Picking the Right Tenants (Without Getting Sued)

by Chris on February 16, 2015

Each time a landlord is forced to pay thousands of dollars in damages and fines to HUD or a local housing advocate, it serves as a stark reminder that, while landlords have every right to screen out unqualified tenants, they do not have the right to deny someone housing unfairly.

Fortunately, renting is a popular option right now, so there are plenty of qualified tenants to choose from. And, with the availability of automated tenant screening reports, it’s easier than ever to verify a qualified applicant’s information.  tenant screening

Yet, a strong rental market also can increase the likelihood that a frustrated rental applicant will cry foul after being rejected for the wrong reasons.

Finding the “right” tenant is paramount for landlords; however, rental discrimination is often the direct result of misconceptions over what makes a qualified tenant, and even the most seasoned property management veterans can make mistakes.

The trick to successful tenant selection is developing a tenant screening policy that can apply equally well to any tenant, from millennials to retirees, families to single professionals. To avoid discrimination charges, landlords must throw off any expectations regarding what “type” of tenant would be a good fit for the property, and focus on the qualifications of an individual applicant. Qualified applicants will always be the right fit for any property.

It’s important for all landlords to understand that it is against the law to discourage otherwise qualified tenants from applying for a vacancy because they don’t meet the landlord’s image of the right tenant. It is up to an individual applicant to decide if a vacancy is of interest, not the other way around. Landlords who tell one prospective renter that the vacancy is filled while showing it to another, or continuing to advertise it, are playing a dangerous game.

Likewise, landlords cannot “steer” an applicant away from or towards a specific rental, like asking families with kids to live in a certain section or on a particular floor of an apartment complex.

Rental ads that attempt to describe the right tenant for the property also are a common trap. Mistakes include phrases like describing an area church, or explicitly stating a preference against children. These words have an adverse affect on some rental applicants who may decide not to apply. Prosecutors read these ads, too, and frequently initiate discrimination actions based on the offensive language. An inappropriate ad may prompt a secret investigation, and a landlord who has revealed a possible bias in a rental ad may not realize that the next “rental applicant” is actually an investigator.

Bad leasing policies alone can give rise to a discrimination charge and resulting fines, even if the “tenant” was actually an impostor — a tester who works for a fair housing advocate. There is no reason to discriminate against a class of tenants in order to keep a rental property profitable. In fact, holding on to an expectation that one group will be preferable over another is cutting corners in tenant selection, and will lead to costly mistakes in the tenant screening process. These expectations lull landlords into a false sense of security. Believing that they’ve found the right tenant , they are less likely to dig deeper. Professional tenants know how to play on a landlord’s biases.

The reality is that single professionals can be good tenants, or they can be horrible, blowing out of town suddenly when they change jobs, or causing damage through neglect — just like any other tenant. Stripped away of any stereotypical characteristics, each rental applicant can be viewed for what actually matters — whether the individual is qualified:

1. The applicant can afford to pay the rent.

2. Can prove financial responsibility with a tenant credit check.

3. Has a good rental history, free of prior evictions, missed rent, or reports of prior damage to a rental property.

4. Is safe to be around other tenants, with no dangerous criminal history.

5. Can get along with others and abide by the rental rules as those are applied to all tenants.

Lose the stereotypes and misguided expectations, and tenant screening is reduced to a simple equation. Finding qualified tenants will always increase profits. On the other hand, passing over perfectly qualified tenants based on personal bias or inappropriate expectations likely will lead to income loss, because it’s just a matter of time before a policy like that will backfire.

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.

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