APPLICANT SCREENING

THE BASICS

The goal is to attract honest tenants and deter dishonest applicants. To save time and money, weed out the bad applicants as early as possible. Implement systems that discover dishonest applicants and use a legal, simple and fair process to deny them.

Overview

Here are two ways to screen out potentially troublesome tenants:

1. Encourage self-screening. Establish situations to discourage dishonest applicants. Fewer substandard applicants mean less work for management!

2. Uncover past behavior. Most thorough background checks will reveal poor references, inconsistent credit ratings or falsehoods on the application.

It is important that applicants read and understand the rules and process. It will help protect you legally and show applicants you are committed to preventing problems before they begin. There are no one-step solutions. Effective management requires the approach and attitude that discourages illegal behavior and encourages a stable tenant base.

Applicant Screening, Civil Rights and Fair Housing

Landlords often get confused if or when they can turn down applicants. Some
believe civil rights laws require that they accept almost everyone. This is not
the case.

What Are the Protected Classes?
Federal Fair Housing Laws strictly prohibit any discrimination against
these protected classes:

race color
religion sex
handicap familial status
national origin source of income
sexual preference

Civil rights laws protect the way applicants are screened and ensure that
all qualified applicants feel equally invited to apply. State and local
governments may add categories (marital status, sexual orientation,
source of income or participation in a government subsidy program).

Note: Keep an “Equal Opportunity Housing” sign in the office to remind
prospective residents that you do not discriminate.

Washington State Law

Washington State covers discrimination laws under RCW Chapter 49.60.
Washington State Law defines protected classes as race, color, creed, sex, marital
status, familial status, national origin, disability or use of a service animal.
Additional information can be found at:

Washington State Human Rights Commission (WSHRC)
711 South Capitol Way, Suite 402 Olympia, WA 98504-2490
1-800-233-3247 1-800-300-7525 TTY
www.wa.gov/hrc/(external link)

Each time an applicant is denied, you have denied someone who belongs to a
protected class. The question becomes, were all applicants treated fairly? If the set
criteria are applied consistently, you may turn down applicants who do not
measure up. The following examples are consistent with federal fair housing
guidelines:

All applicants are required to show photo I.D. If someone is turned down for not
showing photo I. D., and everyone isn’t required to show it, the action is illegal.

Your written criteria prohibits the sale of drugs on the premises. Written drug
criteria must be given to everyone, not just one class of people, e.g., only specific
racial groups.

You refuse to rent to applicants who provide false information during the
application process. It is legal and appropriate.

There is nothing illegal about setting fair criteria and holding all applicants to
the same standards. Be consistent!

What About Non-Protected Classes?

Discrimination is allowed against non-protected classes. Be consistent! While not
illegal, discrimination may not be profitable. For example, refusing pets may turn
away many potential renters.

What About Criminal Behavior?

It is not illegal to deny residency to applicants based on their criminal
history. However, use convictions (or plea bargains) as your guide. It is
a good practice to refuse residency to applicants who repeatedly disturbed
or threatened previous neighbors or damaged properties.

Written Tenant Criteria

Our program recommends written rental criteria and posting a copy. We also
suggest attaching a copy of the criteria to every application and making sure
applicants read everything.

The following is a “generic” example intended to show various types of rules
you might set. Adjust the criteria to your needs. Make sure an attorney familiar
with current landlord/tenant issues reviews the criteria before implementing
them.

Introduction

We work with neighbors and local landlords to maintain the quality
of our neighborhood. We do not want rental units used for illegal
activity. To that end, we utilize a thorough screening process for all
prospective renters.

Please review our list of criteria. If you meet the criteria, please apply.
Please note that we provide equal housing opportunity and do not
discriminate on the basis of race, color, religion, sex, handicap,
national origin, or familial status.

Screening Criteria

q A complete application
A complete application is required for each person 18 years of age or older who will reside at the location. Applications missing information will be returned.

q Rental history verifiable from unbiased sources
If you are related by blood or marriage to one of the previous landlords listed, or your rental history does not include at least two previous landlords, we will require a qualified co-signer on your rental agreement. Qualified co-signers must meet all applicant screening criteria or pay an additional security deposit of $XXX.

It is your responsibility to provide us with the information necessary to contact your past landlords. We reserve the right to deny your application if, after making a good faith effort, we are unable to verify your rental history. If you owned, rather than rented, your previous home, you will need to furnish mortgage company references and proof of title ownership or transfer.

q Sufficient income/resources.
If the combination of your monthly personal debt, utility costs, and rent payments exceeds X% of your monthly income before taxes, we will require a qualified co-signer on your rental agreement or an additional deposit of $XXX amount. If the combination exceeds X + Y% of your monthly income, your application will be denied.

We must be able to independently verify the amount and stability of your income through pay stubs, employer/source contact, or tax records. If self-employed, please provide your business license, tax records, bank records, or a list of client references. For Section 8 applicants, the amount of assistance will be considered part of your monthly income for purposes of figuring the proportion.

q Two pieces of I.D. must be shown.
At the time of application we require a government issued photo identification card and a second piece of I.D.

q Section 8 information access.
Section 8 applicants must sign a consent form allowing the local Public Housing Agency to verify information from your file regarding your rental history.

q False information is grounds for denial.
You will be denied rental if you misrepresent any information on the application. If misrepresentations are found after a rental agreement is signed, your rental agreement will be terminated.

q Criminal convictions may result in application denial.
You will be denied rental if, in the last 7 years, you have had a conviction for any type of crime that would be considered a serious threat to real property or to other residents’ peaceful enjoyment of the premises. This includes manufacture or distribution of controlled substances.

q Court judgments may result in denial of your application.
If, in the last 5 years, you have been through a court ordered eviction or had any judgment against you for financial delinquency, your application will be denied. This restriction may be waived in the event of a single instance where the circumstances can be justified AND a qualified co-signer is added to the rental agreement.

q Poor credit record may result in denial of your application.
Occasional credit records showing payments within 30 to 60 days past due will be acceptable if you can justify the circumstances. Records of payments past 90 days will result in a denied application.

q Poor references from previous landlords may result in denial of your application.
You will be turned down if previous landlords report significant complaint levels of repeatedly disturbing the neighbors’ peace, prostitution, drug dealing, drug manufacturing, damage to the property beyond normal wear, reports of violence or threats to landlords and/or neighbors, allowing persons not on the lease to reside on the premises or failure to give proper notice when vacating the property. You will also be turned down if a previous landlord would decline to rent to you again for any reason pertaining to lease violating behavior of yourself, your pets, or others allowed on the property during tenancy.

q There is a $XXX earnest deposit, conditionally refundable.
If your application is accepted, the deposit will be applied to your security deposit. If you withdraw your application before screening expenses are incurred, your deposit will be refunded.
q We will accept the first qualified applicant.
Upon acceptance, you will be required to sign a rental agreement and abide by the rules of our rental community. A complete copy of our rental agreement is available for review. Please note that the rental agreement:

· Requires you to prevent all household members, guests and visitors from engaging in any lease violating behavior
· Forbids you and all household members, guests and visitors from engaging in illegal drug use, sale, manufacture, distribution or other criminal activity on or near the property
· Limits your ability to allow guests to stay for long periods without the advance permission of the landlord
· Provides that serious or repeated violations of the rental agreement will result in termination of your rental agreement

Please read the entire rental agreement carefully as we take each part of the agreement seriously. Our process helps us prevent illegal activity from disturbing the peace of our community and gives our tenants the best housing possible.

Application Information

The best approach is to contact a local legal publishing company, a rental housing association or your attorney for copies of appropriate forms. Whether you use application forms or rental agreements, make sure they are designed specifically for the laws that govern your area and are up to date.

1. These requirements and others will be on many standard forms:

Ø Full Name (including middle)

Ø Date of birth

Ø Driver’s license/I.D. number and state

Ø Social Security number (for credit check)

Ø Name, date of birth, and relationship of all people who will occupy the premises

Ø Name, address and phone number of past two landlords

Ø Income/employment history for the past year along with supervisor’s name, phone number and address

Ø If self-employed, copies of business license, tax returns and bank records

Ø Additional income documentation necessary if including it for qualification

Ø Credit and loan references, auto payments, credit cards and other loans

Ø Bank references, bank name, account number, address, phone number

Ø As appropriate, emergency contact information and/or pet information and deposit rules

2. The following question is not typical on standard forms but may be added.

“In the last 7 years, have you or any other person named on this
application been convicted for dealing or manufacturing illegal
drugs?” (You may also ask about other crimes that constitute a threat
health, safety, or welfare of other tenants or neighbors. Examples
include burglary, robbery, sexual assault, child molestation, etc.)

The applicant may lie, but it provides grounds to deny the application. With the right provisions, the rental agreement may also be terminated.

Fees and “Application Deposit”

In many states landlords charge application fees or earnest money to defray the
cost of screening. Charging a fee or collecting a deposit with the application
may:

· Promote “self-screening.” Criminals may recognize fees as your
commitment to screen. Fees may also discourage applicants from
filling out applications at multiple locations.

· Save time. Fees often inhibit unqualified applicants from applying.

Verify Information

Landlords are often surprised when they receive calls about past tenants. One
landlord said, “99% of these problems can be avoided through effective
screening. There is no better investment you can make.”

The following list includes some best business practices for every applicant:

1. Compare the photo I.D. to the printed information. Make sure the
I.D. matches the applicant and other information provided on the application.

2. Run and analyze the credit report. While not foolproof, credit
reports provide independent verification of the application. Included
are past addresses, court ordered evictions, credit worthiness, past due bills and other information. To run reports, you may join a credit bureau directly or use an applicant-screening firm.

3. Independently identify previous landlords. A good indicator of
future action is someone’s past behavior. To check the accuracy of the application, verify an applicant’s past address through a credit check. Then verify property ownership through county tax assessor records. Finally, crosscheck the ex-landlord’s phone numbers with the phone book.

4. Prepare a set list of questions to ask previous landlords. Use a standard list of questions to verify information applicants provide. A good question is, “Would you rent to this person again?”

5. Get co-signers if necessary. Require co-signers for “borderline”
applicants. Make sure to verify the credit and background of all co-
signers.

6. Section 8 renters. Hand-deliver a written request for information to
the local Public Housing Agency.

7. Verify income sources. Call current and past employers using phone
numbers from the phone book. Don’t cut corners.

8. Check for criminal convictions. Court proceedings are typically
public record and can be obtained through the court system. Many private tenant-screening firms will do criminal background searches.

9. Verify all other information according to your screening criteria.

Hiring Employees

Landlords often hire resident managers to assist with tenant screening and routine
maintenance. It is critical to screen resident managers and other “agents” as
thoroughly as applicants. When employees break the law, both the employee and
employer can be held liable by the injured party.

Turning Down Applicants

With posted fair rental criteria and equal application, it is generally safe to reject
applicants who do not meet the guidelines. But, what do you tell the applicant?
The Minimum!

Whether you reject applicants based on information you discover or due to credit
checks, follow the guidelines defined by the federal government in the Fair
Credit Reporting Act for denial of credit. Check to see if your local jurisdiction
requires additional disclosure.