Tenant screening is the way you find quality renters, which are critical to your success as a property investor, manager and landlord. This applies to single family rental units as well as massive apartment complexes. But in addition to protecting your income, there are legal ramifications to tenant screening. Below are two things to consider when screening tenants, so that you keep your rentals occupied with great tenants and yourself out of court.
1. Be consistent
A systematic and comprehensive screening process that you apply objectively to every applicant will protect you if someone ever claims that you have violated the Fair Housing Act. A process will also help you filter out bad renters. Decide what your minimum qualifications for prospective tenants will be as well as the information you will require of them and request that data in your lease application. Lease applications, at minimum, should include:
- Employment, income, credit history
- Social security and drivers’ license numbers
- Evictions, bankruptcies
- Landlord references
Several rental application forms are available online at websites such as tenantdata.com and e-renter.com.
Landlords should know that filing discrimination claims for renters who feel they’ve been discriminated against has recently become a lot easier. The Department of Housing and Urban Development just released an app that lets users file complaints from their smartphones.
2. Be transparent
Make sure that all applicants know the monthly rental amount, lease term, whether pets and smoking are allowed, their obligations for outdoor maintenance, and other relevant information. Put any “house rules” you may have and other requirements in a disclosure document and have potential renters sign it before their lease begins. This paper trail will protect you should a renter complain of unfair treatment down the line.
It’s also a good idea to be firm about what you’re looking for from tenants. For example, if you are not willing to negotiate on, say, price hold fast to that conviction and treat all potential tenants the same.
