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Blacklisting Tenants

When Adam White withheld rent from his landlord in 1996 for failing repeatedly to repair a serious leak in his ceiling, he was doing what he knew New York tenants have the right to do when landlords fail to make vital repairs. The landlord started eviction proceedings against him, but they settled the dispute quickly -- White agreed to pay the rent and the landlord agreed to make the repairs and give him a small rent abatement -- and the housing court case was officially dismissed. But the case was far from over. Because of it, White was blacklisted.

He did not realize this until six years later, when he was looking to move. A prospective landlord denied his application, because the nation’s largest tenant screening company, First American Registry (since renamed First Advantage Safe Rent), had provided a report on White that said only that he once had been sued for non-payment of rent – without indicating that the landlord had acknowledged White’s legitimate basis for withholding the rent.

White sued, on behalf of all tenants similarly wronged.

This month, the company reached a tentative settlement in the class action lawsuit, White et al versus First American Registry, Inc., by agreeing to pay almost two million dollars to as many as 35,000 tenants who had a case in housing court that appeared in tenant screening reports produced by the company. The settlement was filed on February 3 for review and approval by the federal court.

The settlement points to a significant problem for tenants who are sued by their landlords in housing court -- getting labeled as troublemakers and becoming blacklisted, which effectively prevents them renting apartments in the future.

“Blacklisting I think is the most important issue facing tenants today,” said James B. Fishman of Fishman & Neil, LLP, one of the attorneys who filed the suit on behalf of the class. “It has a substantial chilling effect on tenants being able to enforce their rights.”

Tenant Screening

Talk to New York City landlords, and many will tell you that they have to screen tenants.

“Owners need to be able to protect themselves,” said Mitch Posilkin, general counsel to the Rent Stabilization Association, a landlords’ trade group. “They need to know who they are letting into their buildings. It not only affects them, it affects other tenants in the building. Once a tenant comes into your building, it is extremely difficult to evict that tenant. Owners have to be extremely vigilant.”

As many as a dozen companies provide such tenant screening services to landlords.

One of the things these companies do is check the records of New York City Housing Court.

The problem, as tenant advocates see it, is that many of the 300,000 cases filed in housing court every year, most of them non-payment cases, are withdrawn or discontinued. Sometimes, the landlord discovers that the case was filed in error –- that the rent already had been paid. In other cases, tenants have valid reasons for not paying the rent, as in White’s case when landlords fail to repair their apartments or provide required services like heat and hot water. And in other cases, advocates allege, landlords bring baseless eviction cases as a means of harassing rent-regulated tenants into leaving.

Court Records In A Digital Age

The tenant screening companies buy the case records from housing court. The court defends the practice. The records, it says, are public information.

“We have no discretion about giving out the information,” said David Bookstaver of the Office of Court Administration. “Under the law they’re entitled to it. Under the law we’re entitled to sell it. So if we didn’t sell it, it wouldn’t stop the information from being obtained.”

But James Fishman said the court was going too far in the way it provides the information to the tenant screening agencies.

“The law only says the court has to make court records available at the clerk’s office one file at a time,” he said. “What the court is doing here is selling in an electronic form a mass quantity of information all at once.” Fishman believes “the court system should not be selling this data. You would put these tenant screening companies out of business if the source of information dried up.”

The Settlement

If the court approves the settlement, First American Registry will significantly change the contents of its reports -- they will include the outcomes of the cases. Perhaps more importantly, the company will expunge a case from a screening report if a judge determined that a landlord’s case had no merit or if a landlord agreed that a case was brought by mistake.

“Prior to this they were refusing to delete any case because it was part of the public record,” Fishman said. “Getting those cases expunged gives a large number of tenants the ability to clean their report in a way that did not exist before.”

While the settlement may directly affect how tenant screening companies work, Fishman and other housing advocates said that the blacklisting of tenants simply because they had been to housing court was a problem that had to be addressed at other levels.

“The court system needs to realize that they are turning the housing court into a place that actually does harm, unintended harm, to tenants who simply want to enforce their rights,” Fishman said. “People have been following the advice for years to withhold rent to get repairs. But that advice is harmful. That’s a very significant issue for the court system to deal with. The records are being used to hurt people.”

Housing Court And Credit Card Ratings

Even as the tenant screening company case is all but settled, Fishman said he had noted what may be a more troubling development for tenants: The “big three” credit reporting companies (Experian, Equifax and Trans Union) are including housing court money judgments on people’s credit reports.

A spokesman for TransUnion said in an email that including the information on credit reports was not a new practice, as far as he knew, and that under law the company could include money judgments from housing court. A spokeswoman for Experian did not return a call for comment.

“It’s ominous because of the reasons why judgments occur in housing court,” Fishman said. “Most judgments happen because a tenant who does not have an attorney gets browbeaten in the hallway by a landlord’s lawyer into agreeing to a settlement. What they’re not told is that that judgment is going to show up on their credit report and have a substantial impact on their credit score.”

Credit reports and tenant screening reports are different. A person’s credit report includes information on credit accounts and debts -- any money judgment against the person in any civil court proceeding could conceivably end up on her credit report. Tenant screening reports, like First American Registry’s, however, focus on eviction cases in housing court.

Changes in housing court have made this development troubling for tenants, advocates said. In the past, tenants in housing court were generally given time to pay back rent when they first appeared at housing court; no official judgment was entered against them unless they failed to pay the debt within some agreed upon time.

But now, almost every settlement that tenants negotiate with their landlord’s attorneys in the hallways of housing court include “final judgments” on a first appearance, with a warrant for the person’s eviction issued immediately. The execution of that warrant (that is, the actual eviction by a city marshal) is “stayed” generally for 30 days, which is how much time the person is given to pay up.

This technical change has resulted in more landlord-tenant disputes being reflected in credit ratings. But Niles Wellikson, an attorney whose firm, Horing Wellikson and Rosen, P.C., represents landlords at housing court, does not think this is necessarily unfair to tenants.

“There’s no right to not pay your landlord and not have that come up on your credit,” he said. “The tenant advocates are saying this shouldn’t affect your credit. That’s like saying it’s OK not to pay your landlord. And I don’t agree with that.”

The issue of court's selling court record data for commercial purpose is a new problem as the Internet and computer technology make access to this data cheap and instantaneous. The ramifications are huge, affecting many aspects of people’s lives, as their dealings with the court system, from divorces to evictions to traffic tickets, become accessible to all for a small fee.

Joe Lamport is the assistant director of the City-Wide Task Force on Housing Court, a coalition of community housing organizations.  

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