FAQs – Tenant Screening And Selection – Part I

Ques. Is there a best way for landlords to screen prospective tenants?
Ans. Of course, there is, and that is to do what all business savvy landlords do i.e. always ask each prospective tenant to fill out a written rental application that includes the following detailed information:

1. Employment, income, and credit histories.
2. Social Security and driver’s license numbers.
3. Past evictions or bankruptcies, if any.
4. Work and personal references.

Before selecting tenants, a landlord should check out and verify previous landlords and other references; including employment, income and bank account information; as well as, obtaining a credit report. The last is especially important, because it informs one, whether the person concerned has a history of late rent and bill payments, or whether he / she has ever declared bankruptcy, or even been evicted, ever.

Ques. Do landlords and property managers allowed to obtain prospective tenants credit reports?
Ans. Most certainly, they can, and they do have the authority to ask for and obtain a prospective tenant’s credit report. As well, it is to be borne in mind, if a tenant’s rental application has been turned down, because of negative information on a credit report, they have to send the applicant an ‘adverse action’ letter, informing the applicant of three things:

1. Reason for rejecting the applicant.
2. Name and address of the agency reporting the negative information, and
3. Applicant’s right to obtain a free copy of the report from that agency, by requesting it within 60-days.

In order to run a credit check, the following information is needed:

• a prospective tenant’s name, address,
• Social Security number or Individual Taxpayer Identification Number (ITIN).

Ques. What is the purpose behind landlords using written rental applications?
Ans. Written rental applications can protect landlords from lawsuits filed by irate applicants who may have been rejected as tenants.

For example, if a landlord screens 6-potential tenants before renting one of his / her units, to Applicant #6, feeling he / she is most likely to be the most reliable in rent payments. However, a couple of weeks down the line, a lawyer representing Applicant #3 calls the landlord claiming his / her client claims she was discriminated against, because of her status as a single mother of African-American origin. The landlord is asked to pay $10,000 to settle the matter, or else be sued for $50,000in federal court.

If, the landlord has no written documentation to back up his / her selection of Applicant #6, it is most likely his / her insurance carrier will propose paying up, otherwise, as the insurance company points out, it will look bad in court that a white male with no children was selected over an African-American single mother, with a higher-paying job.

If, a landlord can produce all the applicants’ written applications, their credit reports, and references from previous landlords, the result would likely be different. There would be written documentation to support the selection of Applicant #6 i.e. his credit history and job stability, which are far better than that of Applicant #3, as there was not only poor feedback received from previous landlords, but despite her current employment, had just recently declared bankruptcy.

The best and only way to avoid unnecessary litigation is by screening prospective tenants and conducting background checks. Simply visit www.e-renter.com for tenant screening and background check services.