Screening rental applicants and potential tenants is a vital part of being a successful landlord. Because of an increase over the last several decades in tenants’ legal rights and remedies, nonpaying tenants can be difficult to evict. Before even starting, a landlord should make sure she is familiar with the nondiscrimination provisions in the Fair Housing Act (FHA) and health and safety laws such as the implied warranty of habitability.
How Should a Landlord Start a Background Check?
The first thing a landlord should do is check that the applicant’s identification card and all the information contained on the rental application are valid. This would include calling references and employers. The rental application fee must be valid. The landlord should then access eviction records at the local courthouse, and go to the police station to pull up arrest files.
Next, landlords should call all of the previous landlords mentioned on the rental application. In this important step, a landlord can find out if the tenant has a history of damaging property, complaints by neighbors, police visits, late payments, etc. The tenant should provide believable reasons for an absence of rental history.
Next, a credit check will have to be performed. Good credit will indicate the able to pay rent punctually, and will also provide a history of addresses. A background check on evictions, addresses, and criminal history may also be done at this stage, utilizing one of the numerous web-based companies available. A landlord should be careful to get the applicant’s written permission to do these checks. If the applicant declines to give permission for these background checks, the landlord should respect that decision, but the landlord should also remember that it is highly unusual for tenants to decline giving permission.
What Happens After a Background Check?
If, and only if, all of the above screening devices check out, the next step is to meet the prospective tenant in person. Nothing quite substitutes for a personal meeting, where the landlord can gauge the applicant’s personality.
During the interview process, the landlord should consider these factors before making a decision:
- Reason for Moving?
- Move In Date?
- Intended Rental Term?
- Number of People Living On the Property?
- Employment – how much income and how long has the tenant held the position?
- Does The Tenant Keep Pets?
- Does the Tenant Smoke?
The first two are especially important because they can reveal whether the tenant will be troublesome in the future. If the tenant wants to move in the next day, this is an indication that the tenant is either a poor planner or desperate. Neither trait is attractive.
Likewise, the reason for moving is also very important. A tenant who has been recently evicted or who has lost employment-provided housing might continue the pattern in the future.
What about Commercial Tenants?
Commercial tenancy does not differ too greatly from residential tenancy. The overall goal remains the same: can this tenant pay rent on time? However, the purpose of a commercial tenancy will make the screening process somewhat different from the screening process of a residential tenancy.
First, the landlord will want to assess how financially stable the business is. Sale numbers, debts, and creditors are essential. Bankruptcies are also important to consider. If the business is new, it might be prudent to perform a personal background check on the owner(s).
Second, risk assessment should be a higher priority than with residential tenants. Risk assessment means measuring how likely a tenant might become a nuisance or doing something which might result in the landlord having to evict the tenant. The landlord should check that the commercial tenant has all the required licenses and is complying with all the applicable laws. The landlord should also have an idea of the purpose of the tenant’s business. For instance, evicting a tenant for selling medical marijuana can be expensive and time consuming.
Do I Need a Lawyer?
Landlord-tenancy laws can be complex. An experienced real estate lawyer can help you comply with the laws and develop a process to screen out tenants who might give you a legal headache later on.