Be Careful when Rejecting a Tenant Application

Posted by Teresa on April 2, 2010 under Landlord Paperwork and Forms, Landlord Tenant Lawsuits, Tenant Screening & Background Checks | icon: commentBe the First to Comment

bad-employee2Our last post contained a warning to landlords that what you say can come back to haunt you. In other every day activities, like accepting or rejecting new tenants, landlords must also take care to know and follow all applicable laws—because it protects you and your business from liability.

Take discrimination. The Fair Housing Act is very clear on what constitutes discrimination: denying housing to an applicant based on race, gender, family status, country of origin, religion, age, sexual orientation, or disability. Still, depending on how a rejection is handled, there is always a chance that a discrimination claim could be filed by a rejected tenant.

How can landlords avoid such claims? First, make absolutely sure that you have a rock-solid reason for the rejection—and back it up with paperwork. Second, communicate the reason to the applicant. Don’t just say, “I found a better tenant,” or “I rejected your application.” The tenant could make up his own reasons for the rejection, including his race or religion.

Establish your minimum standards for approving tenant applications, and apply them to every single applicant. Treating everyone equally is a cornerstone of good landlord practices. Accept the first qualified applicant for a rental unit, after applying your standards to each interested party.

Full disclosure to all applicants up front is a good idea. Your lease application should convey your standards, as in the following examples:

  • That each adult who will live in the rental unit must fill out an application and be approved.
  • That a minimum income level is required to rent the unit.
  • Employment history will be checked, and a minimum of six months at the applicant’s employer is required.
  • That previous rental history will be taken into consideration, including timely rent payments, keeping property in good condition, and fulfillment of previous leases.
  • That a tenant credit check and criminal background screening will be conducted on all applicants.

If you have additional requirements, add them to the list. And of course, your application should state that you do not deny the right to rent or lease property based on race, gender, family status, country of origin, religion, age, sexual orientation, or disability.

With this information up front, applicants will know what basis they can be rejected on. When you do reject a tenant applicant, be sure to explain your reasons in writing, and supply a copy of the credit report, as required by law.

What you Say to Perspective Tenants Can Come Back to Haunt You

Posted by Teresa on March 30, 2010 under General | icon: commentBe the First to Comment

iStock_000009636788XSmall1-300x199A real estate brokerage in Las Vegas, one of its agents, and the owners of a rental home were all recently sued in federal court for discrimination. Here’s what allegedly happened:

Back in 2008, a woman tried to rent a home the realty company listed. She says she was rejected because she told the agent she had applied to adopt three children, adding to the three she already had living with her. If true, this is a clear violation of the Fair Housing Act.

She alleges the agent replied that they were “hoping to rent to someone without children,” or something to that effect. The home was eventually rented to a family with one child.

What did the agent do wrong? Plenty: It is illegal to make rental housing unavailable or deny rental housing because of family status, under the Fair Housing Act. His statement, if true, violates the FHA.

The real estate company denies the allegations, and says there is no evidence to support them. Their side of the story is that the prospective tenant refused to pay the asking rent.

While there are always people who look for a lawsuit around every corner, and every suit has two sides, there is no doubt that being sued is no fun. It can cost landlords plenty of time and money. Even if you’re completely innocent, proving that is a big hassle. And what about the bad publicity? Innocent, defendants can suffer negative reactions for months or years to come.

The best way to avoid this type of lawsuit is to watch everything you say to prospective tenants. Don’t ask about their personal situation. Keep every conversation and interaction 100% professional. If they ask if the neighborhood is safe, have them look up local crime statistics online. If they ask if you like kids, tell them what you think about kids doesn’t matter, and that your job is to make sure the rental units are rented fairly no matter what the applicant’s family situation.

Base decisions to accept or reject each tenant applicant on the same factors: proper income level, verified employment and income, acceptable credit history check, passing criminal background screening, and any other verification you require.

Don’t judge any books by their covers—the scariest-looking people sometimes make the most peaceful, easiest tenants. And Mr. and Mrs. Clean could be hiding some scary secrets behind their appearance. In the landlord business—you just never know.