Tips for Avoiding Lawsuits When Screening Potential Residents
- Jan 19, 2018
Bias or prejudice resulting in denial of opportunity, or unfair treatment regarding selection, promotion, or transfer—this is how the Business Dictionary defines discrimination. These days, any kind of unequal treatment could result in a costly lawsuit. Property owners and managers can safeguard themselves by following some simple guidelines when monitoring residents. It is essential to always treat everyone equally, provide the same information to all prospective renters and make sure to have a clear set or written criteria for applicants available for inspection. Moreover, a thorough screening not only delivers peace of mind, but it also prevents you from spending time dealing with problematic renters.
In order to avoid wasting resoruces on legal disputes, Robbie Cronrod came up with a series of actions that could dodge unanticipated discrimination claims. Cronrod is the founder of TenantAlert.com, an online screening service that instantly evaluates each prospective renter.
What is mandatory when screening potential in order to avoid lawsuits?
Robbie Cronrod: Everyone should be aware of the Federal Housing Act, the seven classes it protects (race, color, religion, sex, national origin, disability and familial status) and how it impacts their decisions to select a prospective tenant for their rental. Plus, there may be laws on the local or state level that prohibit discrimination based on a person’s marital status, sexual orientation or age. Which brings me to knowing what local housing laws may apply to you. Each city, county and state has its own housing laws.
I recommend documenting everything and keeping those records for a minimum of three years, even if you don’t rent to the prospective tenant. Keeping all documentation such as applications, signed authorizations and tenant screening reports can be crucial if a rejected applicant questions why another applicant was selected. The documents you’ve kept on file should prove the tenant selected was better qualified and therefore help in eliminating any concerns of discrimination. Additionally, when rejecting an applicant you are required to send a declination letter, also called an “adverse action” letter. The best way to know what is mandatory when screening tenants in order to avoid lawsuits is to find an expert in your area who you can rely on for assistance in these matters.
How has the legislation related to resident screening changed lately?
Cronrod: Legislation is constantly changing to protect consumers on local, state and federal levels. One pending amendment that we are keeping our eye on is to the Fair Credit Reporting Act, and it’s called the Tenant Protection Act. The Tenant Protection Act is attempting to limit how eviction records are used in the tenant screening process. Currently records dating up to seven years back can be included in an eviction report and can comprise both filings and finalized judgments. Should this pass, only eviction records resulting in a judgment that are not being appealed and are no older than three years will be allowed. Should this pass, it would have a significant impact on the eviction results returned for a tenant screening report.
What can you tell us about TenantAlert? What differentiates it from similar products on the market?
Cronrod: TenantAlert provides the necessary tools to run a tenant credit check on a prospective applicant, including credit reports from all three major credit bureaus (Experian, Equifax and TransUnion); multiple scoring models including a customizable one, criminal, terrorist and sex offender reports; Telecheck bad check/NSF reports; landlord, employment and bank verifications; business and international credit reports; and more. TenantAlert also provides customizable reports, white-label websites, credit cards or monthly invoicing for payment and an API for our clients to integrate the data into their own applications.
What could a landlord’s main reasons be to legally deny a rental candidate?
Cronrod: There are many reasons a landlord could legally deny a rental candidate, a few that come to mind include: unable to verify income, a bad credit report, the applicant refusing to authorize a tenant screening background check or if the tenant does not agree to the lease terms as set forth by the landlord.
Are there any situations in which landlords can skip conducting screenings?
Cronrod: No, never. Landlords should be properly conducting tenant screening no matter who they are renting to—even if it’s your mom, dad, brother, sister, aunt, uncle or best friend. Everyone should be properly screened and vetted. Each potential candidate should complete the appropriate applications and background checks as well as sign a legally binding lease agreement. This helps protect all parties and sets ground rules should there be a disagreement in the future.
Image courtesy of TenantAlert