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The Secret Weapon for Renting: How to Ensure Landlord Safety Through Tenant Screening?
As competition in the rental market becomes increasingly fierce, landlords are faced with the challenge of selecting suitable tenants to avoid future troubles and losses. Tenant screening not only ensures the safety and integrity of the rental property, but also provides legal protection for the landlord. There are multiple steps and legal clauses involved in the screening process, so let’s take a deep dive into this secret weapon in the rental process.
Tenant Screening Process
The tenant screening process typically begins with the potential tenant (each adult applicant) completing a lease application and paying the application fee. Lease applications are designed to collect personal identifying information (name, social security number, date of birth, etc.), address, employment status, criminal and eviction history, etc. In addition, a signature is usually required to certify the accuracy of the information provided and to agree to specific terms and conditions.
Under the Federal Trade Commission's (F.T.C.) Identity Theft Red Flags Rule, a valid government-issued photo identification is generally required to confirm the applicant's identity.
Most landlords rely on tenant screening companies to generate tenant screening reports, which contain relevant credit, public record and other information in order to fully evaluate potential tenants. In recent years, applicant-led tenant screening services have emerged, allowing applicants to order reports themselves and grant potential landlords access to them.
Tenant Screening Company
Professional tenant screening services are defined as a Consumer Reporting Agency (C.R.A.) or an Investigative Consumer Reporting Agency and are regulated under the Fair Credit Reporting Act (FCRA). These agencies have a number of obligations to comply with, notably the requirement to confirm the identity and needs of each end user (landlord) before providing a tenant screening report.
These agencies must also follow reasonable procedures to ensure the highest accuracy of reported information and, upon request, clearly and accurately disclose all information that consumers have in their files.
Tenant Screening Report Contents
A tenant screening report may include the following elements:
- Consumer credit report (with or without score)
- Eviction Record Query
- Criminal Record Check
- Sex offender register search
- Specially Designated Nationals List Search
- Rental Reference
- Employment verification
- Recommendations based on landlord standards
Credit report and database searches are usually returned instantly through secure websites, however information from more in-depth public record searches, rental references and employment verifications can take anywhere from a few hours to a few days to complete.
Landlord's responsibilities
Landlords are considered users of consumer reports, and the FCRA has specific requirements for these users. They must provide required information in any notice of unusual activity based on a consumer report, including information about the source of the report and the consumer's rights.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, landlords will also be required to provide digital credit scores and related information used to identify unusual behavior.
Tenant Screening and the Law
There are many laws and regulations governing consumer reporting, of which the FCRA constitutes the primary regulatory framework. Additionally, state laws often place further restrictions on consumer reporting, which landlords should follow during the screening process.
Fair housing regulations restrict landlords from treating protected individuals differently during the screening process. Under Title 8 of the Civil Rights Act of 1968, any form of discriminatory screening is illegal.
Legal and legislative trends
Fair housing advocates have long insisted on applying the legal theory of unequal impact to the requirements of fair housing laws. The U.S. Supreme Court affirmed in a 2015 decision that neutral business conduct judgments applied with respect to protected classes can be grounds for violating fair housing laws.
Landlords have the right and obligation to take reasonable steps to protect themselves, their residents, and the neighborhood by avoiding signing with potential residents who have a history of violent felony convictions.
Tenant screening is not only about selecting the right person, but also an important means to ensure the safety of landlords and the community. Compliance and fairness are also crucial in this process. Since tenant screening can be a shield for landlords, are you ready to properly use this secret weapon in the rental market?
