A Landlord’s Glossary

Posted by Teresa on July 12, 2013 under Eviction, Fair Housing Act, FCRA Issues | icon: commentBe the First to Comment

tenant screening, tenant credit check, glossary, landlord termsHere’s a handy list of terms landlords should be familiar with.

Abandonment: When a tenant defaults in the payment of rent and indicates by words or actions that they have vacated the premise.

Americans With Disabilities Act: A law passed by Congress in 1990 requiring any business or public facility to be accessible to everyone, including those with disabilities.

Arbitration: Using a neutral third party to resolve a dispute instead of going to court.

Certified Mail: A written verification from the Postal Service that the letter you mailed was delivered to its address. It requires a signature.

Common Area: Areas generally accessible to all residents or users, such as hallways, stairways, laundry rooms, recreational rooms and playgrounds.

Co-Signer: A person or persons in addition to the tenant, who agree to be responsible to pay rent and uphold conditions of the lease.

Consumer Report: A  detailed report that provides personally identifiable information relating to one’s credit, character or lifestyle. The FCRA only covers reports prepared by a consumer reporting agency.

Consumer Reporting Agency: An entity that collects and disseminates information about consumers to be used for credit evaluation.

Credit Report: A report prepared by a credit reporting service that describes a person’s credit history for the last seven years.
Credit Score: A numerical value or a categorization derived from a statistical tool or modeling system used by a person who makes or arranges a loan to predict the likelihood of certain credit behaviors, including default.

Default: a tenant’s failure to do something that the law requires.

Default Judgment: A judgment issued by the court, without a hearing, when the tenant has failed to file a response to the landlord’s complaint.
Discrimination: Denying a person housing or stating that housing is not available because of a person’s race, color, religion, sex, sexual orientation, national origin, ancestry, age, disability, marital or familial status. Treating people differently could also be considered discrimination.

Equal Housing Opportunity: Laws that prohibit discrimination in housing on the basis of race, color, religion, sex, national origin, age, disability or familial status.
Eviction: A court proceeding for removing a tenant from a rental unit because the tenant violated the rental agreement or did not comply with a notice ending the tenancy.
Fair Credit Reporting Act: The Fair Credit Reporting Act (FCRA), as amended September 30, 1997, regulates consumer credit information gathering and dissemination. It dictates seven and ten year limits on how long negative information can be reported. The Act also provides a method for correcting erroneous information in a credit file. The 1997 amendment covers landlord tenant relationships and requires landlords to notify tenants if they have been rejected because of information in their credit file or references from previous landlords.

Fair Housing Act: The Fair Housing Act, as amended in 1988, prohibits discrimination in housing based on race, color, religion, national origin, sex, physical or mental handicap, or living with children, expect that housing for older persons may exclude children.
Fees: Money collected from tenants that will not be returned at the end of the tenancy, such as for applicant screening, cleaning, pets, etc.

Guest: a person who does not have the rights of a tenant but stays in/on the premises for a set period.

Inspection Checklist: A written checklist or statement specifically describing the condition and cleanliness of or existing damages to the premises and furnishings, such as walls, floors, countertops, carpets, drapes, furniture and appliances. The statement should be signed by both the landlord and the tenant.

Lead-based Paint Disclosure: A document that must be provided to all tenants before they enter into a rental agreement on properties built before 1978.

Lease: A written or oral contract between a landlord and a tenant that transfers the right to exclusive possession and the use of the landlord’s real property to the tenant for a specified period of time and for a stated consideration (rent).

Lessee: The tenant.

Lessor: The landlord.

Market Rent: The prevailing monthly rent for comparable units in a specific area.

Mediation: A way to resolve disputes by sitting down with an impartial person to reach a voluntary settlement. Medication involves no formal court procedures, and the mediator does not have the power to render a binding decision or force an agreement on the parties.

Month-to-Month: When premises are rented for an indefinite time, with monthly or other periodic rent reserved; or from period to period on which rent is payable and shall be terminated by written notice in accordance with the lease and law.

Normal Wear and Tear: Deterioration which occurs as a results of intended use, without negligence, carelessness, accident, misuse or abuse.

Rental Criteria: A set of criteria than an applicant must meet in order to qualify for tenancy. Landlords should apply criterion consistently and fairly from applicant to applicant to avoid Fair Housing issues.

Renter’s Insurance: Insurance protecting the tenant against property losses, and liability for claims or lawsuits filed by the landlord or others alleging that the tenant negligently injured another person or property.

Security Deposit: Monies paid to the landlord by a tenant as a deposit or security for performance of the tenant’s obligations in a lease or rental agreement. Each state enforces laws that must be followed if a landlord accepts a security deposit.

Sublet: An agreement between the original tenant and a new tenant by which the new tenant takes over the lease of a rental unit. Both the original tenant and the new tenant are still responsible to the landlord

Ten Day Notice to Comply with the Rental Agreement or Vacate: A form used when a tenant breaches the lease or rental agreement in ways other than failing to pay rent.

Three Day Notice to Pay Rent or Vacate: In most state, if a tenant defaults in payment of rent, this notice needs to be served to the tenant to begin eviction proceedings.

Tenant Screening:process used primarily by landlords and property managers to evaluate prospective tenants to assess the likelihood the tenant will fulfill the terms of the lease or rental agreement. The process culminates in a decision as to whether to approve the applicant, approve the applicant conditionally (such as requiring an increased deposit or cosigner) or deny tenancy.

Start your tenant relationship off right by knowing who you’re leasing to. Protect your rental property and assets with tenant background checks. Proper tenant screening will ensure you are leasing to the best possible tenants.

Help Prevent Identity Theft

Posted by Teresa on June 7, 2011 under FCRA Issues | icon: commentBe the First to Comment

tenant screening, tenant credit checkLandlords who conduct tenant prescreening—and that should be every landlord—need to be complaint with federal regulations regarding personal and financial information. The Fair Credit Reporting Act (FCRA) and the Fair and Accurate Credit Transactions Act (FACTA) govern such information and its safekeeping, so it pays to be familiar with certain sections that cover how credit reports can be used, liability for noncompliance and conditions on disclosures to consumers.

The “Red Flags Rule” requires many businesses to establish written identity theft prevention programs to detect “red flags,” or patterns and warning signs that identity theft could be occurring.Last year, new rules were added that could affect landlords. An addition from December 18,2010 amended the definition of “creditor” to include those who regularly and in the ordinary course of business:

  • Obtain or use consumer reports in connection with a credit transaction;
  • furnish information to consumer reporting agencies in connection with a credit transaction; or
  • advance funds to or on behalf of someone (except for those incidental to a service provided by the creditor to that person).

Depending on where you live and conduct business, you may be responsible for different laws regarding credit reporting for tenants and lease applicants. Here are four easy procedures that can help any landlord reduce identity theft:

  1. Make sure the applicant’s ID is real: forgeries are rampant and hard to detect. Tenant screening should include an ID check.
  2. Social security numbers and addresses must match up.
  3. Pay attention to alerts on credit reports.Victims of identity theft will add alerts to their credit reports.
  4. Keep all tenant personal and financial information secure in locked, fireproof cabinets. Limit access to these files and never leave confidential paperwork out on a desk or other area where it can be stolen.

Protect your tenants and yourself from liability by following the Red Flags rule.

Checking Tenant Credit and Criminal History

Posted by Teresa on March 5, 2009 under FCRA Issues, Tenant Credit Checks, Tenant Screening & Background Checks | icon: commentBe the First to Comment

Be Certain Your New Tenants are Credit Worthy

 

Steering Clear of Problem Tenants
Managing rental property is no easy task. Why make it harder than it already is? After all, your properties are only as easy to manage as the tenants who live in them. Employing best practices consistently on each and every rental is the key to managing income property smoothly—and avoiding discrimination issues, too. One way to avoid trouble is to check potential tenants’ credit and criminal history.

Is it Legal to Check a Tenant’s Credit History?
Absolutely. Renting property brings monetary and legal risks to the property owner. You need to mitigate risk wherever you can, and checking credit history is a great way to do so. As part of the rental application, your prospective tenant can agree to a credit check with a signature. You’ll know for sure if the applicant is a good risk—or one to stay away from. Even a tenant with a great credit history can miss paying rent on time—but again, the idea is to lessen that risk by choosing the best possible tenant.

Remember that all information you learn from a credit report must be held in strictest confidence, and never shared with third parties. Your applicant may have a right to the report—check your state’s guidelines and the Fair Credit Reporting Act (FCRA) to be sure you are compliant. If you reject an applicant for credit reasons, you must advise them in writing. Consider having a reputable, professional tenant screening service handle your background screening to ensure you are within the guidelines of the FCRA.

What Will a Tenant Screening Credit Check Tell Me?
The credit check will reveal how promptly the applicant pays credit cards and loans, plus any outstanding judgments or bankruptcy filings. Look for a good record of responsible finances, and see if the applicant appears to be living beyond their means. Conservative spenders will be more likely to survive an emergency or job loss without major upheaval—like breaking your lease agreement.

The credit check will also reveal previous addresses—compare these with the application and investigate any inconsistencies. There could be a simple explanation—or the prospective tenant could be hiding something.

Is it Legal to Check a Tenant’s Credit History?
While you don’t have a legal duty or obligation to do so, you may certainly include criminal history in your tenant screening process. Keeping your property, other tenants, and yourself safe from potential damage is well worth it. These reports typically cover records at the county or national level; different reports are available in different states. Check with a professional tenant screening company for details.

The important thing to remember is to be consistent: screen all applicants in the same way, each time. Making an exception could be reinterpreted as discriminatory—and it could literally open your doors to potential problem tenants. A clear policy of running criminal background checks on all applicants is the best protection for you, your other tenants, and the community.


Next Post: Renewing Leases

Link to Fair Credit Reporting Act (FCRA) Text

Posted by Teresa on November 6, 2008 under FCRA Issues | icon: commentBe the First to Comment

NOTITLENOALT

Read the complete text of the FCRA (Fair Credit Reporting Act) here:

www.ftc.gov/os/statutes/031224fcra.pdf

You can increase your assurance of FCRA compliance by using tenant screening services from E-Renter USA.

How Do I Qualify to Receive Credit Reports?

Posted by Teresa on October 21, 2008 under FCRA Issues | icon: commentBe the First to Comment

NOTITLENOALT

Each of the three national credit bureaus have slightly different requirements for qualification to receive credit reports on tenant applicants, but the essential elements are similar.

  • Any company who wants to continue to receive applicants’ actual credit reports and FICO scores must have an inspection of the office where those reports are accessed and stored. Each of the credit bureaus requires that inspection be performed by an approved third party. The details of the inspection can be provided by the company who will be performing the inspection, but include proper security of files and verification of the type of business being conducted at that location.
  • Additionally, it is now required that customers requesting credit reports provide identification and proof of property ownership.

Credit Bureau Regulations Added to FCRA

Posted by Teresa on October 15, 2008 under FCRA Issues | icon: commentBe the First to Comment

NOTITLENOALT

One of the basic requirements of the Fair Credit Report Act (FCRA) is that credit-reporting agencies and tenant-screening companies make an effort to know that those who purchase credit reports have a legitimate purpose to do so.

At the beginning of 2007, the Credit Bureaus put into place their own, more stringent, regulations to insure that anyone ordering a credit report has a legal right to do so. These new regulations are intended to help fight identity theft and credit fraud.

The tenant screening industry has a responsibility to enforce these new rules by qualifying customers. These new rules apply only to credit reports (other screening reports are still available).

Consent to View Credit Information is Required

Posted by Teresa on October 8, 2008 under FCRA Issues | icon: commentBe the First to Comment

NOTITLENOALT

Anyone who wants to view credit information (including landlords and employers) must have written consent of the individual.

In addition to credit information, other related laws prevent medical information from being given to anyone without written consent of the individual.

Additionally, not just anyone is allowed to receive information, even with your consent. If you apply for credit, employment, insurance, or to rent an apartment, you will generally be asked to give consent for information to be released.

You can increase your assurance of FCRA compliance by using tenant screening services from E-Renter USA.

What is the FCRA?

Posted by Joan Ging on September 27, 2008 under FCRA Issues | icon: commentBe the First to Comment

NOTITLENOALT

The Fair Credit Reporting Act is Federal law regulating the collection, use, and distribution of consumer credit information.

FCRA was enacted in 1970, and substantially amended in the late 1990s and in 2003, and forms the basis for all consumer credit rights. The law is intended to ensure privacy and accuracy of credit reports.

FCRA regulates activities by:

  • consumer reporting agencies
  • any person or company providing information to those consumer reporting agencies
  • any person or company using the information for credit, employment, or insurance purposes.

FCRA also provides consumers the right to periodically review and have errors corrected in their credit records. The Fair and Accurate Credit Transactions Act of 2003 allows consumers to have easier access to view their reports and dispute incorrect items.

Consumer Rights Under the FCRA

Posted by Joan Ging on June 27, 2006 under FCRA Issues | icon: commentBe the First to Comment

NOTITLENOALT

A Summary of Your Rights Under the Fair Credit Reporting Act (FCRA)

The Fair Credit Reporting Act (FCRA) was designed by the federal government to ensure every ‘consumer reporting agency’ (CRA) adheres to the principles of promoting accuracy, fairness and privacy of information in its files. A large number of CRAs are credit bureaus in the business of collecting and selling information about people, such as, whether they pay their bills on time, or if they have ever filed for bankruptcy, etc. to creditors, employers, landlords, and other businesses. If you are interested, the complete text of the FCRA, 15 U.S.C. 1681-1681u can be found at the Federal Trade Commission’s web site – http://www.ftc.gov. The FCRA guarantees the public specific rights outlined below. In addition, the public also has additional rights under state law that can be learnt about by contacting a state or local consumer protection agency or a state attorney general.

  1. You have the right to know if the information in your file has been used against you. If anyone uses information from a CRA against you, such as, denying an application for credit, insurance, or employment, they must inform you, and give the name, address, and phone number of the CRA responsible for providing that consumer report.
  2. You have the right to access information on your file. You are allowed to access the information on your file, including a list of everyone who has requested it recently, after making a minimal payment of $8 to the CRA. There will be no charges for the report, if action has been taken against you, as a result of information supplied by the CRA, and as long as, you request the report within 60-days of receiving the notice of action. As well, on request, you are entitled to a free report, once every twelve months, if you certify you are unemployed and will seek employment within 60-days, or if you are on welfare, or if your report is inaccurate due to fraud.
  3. Inaccurate information can be disputed with the CRA. If your file with a CRA contains inaccurate information, the CRA is required to investigate the inaccuracies (usually within 30-days) by presenting all relevant evidence submitted by you to its information source. The source must in turn review evidence provided and report its findings to the CRA, including advising national CRAs to whom it has provided inaccurate data, of the errors. It must give a written report of the investigation, as well as, a copy of your report with changes, and in case, a CRA investigation does not resolve the dispute, you are permitted to add a brief statement to your file. All future reports given out by the CRA must include a summary of your statement. If items are deleted or dispute statements filed, you may ask the CRA to notify everyone in recent receipt of your report of the changes.
  4. Correction and deletion of inaccurate information a must. CRAs are required to remove or correct inaccurate or unverified information from files, usually within 30-days of your disputing it. However, the CRA is not required to remove accurate data from your file, unless it is outdated or cannot be verified. If changes are made to your report as a result of your dispute, the CRA cannot reinsert a disputed item into your file, unless the information source verifies its accuracy and completeness. As well, the CRA is required to issue you a written notice informing you of the reinsertion of the item. The notice issued must include the name, address and phone number of the information source.
  5. Inaccurate items can be disputed with the source of information. If you tell anyone, such as, a creditor reporting to a CRA that you dispute an item, they cannot report the information to a CRA, without including a notice of your dispute. As well, once you have notified the information source of the error in writing, it may not continue to report the information if it is, in fact, an error.
  6. A CRA is not allowed to report outdated information. In most cases, negative information more than 7-years old or 10-years for bankruptcies cannot be reported by CRAs.
  7. Limited access files. Credit files have limited access and CRAs are only allowed to provide information about you to people, whose need is recognized by the FCRA, usually, in the case of credit applications to a creditor, insurer, employer, landlord, or other business.
  8. Your consent is required for providing reports to employers, or reports containing medical information. A CRA is not permitted to give out information about you to your employer, or prospective employer, without written consent from you. Neither, is it allowed to report medical information to creditors, insurers, or employers without your permission.
  9. The option to exclude your name from CRA lists for unsolicited credit and insurance offers is yours. Creditors and insurers may use filed information to send unsolicited offers of credit or insurance. These offers must include a toll-free phone number for you to call, if you want your name and address removed from future lists. In case, you call them, they are responsible for keeping your name off the lists for a minimum of two years, as well, requesting, completing, and returning the CRA form provided for this purpose ensures you are taken off the lists, indefinitely.
  10. Violaters can be sued for damage. A CRA or a user or a provider of CRA data found violating the FCRA can be sued in a state or federal court.

Knowing your rights is important for both landlords and tenants as landlords often use consumer reporting agencies or credit bureaus for a background check of prospective clients.

Tenant Screening: Complying with FCRA

Posted by Joan Ging on May 26, 2006 under FCRA Issues | icon: commentComments are off for this article

NOTITLENOALT

Because, landlords and property rental companies perform credit checks on potential tenants on a fairly regular basis, it is important they adhere to the Fair Credit Reporting Act (FCRA) requirements. The FCRA as a law puts tight restrictions on the procurement and handling of tenant screening reports.

According to FCRA, landlords or rental companies are required to obtain a proviso or a written authorisation from each applicant before initiating a tenant screening report. This must be done for every tenant application, as your rental building address will be listed on each credit report, you pull. Before the Act took effect, if you used a screening agency to screen your tenants, the agency’s name was listed as the one initiating the tenant screening report. Since then, things have changed and now it is your property address that will appear on the credit report. This makes it important for you to get a disclaimer or authorisation from the applicant that gives you permission to conduct a credit check on him / her.

The importance of obtaining a disclaimer or authorisation from each applicant before asking for a tenant screening report cannot be emphasised. As well, always remember to keep the disclaimer / authorisation on file, even if the applicant has been rejected as a prospective tenant.

As long you adhere to FCRA rules, you should not face any problems, and for you to be in full legal compliance with the FCRA, your disclaimer should read as under:

“In compliance with state and federal laws, this is to inform you that a consumer investigation involving statements made on this application is being initiated. This investigation may involve obtaining information regarding your character, general reputation, credit, mode of living, and criminal background. You have the right to dispute the information reported. If this application is denied because of credit history, you may obtain a copy of your credit report from the credit reporting agency.

Landlord has my permission to release information found in screening for any lawful purpose associated with tenancy of premises. I authorize screening agency and landlord to obtain credit reports, character information, verification of rental history, employment history, bank information, public records, and personal reference as necessary to verify all information set forth in this application.”

As you will find, the FCRA also affects tenant screening, when the landlord or rental company takes adverse action i.e. rejects the applicant. Section 615 of the Act states when taking adverse action, the applicant must be provided with the following:

  1. Oral, written, or electronic notice of the adverse action.
  2. The name, address, and toll-free number of the consumer reporting agency responsible for providing the report, along with a statement stating the consumer reporting agency did not make the decision and cannot provide any specific reasons for the adverse action being taken
  3. A notice must be provided to the applicant that he / she has the right to obtain a free copy of their tenant screening report within 60-days, from the listed agency.
  4. The applicant must also be notified that he / she has the right to dispute the findings of the credit reporting agency, including the accuracy of any information contained in the credit report.
  5. The landlord has also to notify the applicant of the right to make a written request for information received from other sources other than the credit reporting agency within 60-days of adverse action being taken.

While issuing a denial letter, all of the above must be included to comply with the FCRA. Though, some of the FCRA requirements that affect tenant screening may seem unimportant, each one must be followed diligently to comply with the law and to avoid legal and punitive actions. Cutting corners will only find you liable for wilful or negligent non-compliance with the FCRA.

Therefore, while everyone landlord knows tenant screening is important in this day and age, the FCRA has been enacted to protect and promote accuracy, fairness, and the privacy of personal information assembled by Credit Reporting Agencies. There is protection both for Landlords and Tenants, just as it should be!