The Federal Department of Housing and Urban Development (“HUD”) issued a new rule on February 15, 2013, that calls into question whether landlords/management companies can deny tenancy to a prospect simply because of a prior criminal record or arrest. Under the new rule, if a landlord/ management company is sued by a prospective tenant for discrimination, the landlord/management company will have to show that its policy has a legitimate business purpose and protects a legitimate business interest. If the landlord can prove this, the burden shifts to the prospective tenant to prove that the landlord’s/management company’s legitimate business interest can be protected in a different way that would not have a discriminatory effect. If the prospective tenant is successful in proving this, the landlord/management company can be liable for housing discrimination. All landlords/management companies should review their rental criteria policies and practices to make sure that they do not run afoul of this rule.