Learn to Say “Problem Tenants Need Not Apply”

by Chris on May 28, 2012

Recently, a prospective tenant sent a question to a real estate columnist asking for advice on how to find a rental home when the applicant has a bad history stemming from alcohol and drug abuse. The adviser had two suggestions: live in a treatment-related facility, or look for a rental property where the landlord won’t be running a tenant background check.

How does a prospective tenant find a rental where the landlord doesn’t do background checks?  Troubled tenants look for troubled properties. 

If you want to discourage such applicants from applying for your rental property, follow these steps:

Pay close attention to the curb appeal of your property. Safe, secure, well-maintained properties attract the best applicants.

State up front — on the phone and in your rental ads, that you require tenant background checks of all rental applicants under consideration.

Present yourself in a professional, well-informed manner each time you speak with applicants and tenants.

Ask about the prospective tenant’s background before you offer a tour of the property.

Consider obtaining a Crime Free Multi-Housing Certification to display for prospective tenants.  Let prospects know that crime is a reason for eviction.

Explain to the applicant that you will be involved throughout the tenancy, conducting routine property inspections, and overseeing repairs and maintenance of the property.

There is a third option for the applicant with a troubled history. A landlord is not required to reject every rental applicant with a bad history. Perhaps, if the applicant is honest about his past troubles, he will find a  landlord who is willing to take a chance on him as a tenant.  Maybe he deserves the opportunity to rehabilitate his rental history. At the same time, his next landlord deserves to know what he or she is getting into, and to assess the degree of risk they are willing to undertake when providing rental housing.

If a landlord forgoes running tenant background checks, they place themselves at the mercy of the applicant to learn the whole truth.

 

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

{ 2 comments… read them below or add one }

Matt June 5, 2012 at 7:35 am

Hi Chris! As usual, I am delighted to read your latest articles. I would like to chime in on this topic.

I agree that it is particularly important to state upfront that a background AND credit check will be a required part of any application (for good measure, I also make it clear that a deposit equivalent to LMR must also be submitted, to show the application is in ‘good faith’ — i.e. not shopping around to see what sticks).

Also, for any Ontario landlords out there, be very careful as to “how” you reject failed applicants: It is illegal to discriminate on the basis of race, sex, gender, religion, marital status, presence of dependents (kids), among others factors. Also, you cannot reject a tenant’s applications unless their revenue is below the rent asked. So, if the tenant makes 1,001$ a month and the rent is 1,000$, you cannot use insufficient revenue as an excuse not to rent to that tenant.

When rejecting a tenant application, it is always better to say the least possible. Personally, I use the phrase: “I have decided not to accept your application.” Do not specify why, even if asked. Anything you say can and may be used against you!

Stay safe out there!
Matt

Chris June 18, 2012 at 5:04 am

Matt: I have never heard of landlords not being able to reject a tenant’s application on the basis of insufficient income, if their income is higher than the rent. Can you indicate what you are basing your statement on (which Act, or case law, etc.) ? It doesn’t make any sense that landlords would be forced to accept a ridiculous level of risk (a 99.9% ratio of rent to income). Banks use GDSR and TDSR conservative ratios of 32% and 40%, respectively, in their analysis of risk. In my view, a ratio of 30% for housing expenses (rent, electricity, cable) is an absolute minimum before accepting a tenant. If the rent is $1,000 per month, I would not accept someone who doesn’t earn at least $3,500 monthly gross income.

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