Now that 2015 is here, it’s important for all businesses to examine their processes and standards of operations. What is working? What could be improved upon?
Being a landlord is no different.
As regulations change, landlords must keep abreast of the new rules of choosing tenants. An important facet of this is the tenant screening process. Even though most landlords understand that performing background and credit checks for tenants can assist in ‘weeding out’ dangerous or irresponsible tenants, they may still want to review their current practices.
Here are some questions landlords should be asking themselves to ensure their tenant screening process is ready for the new year:
Do I have a written, consistent plan?
It”s a shoddy practice to screen depending on your mood, how busy you are that day, or the appearance of the applicant. If you haven’t already, make a written list of the specific pieces of information you will use to screen ALL applicants. Determine at what point in the tenant screening process you will perform the background check, and what information will eliminate the applicant from being chosen as a renter. Make a commitment to stick to the plan for each and every potential renter. A consistent plan will increase your chances of both maintaining a fair process, and gaining quality tenants.
Am I following Title VII laws?
Title VII of the Civil Rights Act of 1968 prohibits discrimination of the “rental of dwellings based on race, color, religion, sex or national origin”. Take pains to ensure you are not discriminating when selecting your tenants. Think about the questions you ask, both on the application and in the interview. Could any of them be taken as discriminatory? If so, you could be setting yourself up for a lawsuit. Strike any discriminatory or ‘gray area’ question from your process.
Is my plan thoroughly screening my applicants?
If you cannot answer with a confident YES, then you should do a little work on this part. Make certain you are reviewing an applicant’s criminal history, and noting any convictions that may point to the person being a dangerous or unsafe choice. Pull a tenant credit check, and methodically check the information in it. If the person has heavy debt or pays his bills habitually late, he may not be the tenant for you. Also look to see if there are any discrepancies on the tenant credit check that might point to the applicant committing identity fraud. If you are not already, think about ordering eviction records to see if the person has been evicted in the past.
These are all important pieces of information that should weigh into your decision to rent to the person or not.
In the midst of the tenant screening process, read this relevant article: Top 5 Reasons to Reject an Applicant
Do I systematically follow adverse action procedures?
If a landlord chooses to not rent to an applicant based on the information obtained in a background check, the landlord MUST notify the applicant of the intent to take adverse action. In a nutshell, this is a letter to the applicant stating why adverse action is being taken against him. It includes the contact information for the company that performed the background screen, as the applicant has a right to dispute the information.
Be sure you are providing adverse action information each and every time you decline to rent to a person based on their tenant background checks.
Do I understand current state laws?
In addition to federal laws and regulations, some states have enacted their own laws governing landlords. Do a little research on your particular state to become familiar with the current industry trends in your area. Find out specifics on any new or upcoming regulations, and plan on performing this check periodically to make sure you don’t miss anything. Adjust your screening process accordingly.
The start of 2015 is a great time to ask yourself these questions and re-evaluate your tenant screening process. By having a thoughtful, informed review of your policy and procedures, you can tweak your current process to produce the best possible outcome for your current and future renters, and your business.