Background checks look for different results and cover different lengths of time. Learn about the length of history that can be checked legally and used compliantly.
Real estate professionals have access to people’s homes, help consumers make important financial decisions, and have close interaction with the public. Performing real estate background checks can help ensure you build a competent, trustworthy team.
In this article, we’ll discuss common background checks used in the real estate industry, licensing requirements, and real estate background check laws to know.
Complete Guide To Real Estate Background Checks
Buying a home is the single most important purchase many of your clients will make—and they rely on your agency to guide them through the process. Employing unlicensed, untrustworthy, or unqualified real estate agents can put your clients’ safety and financial wellness at risk, and can damage your agency’s reputation.
Real estate background checks can reveal a wide range of information about an employee’s or candidate’s previous jobs, licensing, criminal history, driving history, drug use, and more. With a comprehensive background check, you can make more informed hiring decisions and build a more qualified, trustworthy team.
What Is A Real Estate Background Check?
A real estate background check is used to help ensure real estate agents and other professionals working in the real estate industry are qualified and trustworthy. A real estate brokerage will use background checks before making a decision regarding employment, or to continuously monitor its employees.
There are many types of background checks available. Based on your company’s background check policy, employers will choose which checks to run based on the positions you’re hiring for and the type of information that’s important to make an informed choice.
Common background checks used by real estate agencies include:
- Identity verification to assess whether the candidate is who they say they are.
- Criminal background checks to uncover criminal records, including violent or sex crimes, fraud, or felony convictions that may indicate a candidate could potentially pose a threat to clients.
- Professional license verification to ensure candidates are licensed to work in real estate.
- Professional reference checks to provide additional insight into a candidate’s work experience.
- Drug screening to test for the presence of prescription and illicit drugs.
- MVR checks to confirm whether a candidate’s driver’s license is valid and identify any driving-related violations.
Real Estate Licensing
Real estate requires specialized knowledge in areas like financing and law, but consumers may not have the ability to accurately evaluate a real estate professional’s competence. Occupational licensing serves to protect consumers by guaranteeing minimum requirements and industry oversight.
A background check is a common step in the real estate licensing process, though specific requirements and timing can vary by state.
In Texas, for example, real estate agents “are required by law to have fingerprints on file with the Texas Department of Public Safety (DPS) so a background check can be performed… A license will not issue if the background check has not been passed.”
In Georgia, “A copy of the applicant’s criminal history or Georgia Crime Information Center (GCIC) Report must be brought to the AMP testing center (not the Commission) prior to receiving a license. If the report indicates any crime convictions or sanctions by any licensing or regulatory agency, then the Commission will conduct an investigation and decide whether or not to issue the license.”
Check with your state’s regulatory agency for more information on its real estate license background check requirements. But keep in mind that state agencies may not have complete or up-to-date background check results, or take action on convictions they may find. As an employer, it’s always a good idea to run your own employment background checks so you can make informed decisions on the most up-to-date, accurate data.
How Far Back Does a Real Estate Background Check Go?
How far back a real estate background check can go depends on where your business and candidate are located. In general, real estate background checks cover seven years of criminal and court records, but may go back further depending on state and local laws and the type of check being used.
Here is a quick guide to how far back these common background checks can go:
Criminal records check: Felonies may be reported indefinitely, or restricted to seven years, depending on the state where the candidate and employer are located. Misdemeanors may be reported indefinitely, or restricted to five or seven years, depending on the state where the candidate and the employer are located.
Driving records check: Driving records may go back between three to 10 years, depending on the state.
Professional license verification: May be verified throughout the individual’s lifetime.
It’s important to note that FCRA guidelines require consumer reporting agencies (CRAs) to limit reporting civil suits, civil judgments, records of arrest, and adverse information (outside of criminal convictions) to the past seven years. Some state and local fair-hiring and ban-the-box laws may also limit how far back a real estate criminal background check can extend.
Real Estate Background Check Laws To Know
Real estate background check laws are regulated at the federal, state, and local levels, and it’s important to stay on top of them so you can ensure compliance.
- State and local laws can vary widely. While all states require real estate professionals to be licensed, the background check requirement for licensing can vary by state. There are also ban-the-box laws that govern when and how employers can ask about criminal records, as well as new laws regularly cropping up across jurisdictions that affect drug screening.
- Title VII of the Civil Rights Act of 1964 prohibits employer discrimination based on race, color, religion, sex, or national origin. This includes intentional discrimination, as well as disparate impact discrimination in which an employer’s actions result in unintended discrimination against a protected group. Real estate background checks must be administered fairly and consistently so you can maintain compliance. It’s important to have a screening policy in place at your organization that takes federal and local laws into consideration, and be sure to follow it so you screen all candidates for a given role in the same manner.
- The Fair Credit Reporting Act (FCRA) applies when an employer uses a third-party screener to perform a real estate background check. It stipulates that employers provide background check disclosure and authorization forms before screening is conducted. If an employer intends to deny or terminate employment based on background check results, you must follow the adverse action process, which includes providing the candidate or employee with a copy of the background check report.
Always consult with your legal counsel if you have questions about real estate background check laws.
Get A Real Estate Background Check With GoodHire
Background checks help you to make informed, compliant decisions about the real estate agents you hire for your business. GoodHire offers all of the necessary background check options for screening real estate professionals, and helps you maintain compliance. Our experts can work with you to design a screening package that’s right for your company based on your employment screening policy, your company location and your candidates’ locations, and the positions you’re filling. For more details, talk to sales.
The resources provided here are for educational purposes only and do not constitute legal advice. We advise you to consult your own counsel if you have legal questions related to your specific practices and compliance with applicable laws.