Tenant Screening Criteria

Well developed, written tenant screening criteria, legally compliant, consistently used, can reduce fair housing discrimination complaints.

Creating tenant screening criteria customized for business protections requires time and effort to review business requirements, legal compliances, and market conditions. As business circumstances, legislative actions, and rental markets change, so should tenant screening criteria. A landlord must keep legally compliant and stay relevant to local markets to protect his business interests.

Screening criteria should set out minimum qualifications for tenancy that can attract a larger applicant pool. Prescreening interested prospects using the screening criteria can identify stronger candidates for application. Additional screenings and evaluation of qualifications advance qualified applicants to consideration for an offer of tenancy.

Screening criteria provide the means and measures to identify and assess the risk of tenant default. It is the landlord’s responsibility to avoid risk and to manage risk. Without standards in place, there is no objective measurement for proper evaluation of an applicant’s qualifications. Without adequate due diligence, a landlord creates the potential of legal liabilities, lost income, property damage, and costly evictions.

Written tenant screening criteria provide the landlord with the means to simplify and streamline the process of tenant screening. As stated, minimum criteria is a prescreening tool for prospects to self-evaluate their qualifications against the landlord’s criteria. If minimum qualifications cannot be met, there is no reason to proceed further in the application process.

Tenant screening criteria properly implemented reduce the likelihood of a housing discrimination claim. Criteria provide for a fair and objective evaluation process. The decisioning steps are standardized to provide consistent application of qualification criteria, and detailed to provide the measures to be taken. Tenant screening criteria does not require overly complex methodologies but without well-defined decisioning steps and measurable standards, the landlord does not have an effective, productive screening process to qualify applicants. A landlord needs a consistent, measurable, objective tenant screening process to fill rental vacancies with quality tenants.

An important point to remember is the tenant screening criteria and resultant tenant screening policy and practices apply equally to all applicants. There can be no selectivity in choosing what applicants are screened, or what method of evaluation should be used. As noted above, this simplifies the process of tenant qualification and selection.

The tenant screening criteria provide focus on the priority qualifications for tenancy. A checklist can be created for required screenings to make sure an applicant is appropriately screened and evaluated to the written criteria. By utilizing written screening criteria and conducting requisite screenings, a landlord makes an informed business decision for tenancy based on objective findings rather than generalized or subjective reasons. Basing a tenant selection on a good or bad “feeling” from an applicant is an inconsistent decisioning practice that opens a landlord to liabilities and claims of discriminatory treatment of applicants. Without specific standards there can be inherent bias, unconscious bias, or inadvertent discrimination in decisioning. Even if a landlord acts with good intentions, the result is an inconsistent decision pattern that confuses potential tenants regarding landlord requirements and how to qualify to those requirements. A landlord should always remain aware of his language, general behavior, and directed actions in all rental matters that could be misconstrued as discriminatory treatment of prospects and applicants.

It is also important to note that developing tenant screening criteria formulated in clear, concise, but understandable language provides direction to landlord and prospect/applicant in the qualification process. If language is vague or confusing because of legal terms or colloquial use, prospect/applicants may not understand minimum requirements for qualification.

Providing an informational packet to prospects and applicants containing tenant screening criteria, property details, and important rental policies allows a prospect to self-select for application and for prospective applicants to evaluate if property features, amenities, and rental policies meet their rental requirements.

Tenant screening is subject to numerous federal, state and municipal laws. Due diligence is required to ensure compliance with the current regulations, prohibitions, and restrictions that are applicable to the location of the rental property.

A landlord should research his state landlord-tenant statutes and local ordinances to determine if a landlord is required by statute or ordinance to present a written copy of his tenant screening criteria to an applicant during the application process. The statute or ordinance will provide the specific requirements for compliance, such as proof of receipt by the applicant’s signature on an acknowledgment document. Transparency of rental policies and practices to prospective tenants can be of value in defending against claims of landlord discriminatory practices or subjective, biased decision making in tenant screening and selection.

The federal Fair Housing Act prohibits discrimination based on protected classes of race, color, national origin, religion, sex, disability, and familial status in the sale or rental of a dwelling and in other housing-related transactions. Fair housing laws of states, cities, and counties may provide more stringent protections against housing discrimination than does the federal Fair Housing Act.

Written tenant screening criteria provide defense against claims of fair housing discrimination. In today’s changing legislative environments, it can be difficult to keep current with landlord-tenant statutes, local ordinances, federal regulations, and fair housing laws. Should a charge of housing discrimination be filed against a landlord, the landlord has the burden of proof to show there was no discriminatory action or intent. The landlord’s written tenant screening criteria is indicative of his understanding of his legal compliance requirements. A landlord cannot prove a defense of a fair housing claim by citing ignorance of the law, or that he acted with good intentions.

It is a best practice to consult with legal professionals experienced in landlord-tenant matters to ensure all landlord policies, practices, tenant screening criteria, and rental documents are legally compliant, fair housing compliant, appropriate in addressing landlord-tenant issues, and protect landlord interests and the rights of tenants.

In creating tenant screening criteria, many landlords take into consideration the commonly accepted definition of a quality tenant as the tenant who:

  • Pays full and timely rent
  • Complies with lease terms and conditions
  • Maintains the rental unit to good condition

With that in mind, the screening criteria to qualify tenants for tenancy might include:

  • Verification of applicant identity with approved photo I.D.
  • Verification of current employment
  • Verifiable income 2.5 – 3 times monthly rent
  • Satisfactory credit report
  • Positive rental housing history
  • Satisfactory landlord references
  • No bankruptcies, liens, judgments
  • No evictions
  • Satisfactory background check

Based on these criteria a landlord would require an applicant to furnish proof of identity and consent to tenant screenings for a credit report, background check, public records search and verifications of current employment, income, rental housing history, and landlord references.

A landlord must establish tenant screening criteria before accepting rental applications. Once criteria are set, all applicants must be evaluated by the same criteria. It is suggested that the tenant screening criteria be a separate rental document that is noted with date and time first published. The landlord should keep records of the published tenant screening criteria used to evaluate each applicant, preferably in the master rental file and the tenant’s individual rental file. Having a record of screening criteria universal to all applicants, the screenings and verifications done at time of application, and the resulting evaluations in the tenant’s file may prove valuable if at a later date the landlord must defend against a discrimination claim.

If business, market, or legal compliances necessitate a change in tenant screening criteria, additions, modifications or deletions to the established criteria should be documented with the updated date and time notations.

Tenant screening criteria are risk management tools to protect the landlord’s business by providing a consistent, objective tenant screening process to qualify rental applicants. With such tools the landlord can make an informed business decision to offer tenancy to a qualified applicant.

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