As New York’s rental market begins to recover, landlords and tenants are once again at loggerheads about a controversial method being used to weed out some applicants: blacklists.
Some say tenants are being unfairly blacklisted from renting apartments if they’ve ever tangled with a landlord in court. Whether a tenant has been involved in an eviction proceeding, or even if he has simply withheld rent from a landlord for not making a repair, or just dared to challenge his landlord in court over something as basic as lack of services, he could have a hard time when he looks for a new home.
The issue has recently come up at the Tapestry, a new LEED-certified rental complex from developer Jonathan Rose Cos. After winning a slot through an affordable-housing lottery, a disabled woman named Monique Holloway complained to her local community board that she was denied an apartment because of a seven-year-old housing case, in which Section 8 payments were withheld from a previous landlord because of a lack of repairs.
Alvin Johnson, who heads the housing committee for Community Board 11 in East Harlem, contacted C & C Management, the company in charge of screening tenants for the building, to inquire about Holloway’s rejection. He explained that the rent was withheld by the city, not by the tenant.
“They actually reviewed her case and found out she was placed on that list through no fault of her own,” Johnson told The Real Deal.
Johnson said by the time the case was resolved, there were no more units left at the Tapestry, but C & C found an opening at another property it manages in the Bronx. C & C officials did not return calls.
Tenant screening has been a controversial practice for more than two decades in New York. But the practice is legal, and lists of those who have been involved in housing court disputes are actually sold by the state Office of Court Administration in Manhattan.
The office sells feeds of court data to outside firms for $350 per week. In the last few years, the court has revised its system so that if, for example, a tenant is a few days late on rent and the case hasn’t been scheduled before a judge, their case is not included in the data feed. And the court is moving toward lumping all civil court data together, rather than isolating housing court data.
Court officials said they understand the concerns about how this information may be misused, but note that court information is considered public information, which means they cannot legally prevent an outside entity from obtaining the data.
“How people use or misuse [court information] is an interesting dilemma, but it’s not really the court’s dilemma,” said David Bookstaver, spokesperson for the Office of Court Administration in Manhattan.
Landlords and real estate industry officials say the screening system is needed to protect against problem tenants.
But not everyone sees the situation the same way, and anger over these blacklists is on the rise.
As the market momentum shifts toward higher rents and limited concessions, landlords are ever more selective about the caliber of tenants they bring into their buildings. Landlords not only want to make sure that their tenants can make monthly rent payments, but are skittish about recruiting problem tenants who will be hard to evict.
“There was a time when vacancies were higher, when [landlords] started letting people in, and questioned whether they should have let them in later,” said attorney Jamie Heiberger, who represents many of the city’s top landlords. “I think the owner of a building has every right to see that history.”
Mario Mazzoni, director of the Metropolitan Council on Housing, the city’s largest tenants union, said his organization is planning to sue the state Office of Court Administration office within the next few months to stop the sale of tenant information.
“This is not within the court’s purview to run sort of a private enterprise,” Mazzoni told The Real Deal. “We feel that stopping them from selling the data is the only legal avenue that can [put] a wholesale end to the current practice.”
The issue has become enough of a sticking point to garner the attention of the City Council, which just a few months ago passed the Tenant Fair Chance Act. The law was designed to provide a level of accountability to tenants who are rejected from apartment buildings because their names appeared on a blacklist.
“We were hearing from tenants who were turned down for rental apartments on the basis of a blacklist,” Councilman Daniel Garodnick, the bill’s sponsor, said last month. “In many cases their names simply should never have appeared on such a list.”
Legal experts say that nearly all major landlords use third-party firms to screen tenants, while many smaller landlords personally review credit and references, and some may look up court records themselves.
The bill requires landlords to give prospective tenants the name and address of a tenant screening firm, allowing them to challenge the accuracy of the information if they are rejected.
As a backdrop, many view the city’s landlord/tenant court as the most pro-tenant in the country.
“Owners would be a lot more flexible if housing court was fairer to them,” said Frank Ricci, director of government affairs at the Rent Stabilization Association, a Manhattan-based organization that represents 25,000 landlords around the city.
“Because housing court has become so much of a nightmare for owners, they figure it’s a lot more fair to screen the tenant on the front end,” he said. “It’s almost impossible to get an eviction.”
Ricci said that housing court judges repeatedly sign orders to show cause, which allow tenants to delay eviction cases in favor of emergency hearings before the court. He said even when eviction warrants are issued, judges often sit on those warrants for months.
He said bad tenants pose an even greater risk for small landlords.
“Small owners, for them it’s a war of attrition,” said Ricci. “If you have a six- or 10-unit building, you can’t go for months and months and months without rent at one apartment.”
Pat Siconolfi, executive director of the Community Housing Improvement Program, a trade group that represents 2,500 rental building owners citywide, said owners have only two main goals in screening tenants: making sure they can pay their rent on time, and making sure they are not a nuisance to their neighbors. He questioned whether the use of blacklists is as widespread as critics claim, noting that only 10 percent of apartments turn over in a given year, which means the lion’s share of renters in the city aren’t even trying to find new apartments.
But by any measure, the city Housing Court system is backlogged.
More than 291,000 eviction cases were filed in 2009, the last year of full statistics available, out of 2.1 million total rental units in the city.
Housing data shows that more than half of eviction cases result in judgments against the tenant, but landlords say it can take months, if not years, to enforce an eviction.
Tenant advocates counter that landlords are using the system as an excuse to target tenants who have exercised their right to challenge a landlord in court.
“It sometimes makes tenants hesitant to bring a [housing court] action,” said Emily Goldstein, an organizer with Tenants & Neighbors, a tenant advocacy organization. “Tenants know that having a record of being in housing court can cause problems in the future.”
Mazzoni said one of the biggest problems with tenant screening is the lack of a central clearinghouse for tenant information. Officials estimate there are 800 different companies across the country that offer tenant screening services, and the only way to stop the current practice is to file suits against individual companies. Tenants have sued for defamation or unfair credit reporting practices, claiming the information the screening companies give to landlords is misleading.
But the majority of tenants don’t have the money or time to hunt down every firm that may have their information on file.
The last major tenant blacklist settlement in New York City involved a $1.9 million suit in 2007 against First American Registry, a Maryland-based company and the nation’s largest tenant screening firm. In that case, a Brooklyn lawyer named Adam White filed suit against First American in 2004 after he was blacklisted for withholding rent from his previous landlord at 310 East 83rd Street due to an ongoing water leak in 1996, according to court records. That landlord, Joseph Koppelman, filed an eviction case, which was later dismissed. The landlord agreed to repair the unit and to provide a rent abatement.
After moving out of that apartment in August 2001, White applied for an apartment at another Brooklyn building, but was turned down by the landlord. Six years after the East 83rd case was settled and dismissed, he filed suit in federal court, leading to a massive class-action settlement involving 35,000 tenants.
Attorney Steve Dobkin of the Manhattan-based firm Collins, Dobkin & Miller said that tenants whose names appear in court documents are automatically being listed on professional blacklists. He is working with the Metropolitan Council and other groups to file suit in federal court to stop the practice of blacklisting.
“[With] the immediacy of computers, your name winds up on a blacklist the day after the case is filed,” he said. “We’re hoping to get the court to order the court system to stop selling these lists to blacklisting agencies.”