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The rental landscape is evolving, and new legislation could significantly impact how property managers handle eviction records during the tenant screening process. Across the U.S., states are enacting laws to seal eviction filings, aiming to protect tenants while balancing landlords' need for accurate information. Here’s what you need to know about these changes and how they affect property management operations.
1. A Post-Pandemic Surge in Evictions
During the COVID-19 pandemic, nationwide eviction moratoriums and nearly $50 billion in emergency rental assistance helped keep eviction rates low. However, with the expiration of these protections and rising inflation, eviction filings have surged beyond pre-pandemic levels in cities like Gainesville, Las Vegas, Houston, and Phoenix.
According to Princeton’s Eviction Lab, eviction rates in 2023 increased by over 40% in some areas compared to pre-COVID averages. Even cities outside the Sunbelt, such as Minneapolis and Columbus, Ohio, have seen significant increases in filings. These alarming trends have spurred new legislation aimed at addressing tenant challenges and reshaping how property managers approach leasing decisions.
2. What Are Eviction-Sealing Laws?
Eviction filings, even those that don’t result in a tenant’s removal, can tarnish a renter’s record and limit future housing opportunities. States like Maryland, Arizona, and Massachusetts have enacted laws to seal eviction records in cases where tenants win, settlements are reached, or cases are dismissed.
Examples include:
- Maryland: Courts seal eviction records within 60 days of resolution if there’s no eviction, and filing fees have been increased to discourage unnecessary filings.
- Arizona: Eviction records are automatically sealed when cases are dismissed or decided in favor of the tenant.
- Massachusetts: Tenants can apply to seal eviction records after four years, with shorter timelines for no-fault evictions.
To date, 17 states and Washington, D.C., have adopted similar laws, with more states considering legislation aimed at balancing tenant protections with property management needs.
3. The Impact on Tenant Screening
Property managers traditionally rely on eviction records to assess a prospective tenant’s reliability and financial responsibility. However, the rise of eviction-sealing laws limits access to such data, challenging the effectiveness of conventional screening methods.
Many tenant screening firms already filter records to include only judgments from the past seven years. Still, sealed or incomplete records may require property managers to adapt by:
- Requesting References: Relying more heavily on references from previous landlords.
- Requiring Co-signers or Larger Deposits: Adding financial safeguards to minimize risks.
- Exploring Alternative Screening Methods: Incorporating employment history, credit scores, and other factors to make informed decisions.
4. Addressing the “Scarlet E”
Eviction filings often provide an incomplete or misleading picture of a tenant’s history. Research shows that many eviction cases don’t result in actual removals—landlords may drop cases after agreements are reached, or tenants may move out voluntarily.
This incomplete information disproportionately affects low-income renters and people of color, creating what housing advocates call a “Scarlet E.” These filings can limit housing opportunities and contribute to homelessness or substandard living conditions. Property managers must carefully navigate these challenges to make fair and equitable decisions while mitigating risks.
5. Balancing Tenant Protections with Property Management Needs
The move toward sealing eviction records seeks to reduce housing insecurity, but property managers must still identify reliable tenants. Adapting to these changes involves several steps:
- Monitor New Regulations: Stay informed about evolving state and local laws regarding eviction records and tenant screening.
- Adjust Screening Criteria: Incorporate alternative factors such as credit scores, employment history, and personal references into the decision-making process.
- Encourage Dialogue: Have open discussions with applicants about past evictions and steps they’ve taken to improve their financial situation.
Read more: National Apartment Association – Legislation Updates
6. The Path Forward
The rise of renter-friendly regulations reflects the growing housing crisis and shifting legislative priorities. As eviction-sealing laws become more widespread, property managers must adapt their strategies to balance fair tenant screening with protecting their investments. By staying informed and adopting best practices, property management companies can navigate these changes effectively while fostering stronger relationships with tenants.