"Inadequate screening invites tenants who pay the rent late - or not at all, to trash your property, move in undesirable friends ... or worse ." Also see: Tenant Screening | Cause for Refusal | Tenant's Social Security Numbers | Credit Reports The following summary is intended as a guide to screening and selecting tenants. Additional information regarding the subject is found in the RHOL Members Property Management Web
I know many landlords who would not loan $10 to some of the people that they willingly turn over a fifty or sixty thousand dollar investment to. Even some longtime landlords have a difficult time understanding that the tenant selection process is second in importance only to property selection. Yet many landlords are inclined to take the first prospect who shows up with enough cash for the for the first month's rent and a security deposit. Being in a hurry to fill a vacancy, and not properly checking tenant's credit history, references and background, often results in very serious problems. Inadequate screening invites tenants who pay the rent late or not at all, trash your property, move in undesirable friends-or worse. There are a great many legal and practical considerations connected with screening and selecting tenants. How well the process is conducted bears a direct relationship to how well an investor will succeed in the rental housing business. Landlords must select tenants who are good credit risks and who will coexist peacefully with neighbors and other tenants, but they must also carefully follow the law and the various acts and local ordinances that have been imposed on the rental housing business. Suppose that the landlord or property manager is in the enviable position of having a number of qualified prospects but only one vacancy. If you ask a typical landlord what they do in a case like that, most will tell you that take the most qualified candidate . Or that their selection is based on simple instinct. Both options leave open charges of discrimination. There are no firm rules on tenant selection, as long as the landlord does not discriminate, but even an unproved charge can be very expensive. The correct answer should always be that you take the first qualified applicant and that you use the same criteria for all of them. There are perhaps as many ways landlords use to evaluate a prospective tenant as there are ways to decide who your daughter should date. For example:
Whatever screening tools you use, always document what you have done and apply the same criteria to every tenant applicant. Housing Discrimination & Fair Housing: Because of the numerous laws that encourage fair housing and prohibit housing discrimination, practically all aspects of the tenant selection process are now regulated in some manner. Everything from advertising to processing applications and charging security deposits is controlled and regulated by Federal and/or State law. Today housing discrimination is illegal if it is based on:
State and local Housing Discrimination Statutes and fair housing laws sometimes provide even broader coverage than the Federal Fair Housing Act. They often prohibit discrimination against an even wider range of protected groups. For example:
The most obvious example of discrimination is refusing to rent to a member of a protected class. But housing discrimination can take many forms, including:
Fair Housing Enforcement & Penalties Housing Discrimination Laws are strictly enforced by both HUD and private civil rights advocacy groups who employ all kinds of tactics to force compliance with Fair Housing Laws. Some of the private groups have been known to use undercover testers, audio and video tapes, photographs and any other means possible to catch landlords or their property managers who might discriminate. Then they sometimes blackmail the property owner into making large donations to their group to prevent filing complaints with HUD. If a discrimination complaint is upheld, possible penalties include:
Senior Citizen Housing :A landlord can only discriminate against tenants with children if the property meets the following criteria: The housing is intended solely for persons 62 years old or above. 80% of the units have at least one occupant 55 years old or above and the building has age restrictions. Advertising can state: "No Children Allowed", or "Over 55 Building." But it cannot discriminate against other protected classes under the Fair Housing Law. UPDATE: HR660, passed in December 1995, eliminated a federal requirement that qualifying senior housing must provide significant facilities like community dining, health care or recreation to allow for restrictions against children. Interviewing Prospects:It is probably best to conduct every tenant interview using a previously written script so that you always ask the same questions of every applicant. Taking the time to write and rehearse your tenant interview will help prevent discrimination charges, and make the process more comfortable for both you and the prospective tenant. We provide a Tenant Interview Checklist for our members in the Forms Web. Choosing Between Qualified Applicants:If you always use a tenant applicant check list in your interviews, it will be much easier to make objective decisions about which prospect was the first applicant who met your criteria for a particular property. Subjective decisions that include "feelings" about someone can clearly lead to questions of fairness. Imagine if your teenager was always judged by how they look ... or act? They would never be able to leave home. Disabled Applicants:The 1990 American Disabilities Act (ADA) changed the rules dramatically for public access, housing, and every work place. Many mom and pop landlords have not not yet felt the impact of the law on their rental housing, but even they had better try to * understand and keep up with the rules. Property owners are required to make "reasonable accommodations" and "reasonable modifications" for disabled tenants. "Reasonable modifications" are readily achievable physical changes to the property that allow a disabled person full use of the premises. "Reasonable accommodations" are modifications to rules, policies and practices which permit disabled tenants to fully and equally enjoy the use of the premises. What "reasonable" means is any judge's guess. For example: a HUD judge recently determined that a pet may be therapeutic for a disabled tenant and therefore a no pet policy violated the Act. * RHOL members have access to a special Property Management Web that covers complying with ADA in much more depth. |