Chapter 1

How to Screen Tenants

You are reading our guide

The Complete Guide to Tenant Screening

How to Screen Tenants

Choosing the right tenant is a business decision. After all, you need a tenant who will take care of your investment property and will pay rent on time. How you choose the “right” tenant is important and you have to be able to justify your decision for accepting or rejecting any tenant.

In this chapter, we will go over how to set up a tenant screening process and appropriate criteria for choosing a tenant. After that, we will dive into Fair Housing Laws because even the best-intentioned landlord can accidentally violate the laws.

We mapped out five steps to get started:

Step 1: Outline Your Tenant Screening Process

Below, we’ve listed the six stages of tenant screening. Each stage perfectly mirrors a chapter in our Complete Guide to Tenant Screening.

Stages of Tenant Screening

Step 2: Determine Your Minimum Tenant Criteria

Tenant screening is only useful if you set criteria for what is acceptable and what is not. Here is our recommended minimum criteria for landlords who want to avoid problem tenants:

Minimum Tenant Criteria

You are legally allowed to accept or deny a tenant based on the criteria above.

Some of the above criteria like “responsible” and “friendly” can be hard to determine. If you are rejecting a tenant because you “get a bad vibe” make sure that you can attribute this bad feeling to the rental process. For example, you may sense the tenant won’t be responsible enough to pay rent on time because he or she did not show up to the property showing on time.

Sometimes the opposite happens and you get a good vibe from a tenant. In this case, landlords sometimes skip crucial steps of the tenant screening process, like foregoing a tenant background check. This is a dangerous move. We strongly recommend that you follow every step of the process before accepting a new tenant.

Step 3: Follow Through and Be Consistent

Consistency is key to not missing important details about a prospective tenant.

What if a tenant doesn’t comply with your tenant screening process? If a tenant doesn’t agree to part of your process, then you shouldn’t move forward with him or her. Any tenant that doesn’t agree to your rental process should be declined because a) it’s suspicious b) you need to be consistent.

Consistency also helps you avoid a Fair Housing violation. Fair Housing laws protect tenants from unfair treatment. If you require one prospective tenant authorize a background check and not another, then that could be construed as unfair treatment.

Step 4: Comply with Fair Housing Laws

In order to run a compliant rental business, you need to follow federal, state, and local housing laws. Even well-meaning landlords sometimes have to deal with Fair Housing Law complaints that could become costly. To avoid complaints, stay up-to-date with Federal Fair Housing Laws, which states that you cannot screen tenants based on protected class:

  • National origin
  • Religion
  • Sex
  • Familial Status
  • Handicap

Some state housing laws add more criteria:

  • Marital status
  • Veteran status
  • Citizenship
  • Sexual orientation
  • Political ideology
  • Gender identity
  • Age
  • Participation in the Section 8 Program or other subsidy programs

Fair Housing Laws are important from the very first step when you create your rental listing. You can’t advertise preferences for certain types of tenants. For instance, you cannot say, “Looking for young couple.” Your listing should concentrate on the unit and amenities, and not what kind of tenants you are seeking.

Your tenant screening process should have consistent requirements for every applicant. Your income requirement, for example, shouldn’t change based on who is applying.

Next, you should comply with reasonable accommodations for a disabled applicant. If a disabled applicant asks for a reasonable accommodation, it would be discriminatory to not comply. You should also avoid offering accommodations before he or she asks. While it may seem nicer to offer accommodations, it can actually set you up for a lawsuit because you would be presuming they need accomodation.

Best practice is to treat a handicapped applicant the same as everyone else and wait to see if they ask for accommodations.

Fair Housing Laws also apply to you beyond tenant screening. All of your rules and procedures should be standard for all of your tenants. For example, you should have the same late fee rule for each tenant.

Further, you cannot end a tenancy for discriminatory reasons. The bottom line is you need to treat all prospective tenants the same and all current tenants the same. Consistency ensures that you are being a fair landlord and it’s the best way to avoid unnecessary legal costs and headaches.

Step 5: Avoid Litigation During Tenant Screening

Tenant Screening Fair Housing Laws

The best way to comply with Fair Housing Laws is to avoid discrimination. A landlord is discriminating if he or she:

  • Refuses to show an available rental unit to a particular candidate
  • Requires different rules for identical units. For example, charging different rent amounts, different late fee rules, or different security deposits for different tenants
  • Tells a prospective tenant that a unit “isn’t right” for him or her
  • Tells a prospective tenant that a unit is not available if it is still on the market
  • Has a rental listing say “no kids” or any other tenant requirements
  • Refuses to accommodate a reasonable request for someone with a disability
  • Harasses or intimidates any prospective tenants or current tenants
  • Creates terms for renting to someone that are unfair, such as promising you will rent to someone if he or she does something for you
  • Steers certain tenants into a particular unit or neighborhood based on age, gender, or race
  • Asks excessive or inappropriate questions during the tenant screening process

Examples of inappropriate questions include, “Are you married?” or “How many children do you have?” Even innocent questions can potentially be discriminating, so it’s best to steer clear of these questions.

However, you are allowed to ask how many people will be living in the unit because you are entitled to know. Every individual who lives in the unit should be accounted for on the lease, even children and pets.

Overall, we strongly recommend you use a consistent tenant screening process, so you can avoid litigation.

What happens if you are accused of violating Fair Housing Laws?

The penalties for a Fair Housing violation can vary. You could be fined or charged punitive damages. If you add to that the cost of a lawyer, then you can see how it becomes an expensive problem.

Even if it’s a minor case, you should consult a lawyer who has experience dealing with discrimination claims. He or she will give you the best advice to avoid excessive fines.

The U.S. Department of Housing and Urban Development (HUD) processes most housing discrimination claims. They keep claims on file publically. This means that you have more than just an expensive problem- your reputation and the success of your rental business is at stake.

This is why we cannot stress enough the importance of having a tenant screening process. If you follow our tenant screening guide, you’ll find quality tenants while complying with Fair Housing Laws.

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Final Thoughts

As a landlord, you want to make a smart business decision and comply with Fair Housing Laws as you choose tenants. To do this, set up a process and determine your criteria for renting to someone. Make sure your process is the same for every prospective tenant. If you follow our tenant screening process, you will find quality tenants who fit all of your requirements.

For more information, check out our Guide to Fair Housing Laws.

The start of a good tenant screening process is pre-screening. Learn all about pre-screening prospective tenants in the chapter below.


Also published on Medium.

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