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Landlords want good tenants – ones who pay their rent on time and don’t damage property. To help ensure they have the best possible tenant, landlords should conduct a thorough applicant screening of potential tenants before they sign a lease agreement.
There are two options when it comes to running background checks for tenants: hire a third-party background check company or conduct the screening yourself. Should you choose the latter option, here are some tips for vetting your new tenant.
Background checks are a high priority task when screening potential tenants. There are different kinds of background checks:
To Screen Potential Tenants using information from any or all of these Reports, Follow the Following Steps:
Effective tenant background checks start with data collection. You’ll need the tenant’s information to begin the process, most of which will be included in the rental application. You can download a standard rental application template from the internet or you can draft one yourself.
For the most effective screening, be sure to request the applicant’s full name and date of birth, employment information including information about monthly income, and names of their references.
Review the application for completeness and make sure all essential information is provided.
Read Also: Best Ways to Find Property Ownership Records
In some states, landlords can charge the tenant for a credit check, so check the laws in your state to see if you’re allowed to do so. Use any of the credit reporting companies to check the applicant’s credit history. This will give you insight into an applicant’s financial health. It will also help you identify whether there should be any cause for concern in renting to him or her, such as a history of late payments, bankruptcy, or substantial loans.
If you find something in the background check that gives you pause, inform the applicant in writing with the reason you’re denying their application. If you used a third-party company to complete the screening process, including the name of the company in the letter as well.
You will need to run a detailed background check on applicants to get as much information about the tenant’s past as possible. You can hire companies to run information pertaining to the prospective tenant’s criminal history, credit history, or eviction history. You can also request that the company review other public records for the applicant’s information.
Make sure you hire an approved consumer reporting service. You can get a list of approved agencies from the Finance Protection Bureau for a small fee.
It’s a good idea to contact the applicant’s employer to confirm the tenant’s employment status and their stated income. Also, reach out to the tenant’s previous landlord and ask questions like:
Personal references are also important, although most of them will probably be biased. You can still get a good sense of the applicant’s character by obtaining feedback from those who know them best.
When it comes to tenant background checks, the best course of action is to have prospective tenants fill out an application that requests the prospective tenant’s name, address, phone number, and social security number. If they have a felony conviction or eviction history, ensure the application provides a place to enter this information. They should also provide their driver’s license number and employment history.
Follow up with the applicant’s list of previous landlords and any other references to see if there have been any problems with the tenant in the past. Cross-check the applicant’s financial information from his or her credit reports with the information they’ve provided on the application.
A credit report is an important tool in the tenant screening process. In NYC, landlords are legally allowed to reject potential tenants based on their credit reports.
You’re under no obligation to do so, but be aware that relying on any type of oral agreement could lead to problems legally. Unless there is an exceptionally compelling reason to do otherwise, written rental applications are strongly recommended. You can use the information included in written applications to support your decision to accept or reject an applicant. In addition, if you find that any information in the written application is false, you can take legal action.
Having terms, conditions, and processes documented in writing will make it easier to defend should the applicant challenge an application rejection in court. It is unlikely that a judge will overturn your decision if you can provide a reasonable and non-discriminatory basis for selecting one tenant over another. It’s easiest to do this when it’s clearly documented.
The Fair Housing Act prohibits landlords from discriminating against prospective tenants based on their race or ethnicity, national origin, disability status, sex, or because they have children. Laws also prohibit discrimination based on marital status, sexual orientation, and age.
Only reasonable and business-related reasons should be considered when screening potential tenants. As long as you have a legitimate business reason for selecting one equally-qualified tenant over another and that reason is documented in writing, you don’t have to worry.
For peace of mind, landlords should make sure that their property is occupied by good tenants. This is why background checks are necessary. Rely on legally defendable screening criteria and screening tools to make the best decision.