Screening Tenants & Legal Compliance for Landlords
If you have a new or vacant rental property, you may be eager to fill it and begin collecting rent as soon as possible. However, it is worth the extra time and effort to conduct your due diligence when screening and selecting tenants. A prospective tenant’s employment and income sources, rental history, credit history, and any relevant public records are all important factors to consider when deciding whether to accept or reject a rental application. Investing the resources to identify good tenants at the application stage can lead to significant benefits over time if you are able to rent to responsible tenants and retain them over the long term. However, it is also critical to ensure that you are in compliance with federal, state, and local anti-discrimination laws when evaluating prospective tenants.
Finding Tenants
One of the first steps in getting your property rented will be to find tenants, which sometimes happens through word-of-mouth, but often requires advertising the vacancy. In many areas the most effective means of publicizing your available rental property is through the internet, and there are many websites, social media platforms, and apps you can use for this purpose. The most compelling advertisements usually feature clear photos, detailed information about the rental unit, and the basic terms of the tenancy. You can also enlist local real estate brokers and property management companies to help you in your tenant search, and sometimes tenants seeking rentals post ads themselves. Any time you show an available property to potential tenants, the rental unit as well as common areas and exterior spaces should be as clean and tidy as possible. You may also need to coordinate with current tenants to show a unit that will be available soon, meaning that you must give them adequate notice (usually at least a day or two) that you plan to have a showing.
As part of the screening process it is important to communicate to applicants what the basic rules and expectations surrounding the tenancy will be, such as rent, deposit, move-in date, length of the tenancy, occupancy limits, and pet policies. This can help all parties avoid wasting time if the rental is not a good fit.
Rental Applications and Documentation
All prospective tenants should complete a rental application and provide documentation reflecting their income sources, rental history, and references. It is also advisable to run a credit check on all applicants, and to review someone’s credit history in detail before renting to them. Applicants who have a high level of debt or who regularly fail to pay bills on time could be less likely to be financially reliable tenants. A tenant’s consent is not necessary for you to obtain a credit report, but having a written consent on file can potentially be useful in the future if you need to decide whether to pursue collections against a tenant who fails to pay rent.
Additionally, it is essential to verify a prospective tenant’s employment, and it is wise to require documentation of other sources of income such as Social Security or alimony if the applicant will be relying on them to pay rent. Another important step is contacting any current or past landlords, as well as any personal references listed on an application. Public records are a critical source of information as well, and can help you identify whether a prospective tenant has been evicted or has been the subject of a collections action for failure to pay rent.
Public records research can also reveal whether an applicant has any criminal history, though not all run-ins with the law should disqualify someone as a tenant. It is not considered permissible to reject an applicant simply because they have an arrest on their record. And even if an applicant was actually convicted of a crime, landlords must carefully consider the nature of the offense and as well as when when it occurred in determining whether it is relevant to what kind of tenant someone might be. Landlords who reject rental applications on the basis of criminal history alone are at greater risk of legal liability for violating anti-discrimination laws. It is important to have specific reasons for not renting to someone with a criminal record, such as that the type of offense at issue could somehow endanger other tenants. You must also be consistent in applying any criminal history policy you have to all applicants, and ensuring that denials made on this basis do not disproportionately affect people who belong to legally protected categories. It is important to keep detailed notes of your reasons for accepting or rejecting all applicants, particularly in the event that you need to demonstrate that you had a legitimate business reason rather than a discriminatory motive for denying a rental application.
Legal Protections Against Discrimination
The federal Fair Housing Act prohibits discrimination in housing based on race, color, national origin, religion, age, sex, disability, and familial status. State and local laws are often more expansive, and may include sexual orientation, gender identity, and marital status as protected groups. Under the Americans With Disabilities Act, as well as state laws, landlords must also provide reasonable accommodations to tenants, which can include renting to tenants who have service or emotional support animals. And while it is legal in most states to request proof of someone’s ability to work in the U.S. as part of your tenant identity verification process, you cannot selectively inquire about immigration status; any requests of this nature must be applied equally to all applicants.
