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Are You Consistent With Your Tenant Screening? By – Patricia A. Harris

Posted on 01. Jul, 2019 by in all

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To avoid lawsuits for discrimination, every landlord should have a list of written rental criteria that describes your minimum acceptable rental qualifications.  This list may or may not be shared with your rental applicants when you give them an application. However, by giving a prospective renter this list, it may save you time in processing unqualified applicants as they can then determine if they qualify and wish to proceed with the application fee and credit check process.  

“Sample” Qualification Criteria for Renting

Below is a sample of qualifying criteria.  Also, know that you may create a different list for each of your properties. 

A complete application. ALL LINES MUST BE FILLED IN. Incorrect or misinformation will disqualify you as a prospective renter.

  1. Have a credit report that demonstrates a willingness to pay financial obligations in a timely fashion.
  2. No prior evictions. 
  3. Favorable responses from references.
  4. Copies of pay stubs may be required to verify income.
  5. If self-employed, copies of up to three years’ tax returns or other documents to verify income may be required.
  6. Rent-to-income ratio in the range of 33-38% or better.
  7. An up-front security deposit of two month’s rent, by cashier’s check, when signing a rental contract.
  8. Proof of renter’s insurance when signing a rental contract. (Optional)
  9. No criminal pasts that could jeopardize the safety of other tenants or the property. (Note:  When looking at an applicant’s criminal history, a landlord also must consider the type of offense, the severity of the offense, and the length of time since the offense occurred.  It is best to seek legal counsel before denying a tenant based on criminal history.)
  10. $______ as an application fee (cash or money order) for the purpose of obtaining credit and eviction and criminal reports to be turned it with completed applications.

You may have other criteria.  If so, list them. But be certain they do not illegally discriminate against any protected classes.   Having your criteria in writing protects you from discrimination and helps you to treat everyone the same.  Members may download AOA’s fillable Sample Criteria List (form 100Q) to use as a guide.

Note:  If you make an exception to your qualifications for a specific tenant, you MUST add that new rule to your qualification criteria and apply it to all future applicants – be careful here if you don’t – discrimination lawsuits await you!

Processing Applications

Once you have received a fully completed and signed application along with the processing fee and other required documents, the following are the recommended minimum procedures for proper screening.  It is also wise to ask to see a copy of their photo I.D. to verify the identity of your applicant.

  • Verify Employment – It is suggested that you call the applicant’s place of employment and ask for the Human Resources department or, if a smaller company, ask to speak with the owner to verify income and length of employment
  • Call Previous Landlords – Make certain the names listed are actual owners and not just friends of the applicant falsifying information.  Did they pay their rent on time? Were they considerate, non-nuisance causing tenants? Why did they move?
  • Check Applicant’s Credit, Eviction and Criminal HistoryCall AOA to run credit, eviction and criminal reports.  AOA offers low-cost reports both online and by phone containing the most extensive eviction history that may pick up an eviction that other companies miss!

Warning from the California Association  of Realtors on Fair Housing Testers 

REALTORS® should make sure they are properly trained to handle fair housing issues before engaging in any property management services. Both governmental fair housing agencies and private organizations may be actively seeking to uncover discriminatory acts in rental housing by using testers who pose as prospective tenants. 

These testers may use Craigslist and other sources to inquire about the availability of a property for rent, submit rental applications, or do other things to identify landlords and agents who violate fair housing laws. For example, the fair housing laws protect, among many others, tenants who use service dogs and those with children, as well as require landlords to make reasonable accommodations for persons with disabilities.
C.A.R. has received reports that a private company may also be using testers posing as prospective tenants to upsell its own services. The company purportedly uses testers to catch agents engaging in discriminatory acts, and then issues demand letters offering to settle if the agents sign up for the company’s own fair housing training courses. In at least one report, a brokerage paid a $25,000 settlement and was also required to sign up for three years of training at that company for which it had to pay $10,000 per year.
The best way to ensure that you do not run afoul of the law is to be knowledgeable about and strictly comply with federal and state fair housing laws, particularly those pertaining to service dogs and disability accommodations. Violations of such laws expose REALTORS® to potential liability, as well as DRE disciplinary action for license suspension or revocation.

ADDITIONAL TIPS:

  • Do not accept incomplete or unsigned rental applications
  • You may also want to take a photograph of the whole family that will become your new tenants.  This simple procedure could scare away any current drug dealers, gang members, etc. as they will not want their pictures on file!
  • State Law limits credit check fees – it is recommended that you charge each applicant your “actual out-of-pocket costs” plus a reasonable fee for your time.  For 2019, the maximum charge for each applicant is $50.94 – which changes each year depending on the CPI.
  • When collecting screening fees – give all applicants AOA’s form #147 – “Receipt of Application Screening Fee
  • If you refuse a tenant based on credit or eviction reports, you must send or give them a letter similar to the AOA Form #140 – “Notice to Rental Applicant” which supplies them with the required legally-mandated information
  • If the applicant requests a copy of the consumer credit report you obtained, you must provide them with it – AOA’s credit check team will provide your tenant with this extra copy upon request.
  • Have each adult complete an application and charge them the same fee.  It is discriminatory in California to treat married couples differently than single people. 

By consistently following the above procedures for screening new applicants, you can be more likely to assure yourself of qualified, good-paying tenants.  

Patricia A. Harris is Senior Editor of the AOA Magazine.

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