Rental Application
      The application is the most important document that a landlord can use to help screen out undesirables - before they become tenants.
      Most professional property managers believe that tenant screening is a landlord's primary responsibility. Consequently, RHOL has several pages on the subject in both our public and our member webs. One of the many important tips you will find, that benefits both landlords and the rental property's neighbors, is to have all the potential adult occupants completely fill out applications and then use the information to screen each adult applicant. 
      Screening is important for reasons other than just determining whether applicants are capable of paying the rent.   It is just as important to the property owner, other tenants and the community, that people with a history of violence, illegal activities, or other irresponsible or anti-social behaviors be prevented from renting a property.  For example, a drug dealer can likely pay the rent, but they are also likely to destroy lives and the neighborhood.
      Some landlords and property managers also require that each adult occupant sign the lease or agreement, making them jointly and severally responsible for costs and damages. We cover the subject in great detail throughout RHOL Webs, starting on the Rental Application Page.     

Screening Tools
      Most professional landlords now use credit reports as their first step in tenant screening. Consumer credit reports, like those available to RHOL members through a third-party vendor, are a pretty good indicator of individual responsibility. Reports often include credit scoring designed to simplify and quantify credit decisions. A credit score is a computer compiled and generated numerical rating that is used by most credit grantors to determine if further screening should be pursued. (It is also the method used by many retailers to qualify a customer for instant credit.)
      If tenancy is denied because of information contained in a report, certain procedures must be followed by the decision maker. They include: providing specific form letters to the applicant that contain information on securing a free copy of their credit report and how to correct any errors it may contain.
      The complete Federal Credit Reporting Act, along with landlord's responsibilities, consumer credit information, explanations, and all the necessary forms and documents used in tenant screening can be found in either the Forms Web or the RHOL Credit Web.

There are various other things that can be done to avoid potentially problem tenants, including the following:

Identity verification - With identity theft becoming a major problem, you should certainly require proof of identity and even take steps to verify that information.  As a minimum, you should check the applicant's driver license, perhaps verifying it with the department of motor vehicles, and make a copy for your file.  If possible, also make a copy of the applicant's social security card, photo credit card, bank statement, paycheck stub, previous utility bill, or other documentation that might be available.  In general, the more documentation you get, the less likely that the tenant will trash and skip and the more information you will have for tracking him down if he does.

Criminal records check - This search can usually be ordered along with a credit report.  On-line, inexpensive criminal checks are not available for all jurisdictions, so you need to determine whether the check will be of benefit for your case.

Eviction records - The landlord can also check Court records for any history of eviction for the applicant.  While you can do this yourself for specific jurisdictions, sometimes sources are available that make the job easier.  In some areas, local landlord associations maintain databases of evictions for their members. For example, Blue Water Rental Housing Association, maintains a database of the previous 15+ years of evictions in St. Clair County, MI.

Tenant History - Various credit agencies are attempting to create databases of tenant histories as reported by landlords.  Eventually, you will likely be able to check the applicant's rental history online.

More - For more information regarding screening, visit the Tenant Screening, Tenant Selection & Screening, and Tenant Selection pages in our Rental Web as well as the Tenant Screening page in our Manage Web.

Tenant Selection
      Although  the terms "tenant screening" and "tenant selection" are often used synonymously, even by RHOL on some of our Web pages, in this e-course we separate Tenant Selection from Tenant Screening by defining selection as the making of the actual decision regarding which screened applicant you pick to occupy the vacant unit.  The cost of bad selection can be much higher than the cost of bad screening because it is usually the selection process itself rather than the screening process per se that puts a landlord in violation of Fair Housing and other laws.  Inadequate screening in itself might result in a bad tenant and this might cost you a few hundred dollars, maybe even a few thousand dollars, in unpaid rent and damages.  Improper selection can result in serious and costly legal problems where your opponent is the Federal, State, or City government (or all three) which have unlimited legal and financial resources.  In this case you might not only face many thousands of dollars in legal fees, but might also be hit with fines amounting to tens of thousands of dollars. 
      Finally, the screening procedures themselves must be  fair and applied equally against all applicants.
      A landlord should establish their criteria, in keeping with fair housing and civil rights laws, then take the first qualified applicant, not necessarily the most qualified.

Rental Agreement/Lease
      Rental agreements or leases (terms can be used interchangeably) can be anything from a simple oral understanding to multi-page documents that attempt to address every possible situation. 
      All parties should carefully read every document they are asked to sign, particularly rental agreements. If there are any doubts or uncertainty, a real estate attorney or housing professional should be consulted. Remember, a lease is a contract under which someone will occupy someone else's property. Contracts are legally enforceable. 
      Many states regulate what can and can't be in agreements to rent residential properties. In fact, some states make their landlord-tenant law a default part of any such agreement. It is important that every party to the contract review our pages on the subject. They can be found in our Landlord's Web and in the new Tenant's Web (now under development). However, the subject is covered most completely in the Property Management Web where you will find your state's landlord-tenant law and even several pages of Cut & Paste lease clauses; the good and the bad.
       If you want additional information on the importance of a written rental agreement, read the RHOL page on Lease FAQ's, then find several examples of rental agreements in the Forms Web.

Move-In/Move-Out Check List
      Many states now require that landlords and tenants complete a move-in/move-out check list and one should always be used even if not required by law.  The document usually contains a form listing the condition of rooms and components thereof, furniture, fixtures, appliances, and appurtenances.  The landlord and tenant should agree on the condition of each listed item at the time of move-in, and document their agreement.  Then there should be no argument as to damages, if any, when the tenant moves out.  In addition, photographs or video are highly recommended.
      We have sample Check Lists in our Forms Web.  Also, see our page addressing what is normal Wear and Tear and what is usually considered Damage.

Other Documents
     There are a number of other documents whose use is important to avoiding misunderstandings and minimizing conflicts, which in turn minimizes losses, including the following:
      Pet Agreements
      Sub-Lease
      Extension Agreement
      Utility Agreement
      House Rules
      Change In Tenancy
      Maintenance Request

Monthly Rent Collection Procedures
      There are many methods, policies, and procedures that will encourage prompt payment of rents and minimize losses when it is necessary to get rid of a bad tenant.  Some these are discussed in detail on our Collecting Rents page as well as in Lesson 12 of our Managing Income Property e-course.