Have you ever had a bad roommate? Most of us have at least once. Maybe it was that college buddy you let move in, only to discover that he and his girlfriend were attached at the hip. Two roommates for the rent of one! It’s not fun.
But when you’re the landlord, and you get a bad tenant, a lot more than feelings can get hurt. In the worst case scenario, poor tenant selection can lead to general liability lawsuits, loss of income, property damage and more.
As the owner of the property, you’ve got to protect your investment, and solid renter screening procedures are the first step. That said, screening but be undertaken with care, thoughtfulness and awareness of federal, state and local laws. You have every right to choose tenants based on legal screening criteria as long as you take care to avoid any discriminatory tactics during the screening the process.
Avoiding Discriminatory Tactics During Screening
The purpose of screening is to protect you as the landlord, but there are laws in place to protect tenants too. The Fair Housing Act of 1968 was put into place to prevent discrimination against potential renters.
In a nutshell, The Fair Housing Act works to prevent the renter from being denied the ability to rent based on specific protected classes. Renters also have additional rights provided based on your state’s local discrimination laws. As every state can have slightly different laws to protect against discrimination, it’s imperative you are well versed on yours.
Under The Fair Housing Act, it is illegal to discriminate in the sale and rental of housing based on race, color, national origin, religion, sex, familial status or disability. There is a long list of actions that can be interpreted as discriminatory practices – from charging different amounts to different people, to setting different terms or even refusing to negotiate. As a landlord, you must read and comply with these rules.
The Dos and Don’ts of Renter Screening and On-boarding
When it comes to tenant screening, you don’t want to “wing it” or rely on a gut feeling. This is a time when you must plan your work and work your plan. Here are several tips to ensure you select the best renters, without being discriminatory.
- DO clearly document your tenant screening criteria and stick with it. Don’t be tempted to throw all your rules out the window because a prospective tenant went to your college and loves riding motorcycles, just like you.
- DO screen for financial qualifications first. For example, do the applicant and any co-signers have sufficient income and stable employment? There’s no need to continue screening if applicants can’t afford the rent.
- DON’T forget to verify income and employment. Make sure that the information on the application is accurate. Require paystubs and W2s and contact the employer to confirm ongoing employment.
- DO list screening requirements in your ads. This will save you and potential tenants time and will allow you to focus on serious contenders.
- DO be respectful to ALL prospective tenants. Always comply with the Fair Housing Act. Your best bet is to simply treat each prospective tenant with equal measures of respect.
- DO require a signed written application. This will separate serious candidates and will become part of your documentation should anything go wrong later on.
- DON’T conduct your screening interview via email. While it’s fine to answer a few questions electronically, it’s important to actually speak with potential renters – either in person or over the phone. Get their written application first, so you can follow up on the answers they’ve provided.
- DON’T run criminal background checks if they’re not allowed. Different states and local jurisdictions have different rules. Be sure that you know what’s legal in your area.
- DON’T disregard rental history. In many cases, a tenant’s prior rental history paints a more complete picture of their behavior than just a poor line of credit does. Don’t forget to reach out to previous landlords to get their input on prospective tenants.
- DO keep meticulous records. Every time you decline a renter, document your reasons and keep them on file. You’ll be glad you did if a declined tenant ever decides to bring a landlord discrimination lawsuit against you.
- DON’T vary your deposit requirements. Deposits can be tricky. It’s best practice to ensure that deposit requirements are the same for all tenants. Security deposits and the amounts you can charge vary from state-to-state, so make sure you know your state’s minimum and maximum requirements.
- DO consider using a tenant screening service. These services should know the laws in your area, keep good records and comply with the Fair Housing Act. Sometimes, you can sidestep a major headache by outsourcing this task to professionals.
- DO use video to document a unit’s condition. During the walk through with your tenant at the beginning and end of their lease, take video of the space. This will make it simple to document the difference between any preexisting damage, and damage done by the tenants. This can save you quite a headache during the move-out phase, especially if there is a dispute over the return of the security deposit.
- DO use digital processes. When you set up a payment structure where tenants can pay their leases online, you make it easier for all parties involved. Also, make communications between the landlord and tenant digital. Why? Well, it’s less paperwork to keep up with for starters. It’s also easier for record-keeping and it ensures that you can reach your tenants even when they’re away.
Are Your Properties Fully Protected?
Landlord tenant screening helps protect you against the perils of a bad renter. But what about protecting you, the landlord, from litigation?
For that, you will need a Landlord Insurance policy.
Get a quick quote from Honeycomb today.
Also, take a moment to learn more about three common landlord liability exposures.