Property Manager – Sherman Oaks

Screening Tenants Legally

BY ROBBIE CRONROD

In October, a Massachusetts landlord who refused to rent to pregnant women or families with minor children was found guilty of violating the federal Fair Housing Act and fined $40,000. The same month, the Fair Housing Justice Center in New York sued a landlord for allegedly quoting higher rental rates to black prospective tenants, rejecting applicants with public rent assistance, and making children undergo unnecessary lead tests. Five months earlier, a federal jury in Montana fined a landlord $37,000 after she charged a disabled tenant $1,000 to have a service animal.

Cases such as these are stark reminders for property managers and landlords that neglecting to follow antidiscrimination rules designed to protect renters can come with big consequences. You know the fundamentals of fair housing: You shouldn’t ask any questions or base any housing-related decisions on an applicant’s race, color, religion, sex, national origin, disability, or familial status, and you mustn’t promote a property in terms such as “great building for single professionals.” But knowing the law and complying with it are two different things, which can be made difficult by the continual evolution of case law related to housing discrimination.

Tenant screening provides a first line of defense against discrimination complaints. That’s because differences in factors such as an applicant’s income, employment, references, and credit histories can help justify the selection of one tenant over another and thereby help landlords avoid discrimination charges. Here are eight recommendations for using the screening process to keep discrimination lawsuits at bay.

DO apply your policies and procedures uniformly. Avoid running a full tenant screening report on some applicants and only a credit check on others. If you have a policy of renting to applicants with the best credit, don’t make an exception for a would-be tenant with a better personality but a less positive credit report. Be consistent or be vulnerable to discrimination complaints.

DON’T get too personal on rental application forms. Ask about jobs, previous addresses, income, and references. But stay away from specific questions about spouses or children, as well as other protected characteristics under the Fair Housing Act. (You can provide space for an applicant to list all the individuals who would be living in the apartment.) Even asking the question may give the impression that you would limit housing access based on the answers.

DO choose a “colorblind” screening service. Some services have a scoring system that enables landlords to establish their preferred tenant profile based on specific parameters, such as income, past evictions, and credit score. The software then evaluates each applicant according to the criteria and returns a “recommend” or “not recommend” verdict completely independent of race, religion, or other potentially discriminatory factors. This ensures that applicants are evaluated equally, providing a strong defense, assuming you follow the software’s recommendations.

DON’T automatically reject an applicant with a criminal record. In 2016, the U.S. Department of Housing and Urban Development issued a memorandum on housing providers’ use of arrest and conviction records to make housing-related decisions. According to Jodie McDougal, a partner at the Davis Brown Law Firm in Des Moines, Iowa, these guidelines mean that you cannot have blanket policies excluding all applicants who are felons or consider arrest records. Instead, you should perform a case-by-case evaluation. Read McDougal’s explanation and recommendations.

DO stay abreast of new developments affecting screening. One of them is a pending amendment to the Fair Credit Reporting Act, introduced in Congress last August. Currently, eviction reports used in the tenant screening process can include records dating back seven years. Under the proposed amendment, called the Tenant Protection Act, only eviction records no older than three years and resulting in a judgment that is not being appealed would be allowed. Use of older records would be viewed as discriminatory.

DO keep all documentation for up to 10 years. That includes rental applications, signed releases, tenant screening reports, and any other data or documents collected during the screening process—even if you don’t rent to the applicant. This information may be crucial if a rejected applicant questions your denial or selection of a different tenant. A paper trail can help you prove that the person was not denied residency based on discrimination but because a more qualified tenant was selected instead.

DO send a declination letter when rejecting a potential tenant. This document, also called an “adverse action letter,” specifies the reason or reasons for rejecting a rental application, such as income, employment, or credit history. Some screening services provide free declination letters with all the federally required language, along with a checklist of legitimate reasons for turning down a candidate.

DO call your attorney when in doubt. With new legal challenges and decisions coming out on a regular basis, it’s wise to have a legal resource you can turn to with questions. Find an attorney who can periodically review your rental application form to make it sure it complies with the latest antidiscrimination requirements. It will help prevent you from making a mistake that may land you in court.

From: http://realtormag.realtor.org

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