequency must an owner live in the unit to claim principal residency? Can property managers or “supers” who live in and oversee a connected dwelling claim the exception and run background checks, or do they fall outside the definition of an “owner” or “housing provider?” All of these unanswered questions pose risks to companies in this space.

Further compliance challenges stem from the interplay among the Oakland ordinance and state and federal laws. The FCHO provides that “it shall not be a violation of this Ordinance for a Housing Provider to comply with Federal or State laws that require the Housing Provider to automatically exclude tenants based on certain types of criminal history, e.g. Ineligibility of Dangerous Sex Offenders for Admission to Public Housing (42 U.S.C. Sec. 13663(a)) and Ineligibility of Individuals Convicted for Manufacturing Methamphetamine on Premises of Federally Assisted Housing for Admission to Public Housing and Housing Choice Voucher Programs (24 C.F.R. Sec. 982.553)).” But what other automatic exclusion provisions could govern? If a housing provider situated in Oakland orders a background check on a tenant-applicant, how must it limit the scope of its request? And if it fails to limit its check adequately, what independent steps must a screening business entity take to ensure compliance?

The rollout of the FCHO has the potential to alter considerably the dynamics and procedures of housing in Oakland. There is potential for housing advocacy organizations, tenant-applicants, developers, and screeners to drum up novel theories based on the ordinance’s ambiguities. Only time will tell which of those theories will prove successful.