Screening interviews are important to identify and qualify rental prospects for tenant selection in filling a vacancy. As relevant to the circumstances, a landlord could conduct more than one type of interview with prospects or tenants during the application process and tenancy. The following discussion is representative of screenings that could be conducted as part of a landlord’s best practices in property management.

Prescreening Interview

A prescreening interview is a separate interview from a tenant screening interview during the application process.

Prescreening rental prospects can identify potential tenants to fill a vacancy. Qualifying a rental prospect could begin as soon as the landlord is contacted regarding a posted vacancy listing.

Questions asked during a prescreening interview help the landlord prequalify the prospect to the landlord’s minimum screening requirements. Many prospects have questions to ask the landlord about rental policies and procedures for tenant qualification, selection, and residency. During the interview the prospect can determine if the unit meets his rental criteria and whether he will take the next step in the application process.

There are multiple ways a potential renter can learn of a unit vacancy. A prospect may contact the landlord in response to print/online media advertising, social media post, a referral from a satisfied tenant, “for rent” signage, an on-site visit, an open house showing, or other type of contact for information about a vacancy.

The questions that a landlord may ask during an interview with a prospect should be relevant to business purpose and compliant with applicable laws. A landlord should prepare a list of permissible screening questions to be ready for the first contact with a prospect. Using a set of standardized questions will help avoid claims of discrimination.

.Some common interview questions include:

• Do you currently rent? How long have you lived there?
• Why are you moving?
• What is your planned move-in date?
• Have you given notice to your landlord?
• Will your landlord give you a good reference?
• How many people will live in the unit?
• What is your monthly income?
• Will you be able to meet requirements for:

• • • • Security deposit, one month rent
      • Credit and background check
    • Will you comply with:
      • No smoking policy
      • Pet /animal policy

A landlord may want to document responses to his advertised vacancy by keeping a written record of inquiries received with brief but relevant information about the response to the vacancy listing. This aids the landlord in his marketing and advertising practices and can be an additional reference document if a prospect later decides to apply for tenancy.

Applicant Interview

Rental applications are the most efficient means to gather relevant background information about a prospective tenant to begin the rental qualification process. Customized to a landlord’s business requirements, the rental application form is a screening document that requests information about an applicant’s background, rental history, credit history, employment, and income.

A well-developed application form makes it easier for the applicant to furnish information in an organized manner. This in turn makes it simpler for a landlord to analyze and evaluate applicant information for potential business risk. A standardized format helps to ensure the screening process is conducted in a non-discriminatory manner. Every applicant should receive the same application form to be processed in the same manner according to rental practices.

The application form does not replace an applicant interview. The applicant interview is used to request additional information or clarify information as needed to evaluate the applicant’s rental qualifications.

Interview questions are developed to help the landlord determine if the potential tenant has the ability to meet rent obligations and would be likely to comply with rental rules and regulations. A rental application should be completed by every adult who intends to live in the rental unit.

A landlord must be knowledgeable of fair housing laws to understand what questions are permissible and what questions are not permissible during an interview.  Federal Fair Housing laws prohibit discrimination against the protected classes of race, religion, national origin, sex, color, familial status, or disability. Many state and local fair housing laws have additional protected classes that are more stringent than federal fair housing law.

The interview is a time to confirm the applicant’s responses to the questions regarding the completed application form. By confirming the applicant responses, a landlord prepares for the verification process at the source document or source entity. While a landlord may want to get to know the applicant, it should be remembered that the landlord-tenant relationship is a business relationship, contractual to specific duties and obligations. Questions asked must be relevant to business purpose and not stray into personal or non-essential topics. A professional working relationship between landlord and tenant will be a best practice for both landlord and tenant. A landlord should be clear in expectations for tenant duties and behavior and follow legal compliances for disclosures and notification to tenants per regulations and guidances.

Landlord Interviews

Conducting interviews with the previous landlord and past landlords is a tenant screening tool that provides direct information about a former tenant’s rental behaviors with landlords and neighboring tenants past rental history as documented by the landlords for timely rents, lease compliance, and maintaining the property in good condition provide a larger view of the tenant’s behaviors in a community setting.

Being organized with the rental application and a written list of questions will allow the landlord to conduct the interview in a professional business-like manner.

A customized rental references worksheet might ask questions such as:

• When did the tenant’s lease begin and end?
• What was the amount of monthly rent? What was the security deposit?
• Did the tenant consistently pay the rent on time?
• Did the tenant have roommates that contributed to the monthly rent?
• Did the tenant take good care of the property? Did the tenant leave it clean at move-out?
• Did the tenant cause disturbances or generate complaints from other tenants or property owners?
• Were any legal notices for evictions served?
• Was notice given per the lease agreement?
• Was the full security deposit refunded?
• Would the landlord rent to this tenant again?

Other Screening Interviews

A landlord may want to conduct interviews with personal references as provided by the applicant to gather additional information related to qualifying the applicant for selection to tenancy.

The landlord may require the applicant provide a co-signer to qualify for tenancy. The landlord will need to conduct his standard tenant screenings on the co-signer including the application interview.

Contacting employment references is usually verification of current employment. This type of contact/interview is to confirm employment history, wages/salary information, and expectations for continued employment.

Lease Renewal

Many fixed term lease agreements are for a term of one year. A tenant who qualified under the landlord’s rental standards a year ago may have had a change in regard to one or more of the landlord’s qualification criteria. If the landlord is considering offering an existing tenant a lease renewal, the landlord may conduct a screening interview to re-qualify the tenant to current rental standards.

Tenant Exit Interview

Some landlords have found that conducting a tenant exit interview at time of move-out can provide valuable feedback on property operations and rental practices. While information gained from the exit interview may be too late to retain that particular tenant, the information can be used to prevent a future tenant from experiencing the same or similar problem.

In developing questions for a tenant exit interview, a landlord is expanding on the standard question “why are you leaving?” Questions may include:

• What is your primary reason for moving?
• Are you moving to another rental community in the area?
• How did you find your new place?
• What did you like about living here?
• Do you consider the rent a fair rent for this unit/area?
• What could have been done to keep you as a tenant?

Dealing with difficult tenants is costly for a landlord; draining landlord energy and diverting business resources of time and money away from general property operations. However, a landlord cannot afford to dismiss or ignore demands from a difficult tenant. Experienced landlords recognize that property management is also tenant management.

A difficult tenant creates stress on the landlord’s business which can potentially create liabilities for the business if issues are not addressed in a timely manner. Difficult tenants can be disruptive to other tenants, potentially interfering with other tenants’ rights of quiet enjoyment of the premises, privacy, security, and safety. This can result in absence of renewals by other tenants or other tenants also becoming difficult.

The challenge in managing difficult tenants is to be prepared with a plan of action that details what steps should be taken to acknowledge and address tenant concerns and take appropriate action for resolution while protecting the business from potential harm.

Each landlord could define a difficult tenant in a different way from his fellow landlords. As a generalization, a difficult tenant is a demanding tenant, usually with repeated requests for services and comments, concerns, and complaints voiced frequently to the landlord and his staff. Issues could be major or minor ones yet treated equally in importance by the tenant.

Difficult situations could also produce a difficult tenant. A landlord would do well to first listen to tenant concerns and comments before deciding his tenant is a difficult tenant. A landlord should always remember that a difficult tenant is first of all a tenant entitled to fair and equitable housing, rental services and amenities and tenant rights and protections by law. In exchange, the tenant has responsibilities and obligations by statutory requirements and his lease agreement. Demanding or not, pleasant, or unpleasant, the tenant must be treated in a professional manner, as respectful and courteous as all other tenants are treated.

There are legitimate business reasons that a tenant could become a difficult, demanding tenant, such as a landlord‘s failure to maintain habitability or a landlord’s practice of deferring maintenance and repairs. If a tenant has repeatedly expressed concern or requested services for repairs and maintenance but his communications have been ignored or dismissed, there may be legitimate reason for the tenant to be more demanding for a response and resolution. Landlord failure to maintain the rental premise to good condition is a statutory contract default on the landlord’s obligation to provide habitable housing. Deferred repairs and maintenance which negatively impact tenant health and safety are recognized by courts as legitimate reasons for tenants to withhold rent. If the tenant proves that he has received different treatment than other tenants, he has claim for discrimination and unfair practices. A difficult tenant can quickly become an angry tenant who could potentially pose a threat to others by his disruptive behavior or can result in a complaint to government housing authorities or filing of lawsuit.

Tenant screenings can help identify red flag issues during the application process that could indicate potential problems during tenancy. A landlord can address red flag issues with additional screenings and evaluate the applicant’s qualifications according. While most applicants are on their best behavior during the interview and property showing, it is not unusual for a landlord to discover that the selected tenant becomes a difficult tenant once in residence.

The lease signing and tenant orientation meeting is a good opportunity for the landlord to hold an open discussion with the incoming tenant regarding tenant responsibilities and setting landlord expectations of appropriate tenant behavior.

A landlord’s lease agreement is a powerful property management tool. The lease agreement is the legal contract between landlord and tenant with specific duties, obligations, terms, and conditions of tenancy. The lease agreement is the governing document to enforce rules for tenant behaviors and remedies for tenant breach of contract. Therefore, the lease agreement must be strong enough in language and terms and conditions to protect tenants’ rights but, when necessary, to evict a tenant who commits repeated violations of the lease or a material condition of the lease.

During tenant move-in orientation, the landlord should review all material lease clauses with the new tenant, emphasizing the rental rules and regulations including rents, deposits, occupancy and use of premises, guest policies, noise restrictions, quiet hours, and the consequences of violation of the rules. The landlord should emphasize to the tenant that by the tenant’s signature on the lease the tenant acknowledges his understanding and consent to terms and conditions. A tenant should also understand that he is responsible for his guests’ conduct and adherence to rules and regulations while the guests are on the rental property.

The rules for community living must be clear to serve as a guide for resident behaviors and to act as a deterrent for unacceptable behaviors. Landlords should incorporate as much detail in their lease agreements as needed to protect the property and the residents. Caution is advised that arbitrary or excessive rules and regulations can serve as a deterrent for business. Tenants do not want to be regulated or restricted unnecessarily, unfairly, or illegally. Lease clauses must comply with applicable federal, state, and local laws for fair housing, consumer protections, and landlord-tenant statutes. Any policy, procedure, practice, rule, or regulation cannot discriminate against a protected class or characteristic nor deny rights afforded by law.

Certain landlord-tenant interactions make it more challenging for a landlord to work with a difficult tenant to achieve resolution of issues.

Rents

The most common situation for difficulty in landlord-tenant interactions is tenant failure to pay rent. The applicant may have qualified during screening as being financially able to meet rents but circumstances frequently change after a tenant has been installed and the tenant is unable or unwilling to make timely payment of the full rent owed.

In a situation where the tenant has defaulted on his rent obligations, such as late payments, missed payments, partial payments, or skipping out on the rent, a landlord must remain calm and professional in his dealing with the tenant. The tenant may be emotional, embarrassed, belligerent, or unable to deal with the situation as a result of cash flow problems, or unemployment. Communication is important in this situation to understand the true nature of the problem and how to resolve it.

It is a best practice to have good lease clauses that include all policies and practices related to rents – how much the rent is, when it is due, the grace period as applicable by statute or lease and application of late fees. The lease should address the issues of rent defaults and the remedies that may be taken to resolve the issue, including legal eviction.

Frequent Tenant Demands

A landlord may have to deal with a difficult tenant who constantly makes demands on landlord time and services or complains about the property, the neighbors, the policies, and the rules for the community. It takes effort to remain calm with tenants who are angry, rude, or irritating but a landlord must listen first before responding professionally to the tenant. Tenant safety, security, and health issues must be prioritized when issues arise to protect the tenant and the landlord.

A best practice to help with demanding tenants is to ensure that (1) there is a strong lease agreement, (2) the lease is enforced consistently, (3) the lease is enforced uniformly with all residents, and (4) new tenant orientation is conducted to provide education and training regarding rental rules, lease terms and conditions.

Disruptive Behaviors/Nuisance Complaints

A tenant’s noisy behaviors can be disruptive to his neighboring tenants which in turn can cause problems for the landlord. Noise complaints from tenants should not be ignored by landlords. Any complaint should be taken seriously and investigated accordingly.

A best practice is to have a strong lease agreement. A lease should always include a clause that prohibits tenants and their guests from creating a nuisance by disturbing or interfering with the quiet enjoyment and peace and quiet of the rental property by other tenants or nearby residents. If the tenant violates the lease by creating a nuisance with loud or excessive noise, the landlord’s actions should be in accordance with the remedies set out in the lease or by law.

Property Damage

Property damage caused by a tenant can be an expensive problem for a landlord. Accordingly, a landlord collects a security deposit to protect his property against damage caused by a tenant. In general, tenants are held responsible for property damages as a result of tenant negligence, carelessness, or intentional destruction. Tenants are not responsible for normal wear and tear during their tenancy.

A best practice is once again a strong lease agreement that details tenant responsibilities for maintenance and housekeeping to maintain the unit in good condition as received at move-in. Landlords should conduct regular routine property inspections for damage and maintenance concerns and take corrective actions as required.

Property Damage Caused by Pets

Property damage can be caused by a tenant’s pet’s destructive behavior or by pets being left unattended by their owner/tenant. The landlord ‘s pet policy should detail pet owner responsibilities for control of their pet and responsibility for damages to the property caused by their pet The owner/tenant acknowledges his acceptance of the pet policy at lease signing. Some landlords require pet deposits at lease signing to help prevent loss from pet damages.

Occupancy, Guests, Subletting

Difficult tenants may ignore a landlord’s policies for occupancy standards, guests, or subletting. A landlord may discover during a property inspection that others are living in the rental unit that are unknown to him. Those additional occupants have not been tenant screened and have not signed to the lease. This can result in creating potential liabilities for the business.

The landlord should have definitive lease clauses regarding occupancy, guests, and prohibitions against subletting the rental property. Remedies for tenant default should be clearly detailed in the lease and strictly enforced during the tenancy.

Illegal Activities

A landlord cannot ignore tenants conducting or being involved in criminal activities on the rental premises. A landlord should monitor tenant activity on the premises and report criminal activities to law enforcement agencies. Tenants engaging in criminal acts have materially violated the lease agreement and legal action should be pursued for lease termination and eviction.

Pre-screening rental prospects is a management practice that reduces the risk of installing a problem tenant. By prescreening a rental prospect at the point of first contact, a landlord can quickly determine if the prospect has a genuine interest in the offered rental. If the prospect expresses interest the landlord can conduct a brief interview to screen the prospect for a property showing and possible application. Questions asked during the prescreening interview help the landlord prequalify the prospect to the minimum screening requirements set by the landlord. Information provided by the landlord during the interview helps the prospect determine whether the rental will meet the prospect’s needs and wants. The prospect can self-qualify to the asking rents, property location, features, and amenities as the landlord details rental expectation and lease terms and conditions.

A prescreening interview is a separate screening in addition to tenant screenings conducted at application submission. Prescreening is conducted as a discovery tool to help the landlord understand the prospect’s situation and the prospect to learn more about the rental offering.

This first screening can save time and money for the landlord by eliminating prospects who don’t meet minimum screening criteria. The prospect saves time and money by knowing his qualification status and not having to pay the landlord’s application fee to find out he did not meet minimum screening requirements. The asking rent and move-in ready date are two primary qualifiers for landlord and prospect. If the prospect is unable to meet rents or cannot accept the unit ready date, the prospect will need to continue his rental search elsewhere.

For quality properties both a prospect and a landlord want to move quickly through the rental process to fill the vacancy. Since the initial contact between the landlord and a rental prospect could be as soon as the posting of a rental vacancy, it is important for the landlord to be prepared to respond to inquiries promptly in a professional manner. A favorable first impression of the landlord can be an influencing factor on a rental prospect’s decision to apply for tenancy.

To take advantage of the opportunity of using the rental listing to attract prospective tenants and act as a preliminary screening tool, the landlord will want to create interest in the vacancy by showcasing property features and amenities in the listing. However, the rental listing should prioritize basic rental information including required disclosures such as screening criteria and lease requirements to assist the prospect in evaluating rental properties in his search. Providing essential property information for property address and asking rents allows prospects to assess their interest in the property and to pre-qualify themselves using the rent price point. Those prospects reaching out to the landlord for more information provide an opportunity for the landlord to explain his application process and decisioning criteria which could lead to an application decision.

By prescreening prospects, the landlord can concentrate his time and effort on qualifying prospects who potentially have the minimum qualifications to move forward in the process. By preliminarily qualifying a prospect to minimum standards and confirming the prospect’s continuing interest in the application process the landlord can detail his application process, rental expectations, policies, and practices more fully to the prospect and encourage application submission. This full disclosure can be the influencing factor on the qualified prospect’s next step. The prospect can self-determine whether he now has sufficient interest to go forward in the application process. However, after learning more about the rental unit and the community, the prospect must still evaluate this information against his own rental criteria – his rental wants and needs. He may decide to continue his rental search elsewhere. In a brief interview, both landlord and prospect can reach a decision that is less costly in time, money, and effort rather than continuing an application process that was not mutually satisfactory.

As part of preparing to fill a vacancy and before posting a rental listing, a landlord should conduct due diligence to ensure compliance with current landlord-tenant laws applicable to his property and the local, state, and federal laws regarding fair housing, fair housing advertising and consumer protections.

Having set his screening criteria, the landlord is ready to screen prospects and advance those meeting minimum requirements to the next stage in the filling vacancy process. Prospects should be made aware of qualifying requirements such as:

• Satisfactory credit report
• Satisfactory background check
• Proof of income
• Employment verification
• Positive rental housing history
• Satisfactory landlord references
• Satisfactory public records (No evictions, bankruptcies, liens, or judgments)

Prospects should also be made aware of other landlord requirements such as

• Application fee due at application
• Lease type – fixed term or month-to-month
• Lease terms and conditions
• Rents
• Security deposit
• Move-in fees
• First month rent, security deposit, other fees and deposits required at lease signing
• Income to Rent ratio
• Animal policy
• Smoking policy

Qualifying a rental prospect by asking the prospect a few important questions can quickly move the rental process forward. A landlord should have a standard set of questions to ask all prospective renters who contact him regarding a vacancy. Using a set of standardized questions will help avoid claims of discrimination by ensuring all prospects are asked the same questions in the same procedure. It is a good practice to begin the prescreening interview by asking the rental prospect what questions he has after reviewing the rental listing. Allowing the prospect to go first with his questions provides a landlord an opportunity to listen to what the prospect feels is important, what needs clarification, or what requires confirmation.

Documentation of all prospect contacts should be recorded in writing and doing so may help defend against claims of fair housing discrimination. Notation of the prospect’s responses may also prove useful to later compare with information in his application form.

How many questions should a landlord as prospect? Twenty questions may be too many questions and the prospect will likely lose interest and terminate the interview. Five questions may not be enough to make a clear determination of the prospect’s interest and qualifications. A landlord should keep in mind that the simple act of a prospect making first contact is a promising lead. If a landlord prioritizes listening to the prospect and asking prequalifying questions that confirm interest in a property showing and becoming a renter, a prospect is usually receptive to   learn more about the landlord’s rental requirements.

Lease renewal is a tenant retention strategy. For many landlords a lease renewal policy may be a best business practice depending upon local market conditions, business necessity, the individual tenancy, and other variables related to property location, condition, rents, and statutory requirements. A landlord, by utilizing a lease renewal strategy for his quality tenants, avoids vacancy and reduces the costs associated with traditional tenant turnover.
However, not every tenant is a quality tenant. There are many reasons that leases are not renewed. Some tenants choose to move on, while other tenants do not perform at a level to warrant renewal. A landlord must evaluate each tenancy on its own merit for consideration of renewal. In some situations, it is better for business if the lease expires and a vacancy is created.
The benefits of lease renewal include:
• Avoiding the time consuming, costly process of finding a new tenant, including:
o Holding costs of a vacant unit including overhead costs of mortgage, utilities, taxes, and insurance,
o Loss of rents due to vacancy,
o Advertising and marketing costs,
o Tenant Screening costs,
o Move-in costs including property cleaning, repairs, tenant orientation and property inspections,
o Eliminate tenant learning curve on rental policies, procedures, and rules,
• Reducing potential risk associated with installing a new tenant,
• Potentially increasing monthly rent without incurring new tenant expenses.
As part of the landlord’s lease renewal policy and practices, there are preliminary tasks that should be done before considering a lease renewal offer. These include:
• researching current state and local landlord-tenant laws applicable to the property’s location to determine whether laws address the issue of lease renewal including rent increases, security deposits, or other terms and conditions associated with lease renewals,
• reviewing current lease terms and conditions to identify policies and practices already in place regarding end of lease procedures. Review of the current lease will also serve to identify terms and conditions that may need to be changed for a renewal lease contract,
• conducting a property inspection to determine whether the tenant is keeping the rental unit in good condition and housekeeping to an acceptable standard. Specifically, the landlord is inspecting the unit to determine whether there are visual signs of tenant-caused damage or unreported maintenance or repair issues, and
• conducting a rental survey for local market conditions, fair market rents, and comparable properties.
A lease renewal is an opportunity for the landlord to increase rent. Landlords can generally set their own asking rents unless rent control, rent stabilization, or other landlord-tenant statutes and ordinances govern rents and rent increase amount. Current market conditions could also influence asking rents. If the tenant’s current rent is below fair market rent, the landlord will usually try to increase rent to market rent for a renewal lease. Rent that is significantly below market rent may need to be adjusted incrementally if the landlord wants to retain the tenant.

A large rent increase could have a significant impact on the tenant’s ability to make rent. There is a risk that a tenant’s financial situation could have changed since the initial tenant screening was conducted. A landlord should be clear on legal requirements for tenant screening and/or rescreening. Some states have specific regulations on the use of tenant screening/background reports by landlord for housing decisions. If rescreenings are permissible and the landlord has a policy for rescreening, all tenants considered for lease renewal should be screened according to policy and legal compliances. Care should be taken that discrimination does not occur by selectively choosing tenants for requalification.
The lease renewal decisioning process usually has a set time period for the landlord to make a renewal offer and the tenant to respond. As a rule of thumb, a landlord will contact a tenant 90 days before the lease expiration date and require a tenant response within the next 30 days. In the event that the tenant declines the renewal offer, the landlord would have sufficient time (approximately 60 days) to prepare for a vacancy. There may be state or local regulations on the time period for landlord notifications and tenant response that could change notice requirements.
Of primary importance is whether the landlord wants to keep the tenant. The best candidates for lease renewals are those tenants who have satisfactorily performed to contract terms. Those tenants have established a rental history and a relationship with the landlord that the landlord would be fairly confident of future tenant behaviors.
There are several other issues associated with lease renewal that are sometimes overlooked when conducting analysis and evaluation for a renewal offer. A renewal tenant does not have privileges over an incoming tenant. House rules and lease terms must enforced for all tenants. A landlord may be tempted to ignore a good tenant’s minor lease violations. Selectively enforcing rental rules is tenant discrimination and prohibited by federal, state, and local fair housing laws.
There are factors that can influence a tenant’s acceptance of a renewal lease. Of primary importance to most tenants is a satisfactory experience with property management and customer service. This can include:
• Landlord being accessible and responsive to tenant requests, questions, and concerns,
• Tenant screenings – good tenants want good neighbors,
• Fair rents,
• Enforcement of lease terms and conditions,
• respect for tenant privacy,
• Safe secure environment,
• Well-maintained property.
The most commonly cited reason for moving is the landlord’s lack of response to repair and maintenance problems.
A landlord should be prepared to respond with documented procedures when a tenant declines to renew. The lease should detail what happens at termination date:
• the lease expires and the tenant moves out according to the protocols established by the lease terms.
• the standard residential rental lease clause provides for a reversion to a month-to-month agreement with an automatic month by month renewal.
If the tenant declines the renewal offer and accordingly plans to move out at lease end, the landlord may require the tenant to provide written notice of intent to vacate as specified in the lease agreement. The notice allows the landlord to begin preparations for the upcoming vacancy.
After receipt of the tenant’s notice to vacate, the landlord should confirm the tenant’s stated departure date in a move-out letter. In the move-out letter the landlord can review the lease terms and conditions for tenant move-out, including property inspection, cleaning, and return of keys.
The landlord should be prepared to respond to a tenant request for a lease concession in return for the tenant signing a renewal contract. Most commonly a tenant will ask for a rent discount or unit upgrades. Granting a lease concession is a business decision that can move a tenant forward in his renewal decision. If a lease concession is granted, the renewal lease agreement should be documented in clear language regarding the type of concession, details of the terms and conditions agreed to, and the available remedies if the tenant should default on his obligations. A landlord should research state and local laws to determine if there are requirements for notification and disclosure of tenant incentives or lease concessions.
A renewal lease is a new lease with the existing tenant. A lease should always be documented in writing with detailed language of lease terms and conditions. The amount of detail in the renewal lease should be the same amount of detail as was written in the original lease. The lease should identify the parties to the lease, the premises address, the beginning and ending dates of the lease, lease terms and conditions, rental policies, what constitutes lease defaults, remedies for lease default, rents and deposits held. The renewal lease may have different lease terms and conditions than did the original lease either by modification, addition, or deletion, and should be reviewed with the tenant to ensure the tenant understands the new terms and conditions.
Experienced landlords plan the tenancy process from prospecting tenants to lease termination date to renewal. Tenant selection is done with long-term tenancy as a consideration. The landlord can increase his lease renewal rate by his policies and practices, setting the right expectations during tenant orientation, enforcing lease terms and house rules, treating tenants with respect, protecting tenant privacy, providing a safe and secure environment, and maintaining the rental property in good condition.

A rental history report is a comprehensive timeline of a renter’s past rental housing. This information is used in the tenant screening process to allow the landlord to make a more informed decision in the selection of a new tenant.

There are several ways to obtain a rental history report. A rental history report can be compiled by the landlord using applicant supplied information requested on the rental application. Most standardized rental applications request the applicant to provide a 3 to 5 year rental history with previous and past landlord /property manager names, contact information for each landlord/property, rental address, and dates of tenancy.

A rental history report may be provided by some tenant screening companies as a specialized report for landlords. Information for a rental housing history report is generally gathered from multiple information sources including credit reports, background checks, eviction records, and previous addresses used by the renter.

Some specialty consumer reporting agencies provide consumer rental history reports for a landlord to use in applicant decision making. Consumer data for rental history may include information on rents, deposits, past due amounts, property damages, evictions, lease defaults, noise and nuisance complaints, unauthorized occupants, pet issues, or other reportable events.

A rental history report as provided by a contracted agency may provide the landlord with renter information such as:

• A chronological listing of all rental housing addresses reported for the renter,
• Full contact information for the landlord/property management company for each rental property address listed,
• Dates of tenancy at each rental address,
• Monthly rent and rent payment history,
• Rental issues such as late or missed rents, lease default, property damage, legal action such as eviction, or other reported rental problems,
• Any recommendations regarding tenancy as reported by a past landlord.

A rental history report provides an orderly means to analyze and evaluate an applicant’s past rental behaviors for potential financial risk to the landlord’s business. The rental history report is a capsulized document of what the applicant was like as a tenant over a certain rental period. By using a rental history report the landlord can easily determine a pattern of how often a renter has moved, the length of tenancy at each rental address, confirmation of timely rent payments, and whether there is history of negative events involving the renter. Analysis of the report could identify red flag issues such as frequent or sudden moves, lease defaults of unpaid rent, damages, or skips, and eviction. Perhaps the greatest concern for landlords is the potential threat of late and missed rents. Data on rent payment history is not always available to landlords using customary tenant screenings such as credit reports. While an applicant’s credit report provides information on general credit usage and payment history of debt obligations, many credit reports do not contain history specific to rent obligations and rent payment history unless a landlord has reported debt to a credit reporting agency or has sent the debt to a collections agency.

The use of the rental history report provides an overview of rental behaviors for a period of time, usually over several years that can be indicative of future renter behavior. This snapshot of rental history can be of significance in tenant decisioning regarding probable length and quality of tenancy and the potential impact on landlord cash flow as a result. If a landlord depends upon stable and consistent cash flow from long term tenants, a renter that historically fulfills a one year lease agreement and moves on or a tenant that has a history of late payments can have a significant impact on cash flow.

A rental history report can reveal the absence of rental history or limited rental references. For example, applicants who are first time renters, have previously rented from family members, lived in student housing, or are homeowners returning to rental markets may have limited rental history or none at all. The landlord should follow his stated rental policy and practices for rental qualification. If the applicant is otherwise qualified, the landlord’s options could include requiring additional security as permitted by state statute.

There can be a request by an applicant that the landlord not contact the applicant’s current landlord. The applicant may not have given notice, may not want the current landlord to know he is looking for a new rental, or thinks the current landlord will give unfavorable information, which may or may not be justified. While the request is understandable, the landlord should adhere to his stated tenant screening policies. If one exception is made, other exceptions might follow. However, the timing of the decision to contact the current landlord could depend upon whether the applicant is otherwise qualified to rental criteria. If the applicant meets other criteria, the current landlord should be contacted for a reference check.

If a thorough review of the rental history report does not discover red flag issues, the landlord can proceed with the applicant interview followed by reference checks of previous and past landlords.

It should be standard business practice for fair housing compliances to ensure that interview questions are non-discriminatory in nature and asked in a non-discriminatory manner. The same questions for applicant interviews must be asked of all applicants and the same questions for landlord reference checks must be asked of all previous landlords. Interview questions for an applicant could include relevant questions regarding rental history such as rent details (due date, late payment assessments), property conditions (move-in/move-out, damages), or whether the applicant would rent from that landlord again.

Research and verification of rental history information is a required risk management measure to safeguard the landlord’s business. Failing to conduct all due diligence on applicants has the potential for claims of liability and negligence. Applicants wanting to withhold rental history may try to use friends or family members as landlord references, provide false or misleading rental addresses, aliases, or other fraudulent information. A landlord calling to check rental references must verify the identity of the reference, the rental address, and confirm that the applicant was a tenant with that landlord at that address.

If the applicant has been a renter for several years, calling former landlords may provide more honest answers to questions about rental behaviors than calling only the previous landlord who may have motivation for giving either a good or bad reference.

A past landlord has moved on and has nothing to gain or lose in providing relevant rental information. While some former landlords may be hesitant to provide detailed tenant information due to privacy concerns, a landlord should be able to at least confirm dates of tenancy, rental amount, and the security deposit amount.

Most commonly during a landlord reference check, the inquiring landlord has questions such as:

• What were the dates of the tenancy?
• What was the amount of monthly rent? What was the security deposit?
• Did the tenant consistently pay the rent on time?
• Did the tenant have roommates that contributed to the monthly rent?
• Did the tenant take reasonable care of the property? Was the unit clean at move-out?
• Was the tenant disruptive to others?
• Were any legal notices for evictions served?
• Was notice given per the lease agreement?
• Was the full security deposit returned?
• Would the landlord rent to this tenant again?

The above questions are representative of a number of questions that could be asked of landlord references. The inquiring landlord would probably like to know as much as possible about the former tenant’s rental behavior but should remain respectful of the reference landlord’s time and access to tenant records.

Information obtained through landlord references should be assessed against information obtained through other types of tenant screenings. A landlord must keep an open mind regarding any mention of personality conflicts, subjective feelings, or personal preferences as expressed by a former landlord. A positive reference by a former landlord does not necessarily mean a trouble-free tenancy. A decision to offer tenancy must be based on all objective data collected by the landlord’s tenant screening process.

Since landlord reference checks are only one of many tenant screenings conducted for tenant qualification, a landlord has multiple opportunities to obtain data to evaluate applicants. By using multiple types of screenings, if the tenant has been a problem tenant in the past there will likely be red flags that show up in other screenings

The move-in process begins the landlord-tenant relationship. It’s important for a landlord and tenant to establish a professional, mutually respectful relationship during move-in to encourage a satisfactory working relationship during tenancy.

Lease

The lease agreement is the legal contract governing the landlord-tenant relationship. A clearly written, detailed lease agreement sets out the terms and conditions for tenancy. If the rental property is governed by a home owner association, it is important that the lease agreement include appropriate language for the tenant to (1) acknowledge receipt of copies of all relevant documents (usually CC&Rs, Bylaws, and Rules & Regulations); (2) understand and accept the restrictions of the particular association involved; (3) understand that the association can modify rules and regulations for the purpose of promoting the convenience, safety, or welfare of residents; and (4) agree that he/she will reimburse the landlord for all fines, legal costs, and other penalties resulting from tenant’s violation of association rules and regulations.

The landlord has responsibility to utilize a lease agreement that is compliant with specific federal, state, and local legal requirements. While an offer of tenancy has been made and accepted, there is no legal contract until both landlord and tenant have signed the lease. A landlord should have a best business practice to review the lease agreement with the incoming tenant to make sure the tenant understands his legal obligations by contract and statute before signing the lease.

Orientation

Tenant orientation provides the opportunity for the landlord to review with the incoming tenant the lease terms and conditions, lease addenda, rental policies and practices, required landlord disclosures, the landlord’s rules and regulations, the move-in/move-out inspection checklist, and the tenant handbook. A welcome letter may be included in the tenant’s move-in packet to serve as a guide and reminder of important rental policies and practices discussed during orientation.

A new tenant orientation meeting can introduce the tenants to the rental community in a shorter time with potentially fewer problems during residency. The landlord should review the lease terms and conditions section by section with the new tenant and emphasize the important lease terms such as rents, security deposit accounting, fees, rental policies and practices, move-in and move-out procedures, lease defaults, notifications and remedies of lease defaults, and lease conditions such as a requirement for renters insurance. The landlord should be thorough in his review of terms and conditions providing adequate detail and allowing sufficient time during orientation for tenant understanding and agreement of terms and conditions. The landlord’s house rules and regulations for community living should be reviewed and discussed to make sure the tenant understands his duties and obligations for matters such as housekeeping and good neighbor relations.

A tenant handbook is a resource tool for customer services and community resources. The handbook should include general information such as the address of the landlord or the property management company, business office staffing information including hours of operation, emergency/non-emergency/after-hours contact names and phone numbers, website address, tenant portal information, business email addresses, and cell numbers used in property management. It is helpful to include community resource information and contact numbers for law enforcement, fire and safety, utility companies, and other business services that may be needed during tenancy. The handbook can include other useful information such as maintenance tips, safety tips, severe weather preparedness information, maintenance and repair reporting procedures, and instructions for the use of community facilities such as the pool, fitness center, sports courts, etc.

A new tenant welcome letter serves as a quick reference for business office hours and contact information, emergency/after-hours information, and rental rules and procedures. The letter can provide a brief review of rental policies for rents, property health and safety inspections, landlord access notifications, maintenance and repair requests and lease termination/move-out procedures.

Lease Signing

Traditionally lease signing is done by the landlord and tenant meeting in person and signing a printed lease document. However lease signing can be completed using other means such as digital signing services, the landlord’s tenant portal, email, or overnight delivery of printed documents.

All occupants of legal adult age should be required to sign the lease agreement, making them jointly and severally liable for lease terms and conditions. A best business practice is to have the new tenant sign the lease first. This is particularly important if the landlord and tenant do not meet in person for the signing. If a landlord signs the lease and sends it to a tenant using alternative means of delivery, a tenant could, although not likely, change lease terms and claim the landlord had knowledge and agreement to those changes. A landlord should always verify that the signed lease returned by the tenant is the correct version of the lease with no alterations. The name and signature of the tenant on the returned document should be the full legal name and signature of the tenant selected for tenancy. Once the lease is signed by the landlord, the lease agreement is finalized.

Fees and Deposits

Lease terms and conditions usually require full payment of fees and deposits at or before lease signing unless state statute or local ordinance allow otherwise. In a few localities, tenants may be able by law to spread the security deposit in installments over a designated period of time. Fees and deposits may include a security deposit, other types of deposits, move-in fees, and first month rent. As applicable by statute a landlord may be able to collect a last month rent at time of move-in.

Fees, deposits, and first month rent should be collected and verified as good funds before the tenant is allowed to move into the rental unit. Transferring possession of the unit before funds are converted to the landlord’s use may make it difficult to remove the tenant from the unit for lease default. Legally, if possession of the premises has been given to the new tenant, such as delivery of the keys to the unit, the tenant has possession of the unit and the landlord must follow legal procedures to evict the tenant and regain possession of the premises.

Unit Inspection and Move-In Checklist

Many states require a move-in checklist to be completed when possession is given to the new tenant. The checklist is a written statement of condition of the rental unit at the time of move-in. It documents any existing damage to the unit and/or furnishings and requires acknowledgement of the unit’s condition by the signature of the tenant. The move-in inspection should be done before the tenant receives keys, moves in any personal belongings, or has otherwise been given possession of the unit.

The checklist can help minimize discussions or disagreements between landlord and tenant at a future time regarding the unit’s initial general appearance and physical condition.

It is recommended that a move-in checklist include the condition and cleanliness of landlord supplied appliances; cabinets; painted surfaces; floor coverings; windows, screens, and window coverings; doors, plumbing fixtures, light fixtures and ceiling fans; carport, garage, and parking areas; and landscaping. The original signed checklist should be retained by the landlord in the tenant’s file and a copy of the signed checklist given to the tenant for his records. The tenant should be advised that the same checklist will be used to document the condition of the rental unit at the time of tenant move-out. By using the same checklist for move-in and move-out conditions, the landlord has good documentation if deductions need to be taken from the tenant’s security deposit following move-out.

The walk-through inspection of the unit is a good time to familiarize the tenant with operating instructions for electrical, heating/cooling, and plumbing systems as well as furnished appliances. The tenant should know the locations of the furnace, air conditioner, water heater, breaker/fuse box, gas valve, water valve, supply valves for sinks and toilets, smoke alarms, and carbon monoxide detectors.

Failure of the landlord to follow good inspection move-in procedures can have important implications regarding the landlord’s right to withhold any part of the security deposit when the tenant moves out.

Transferring Possession

The issue of when possession of a unit should be given to the selected applicant is an important one that has potentially significant legal and financial implications. It should always be remembered that once a tenant is in possession of the rental property, it will require legal action by the landlord to remove the tenants from the property and restore possession of the rental property to the landlord.

Possession of a unit should not be given to new tenants until all documents, including all required legal disclosures, have been executed by all parties on the lease agreement, all fees and deposits have been collected by the landlord, and the tenant can document that utilities are scheduled for transfer to the tenant. Allowing a tenant to take possession of the unit while the utilities are still in the landlord’s name can result in problems. In some jurisdictions, if the tenant in possession fails to transfer utilities to his own name, the landlord may not have the right to turn the utilities off.

Tenant income verification is an essential financial screening to qualify an applicant to rental standards. Independent verification of income is necessary to confirm the applicant’s self-reported income as shown on the application. Verification of the applicant’s income provides the landlord with preliminary data regarding the applicant’s income to rent ratio and some assurance that the applicant has been truthful on his application.

Income screening is important to determine potential financial risk to the landlord’s business by a tenant rent default. Rent defaults of missed rent or chronic late payments of rent are of great concern for most landlords. The applicant’s financial ability and timely payments of debt obligations are important decisioning factors in the tenant selection process. The first screening in determining financial ability is income verification.

Income verification conducted early in the application process is a pacing measure that can efficiently move the process of filling a vacancy forward to help reduce days in vacancy. The landlord should have a defined policy and practice for income verification in compliance with applicable landlord-tenant regulations and restrictions by statute and ordinance.

Traditionally income verification was employment verification to determine whether the applicant’s earnings were sufficient to qualify to rental standards. Employment wages have long been considered a steady, stable source of income that could be reliably verified and generally counted on as a dependable means of rent payment.

Source of Income Fair Housing Protections

However, income can be derived from a variety of sources other than employment wages. Some states, cities, and counties have passed fair housing laws to include source of income protections. However not all source of income laws offer equal protection from housing discrimination. There is significant difference in the strength and effectiveness of current laws. While some laws provide specific source of income protections by source name, other laws use more generalized language to refer to source of income protections. Housing Choice Vouchers may be explicitly named as a protected source of income in some localities but may be specifically excluded from source of income protections in other localities. It is the landlord’s duty to research applicable laws for the location of his rental property to determine his fair housing requirements.

As a protected class by state, city, or county statute/ordinance, source of income (SOI) protection must be incorporated into the landlord’s fair housing policies and rental practices. A landlord cannot reject a rental applicant on the basis of the applicant’s source of income as long as the income is from a lawful source. In many of these states and localities, source of income protection includes rental assistance through participation in the Housing Choice Voucher program. Per statute or ordinance a landlord cannot refuse to accept the applicant’s Housing Choice Voucher in evaluating rental qualifications.

Source of income discrimination can take many forms, as evidenced in rental advertising, qualification requirements, and rental policies and practices. In rental housing, source of income discrimination occurs when:

• A landlord’s rental criteria requires specific income documentation such as copies of pay stubs, typically only available to individuals employed as a wage and hour worker or salary employee.
• A landlord charges a higher rent for an applicant with a source of income other than wages or salary, requires a co-signer/guarantor, or requires a higher security deposit.
• A landlord sets different rental terms and conditions, or places restrictions on the use of rental facilities or services for tenants utilizing housing assistance vouchers.

Fair housing protections for source of income do not prohibit a landlord from setting his rental criteria to include income qualification. However, if the landlord does require the applicant to have a certain income to qualify for housing, the landlord must subtract any payment from a subsidy program from the total monthly rent to determine the amount of rent that the tenant would pay out of pocket. The landlord must include all sources of income in the tenant’s total income when calculating income eligibility for any tenant.

Income screening must be compliant with specific state and local landlord-tenant requirements for tenant screenings, such as some localities’ requirements for low-barrier tenant screenings that have a lower qualification income to rent ratio (e.g., 2.5:1 or 2:1 income to rent ratio) or fair access in renting housing requirements.

Lawful Sources of Income

Verification of income means that the amount of the income can be proven or that the receipt of the income can be proven. An applicant must be able to provide written documentation that shows either the amount of income or that the income has been received. The written documentation should name the source of the income for proof of income. An applicant can provide multiple documents that together identify the source of income and the amount of receipt.

Lawful sources of income may include but are not limited to the following:

• Earnings
  • Wages and salaries
  • Self-employment
• Investments
• Pensions
• Private benefit programs
• Mutual funds
• Stocks and bonds
• Rental real estate
• Benefits
• Social Security benefits
• Supplemental Security Income (SSI)
• Unemployment insurance benefits
• Disability benefits
• Workers compensation benefits
• Assistance programs
• Housing Choice Vouchers (Section 8)
• Temporary Assistance for Needy Families (TANF)
• Veteran Affair’s Supportive Housing (VASH)
• Short-term emergency grants from state and local agencies for rental assistance
• Assistance programs from community service agencies, non-profit organizations, or charitable organizations
• Court awarded settlements
• Alimony
• Child support
• Judgments

As the first step in the verifying an applicant’s income, a landlord will need to request appropriate documents to verify the income.

Wage and Salary Employment

Proof of current employment and wages or salary income for applicants can be verified by the applicant providing copies of the most recent paycheck stubs, and/or the landlord’s confirmation of the applicant’s income by contacting the employer directly. A landlord could request a copy of the applicant’s previous year W-2 income statement for comparison of last year earnings to projected earnings for the current year. A landlord could also request a copy of the applicant’s filed tax return for the previous two years for verification purposes.

The base rate of pay and scheduled hours per pay period should be used for income qualification. Overtime hours and/or bonus pay should not be used in determining annualized income because amounts and frequency are not controlled by the applicant.

Self-Employment

A 1099 tax form, most often a Form 1099-Misc, is used to report earnings of individuals who are self-employed. While it may be of benefit to the landlord to request copies of the applicant’s 1099 forms, a landlord must keep in mind Form 1099 reporting requirements. A 1099-Misc form does not need to be prepared if the amount of payment is less than $600 for the year. A self-employed individual has the obligation to report all self-employment income on his tax return but may not receive a 1099-Misc form from all employing entities. A landlord can instead request the applicant provide copies of the previous two years filed tax returns to document his income. A landlord could also request copies of the applicant’s bank statement as a supporting document to show recorded transactions of income deposits.

Commission/Bonus/Incentive Based Employment

An applicant whose income comes from commissions or incentives will need to provide the landlord with copies of appropriate documents that support the source of income. Appropriate documentation may be copies of tax returns, bank statements, 1099s, or other supporting information.

Cash

In some circumstances, cash is a generally accepted means of payment for a variety of goods sold or services performed. Cash employers may not be willing to furnish documentation of employment and proof of cash payments. Workers who work for cash may also work for more than one employer. Cash workers may not be able to provide adequate documentation to prove cash income and stability. A landlord’s policy regarding a cash source of income may provide for conditional acceptance of an applicant, such as a co-signer, or a higher security deposit as applicable if further tenant screenings are satisfactory.

Bank and Financial Statements

A landlord may request copies of the applicant’ bank statements for a specified number of months, usually three to six months, to establish an income history. Bank statements can be supporting documents to confirm paycheck and other income deposits, determine cash reserves, view itemized transaction history including bank overdrafts and returned items, and view account balances. Financial statements such as income and expense statements or statements that show account balances, deposits, and withdrawals can establish a history for income verification and evaluation.

Verification of Non-earned Income

Verification of non-earned income, such as interest, dividends, annuities, Social Security or disability benefits, IRA/401(k) pension distributions, other retirement plan distributions, court-ordered agreements for spousal support, child support or as awarded by settlements, and other investment cash flow and entitlement items, may be verified through copies of official statements provided to the applicant.

Although not commonly used as sources of income for rents, an applicant may plan to use funds from a Workman’s Compensation award, severance payment from an employer, or state Unemployment Benefits. A landlord should carefully analyze documentation provided by an applicant regarding the use of these types of funds. Oftentimes the benefit award period is a short duration or a lump sum amount was awarded. Additional verifications may be needed to determine particulars of awarded benefits and the balance of funds remaining in account that can be distributed.

For income derived from other lawful sources landlord will need to research applicable documentation and supporting information for income verifications.

A landlord’s business is governed by state, local, and federal law. State statues regulate many aspects of the landlord-tenant relationship including housing discrimination, habitability, tenant rights, rent rules, security deposit rules, required landlord disclosures, landlord access to rental property, termination for violation of lease, termination for nonpayment of rent, unconditional quit terminations, rent withholding and repair and deduct remedies, prohibition of landlord retaliation, consequences of self-help evictions, handling of abandoned property , domestic violence situations, landlord’s duty to mitigate his losses due to a tenant leaving without fulfilling the lease agreement. Some states or individual cities have rent control laws.

Local city and county ordinances also govern certain aspects of the landlord’s business, such as fair housing protections and health, safety, and building codes standards and inspections. A few cities and counties have rent control regulations. Some cities and counties have enacted regulations and restrictions on certain landlord practices for tenant screenings and rental standards. The physical location of the rental property determines the governing statute/ordinance for legal compliances.

The federal Fair Housing Act prohibits discrimination in the sale, rental, or financing of dwellings and in other housing-related activities on the basis of race, color, religion, sex, disability, familial status or national origin. The federal Fair Credit Reporting Act (FCRA) obligates the landlord to certain regulated practices to ensure FCRA compliance for the protection, privacy, and accuracy of consumer personal information. Federal agencies such as the Department of Housing and Urban Development (HUD) administer tenant housing assistance programs such as the Housing Choice Voucher program.

Governing documents are developed by the landlord for his business. Primary documents such as the lease agreement, rental policies, house rules and regulations, required legal disclosures and checklists protect and support his business operations.

Lease Agreement

A landlord’s lease agreement is a legal contract binding landlord and tenant to mutually agreed upon rental terms and conditions for a specific period of time as witnessed by signatures of all parties named on the lease.

The lease transfers possession, use and enjoyment of the named rental premises from the landlord to the tenant for a specified period of time for the tenant’s payment of a stated amount of rent. The lease furthers sets out in detail the terms and conditions of tenancy, duties and responsibilities of landlord and tenant, and remedies for lease default.

A good lease provides risk prevention practices against known rental risks and the potential of unknown risks. Failing to provide adequate detail of rental policies and practices within the lease or allowing the lease to fall silent on rental issues, can prohibit or restrict the landlord in exercising his rights to enforce lease terms and conditions.

When a rental issue arises during the tenancy, resolution of the issue looks first to statutory law followed by review of the contract language in the lease agreement. “What does the lease say” is often the most important protection that a landlord can provide for his business. Consequently in drafting a good lease agreement, care should be taken to ensure the lease is not only legally compliant but also provides all clauses necessary to protect the landlord’s business.

A good lease should be sufficiently detailed to provide instruction to the tenant on rental obligations, duties, rules and regulations during tenancy. What should be included in a lease is the landlord’s business decision, but there are common lease clauses used by many landlords in their leases to protect the business such as:

• Contract date
• Identifying information of landlord and tenant
• Identification of the rental premises
• Term of tenancy
• Use of premises
• Occupancy
• Security deposit
• Other fees and deposits
• Rents
• Utilities responsibilities
• Landlord right of access
• Assignment and subletting
• Alterations and repairs by tenant
• Tenant maintenance responsibility
• Tenant responsibility for damage
• Renters Insurance
• Lease defaults
• Termination of lease
• Possession
• Illegal activity
• Noise and disturbance
• Tenant extended absence from premises
• Tenant abandonment of premises
• Handling tenant abandonment of personal property
• Pets
• Required legal disclosures
• Attorney fees and court costs
• Other clauses as needed for business legal protections

A landlord’s lease agreement cannot require a tenant to waive his rights under law by agreeing to waive the landlord’s responsibility for the warranty of habitability; agreeing to hold the landlord harmless for breaches of the warranty; or agreeing to hold the landlord harmless for his negligent acts or other actions by the landlord to circumvent landlord-tenant law.

Lease Addendum

A lease addendum is utilized to add an additional document as separate, referenced attachment to the original lease agreement. The lease addendum provides supplemental and additional information that either the original lease was silent on the issue, failed to provide clarity needed on the issue, or required for legal compliances, such as disclosures under state statutes or environmental disclosures by federal and state laws. If a landlord has incorporated required disclosures and notice requirements in the manner specified by law into the original lease agreement, an addendum would not be needed.

An addendum becomes legally binding as part of the original lease agreement only after it has been accepted by all parties. The addendum does not replace the original lease agreement.

Rental Policies

Written rental policies set out protections to ensure the property is maintained to good condition and to regulate community standards of behavior during tenant occupancy.

Rental policies are incorporated into the lease as appropriate clauses to inform and reinforce tenant understanding of his duties and obligations. Once incorporated into the lease and acknowledged by the tenant’s signature on the lease document, the policies have legal standing for enforcement and remedies for default if the tenant fails to perform to his obligations.

House Rules and Regulations

A landlord has the right to set the rules and regulations for his rental property.

These house rules are in addition to the lease agreement’s terms and conditions and may be incorporated into the lease agreement or as more commonly provided, as a separate lease addendum. The signed lease and lease addendum legally bind the tenant to the landlord’s terms and conditions, rules and regulations during the period of the lease term.

House rules and regulations control the use of a rental property, its amenities, buildings, equipment, and common areas for the benefit of the tenants’ safety, security, welfare, convenience, and enjoyment of the rental units; help protect the landlord’s property from damage and misuse; and ensure fair distribution of services and amenities to all tenants. Rules must be reasonably related to the purpose for which they were developed. House rules cannot be used for the purpose of the landlord evading his legal duties and obligations, nor can a landlord use house rules to deny tenant rights. The landlord’s house rules must apply to all tenants in a non-discriminatory manner.

The house rules provide the tenant with the landlord’s expectations of the standard of conduct required for living at the rental property. The tenant has the duty to perform to lease terms and conditions as agreed. Clearly established rules in plain language that a tenant readily understands provides the guidance and structure for compliance – what the tenant is required to do and what the tenant cannot do. The rules help to minimize confusion or misunderstanding of policies for day-to-day living requirements such as housekeeping duties, and health, safety and security rules.

House rules and regulations provide information and instructions to tenants on rental policies covering such matters as:

• Services and Amenities e.g. pool, fitness center, laundry room, community room use
• Rent policy including due date, grace period, late fees, payment methods
• Landlord entry to rental premises
• Property inspections
• Quiet hours
• Noise and disturbance
• Waste and negligence
• Guest stays
• Pets policy
• Maintenance and repair responsibility
• Keys and lock-out policy
• Housekeeping standards
• Trash and garbage service
• Vehicle registration
• Parking regulations
• Smoking policy
• Use of Common Areas
• Move-out procedures
• Security deposit accounting and return

Move-In / Move-out Property Inspection Checklists

Some state statutes require a move-in checklist to be completed when possession is given to the new tenant. The checklist is a written statement of condition of the rental unit at the time of move-in signed by the landlord and the tenant(s).

Failure of the landlord to follow good inspection move-in procedures can have important implications regarding the landlord’s right to withhold any part of the security deposit when the tenant moves out.

The documented move-in inspection report is the basis for the move-out inspection. The move-out inspection cannot be more restrictive than was the move-in inspection. Some states have special rules and requirement for move-out inspections and use of checklists. In a few states the tenant must be provided a pre-move-out inspection. The landlord will note property defects that the tenant needs to correct if the tenant wants to maximize his deposit refund.

Legally Required Landlord Disclosures

Federal, state, and local laws require landlords to make certain disclosures to tenants at or before lease signing and tenant move-in. Mandatory disclosures provide information to the tenant to help protect the tenant’s legal rights and provide health and safety measures under environmental protections and housing code standards. As examples, there are federal disclosure requirements for identifying and controlling lead-based paint hazards and local ordinances regulating essential services and housing code requirements.

Tenant selection is the most important decision a landlord can make for his business. Selecting the right tenant, a quality tenant, is important to ensure timely rents and protection of the investment property. Tenant screenings are the risk protection measures required for an informed tenant selection decision. Credit screenings utilize credit reports and credit scores to identify and analyze the risks of potential tenant rent defaults. The ability and willingness to satisfactorily meet debt obligations as shown by the applicant’s credit history is a decisioning factor for many landlords in tenant selection.

A landlord’s due diligence is required to determine the legal compliances and regulatory requirements governing the location of the rental property. Legal compliances require consumer notification and consent before a consumer report can be obtained for screening. In some localities landlords are restricted or prohibited in the use of credit screenings and credit scores for tenant screenings.

Financial evaluation of tenant risk is usually based on analysis of the applicant’s credit report and/or credit score as allowed by statute and ordinance. The credit report provides details of credit usage, payment history, and debt exposure. A credit score is a summary numerical assessment of risk compiled from information in the credit report. A credit report and a credit score are two separate credit screenings. While a credit report can be a primary credit screening tool, some landlords choose to use both an applicant’s credit report and credit score to fully evaluate potential financial risk to their business. If a landlord chooses to utilize both credit report and credit score screenings as his rental standards for qualification, then all applicants must be evaluated using both types of screenings.

Credit Reports

Credit reports are part of the broader category of consumer reports as regulated by the federal Fair Credit Reporting Act (FCRA). The term ‘consumer report’ as used in the FCRA means any written, oral, or other communication about an individual’s personal credit worthiness, character, and general reputation. Requestors of credit reports must have permissible purpose as defined by the FCRA.

The three major national consumer credit reporting agencies (CRAs) are Experian, Equifax, and TransUnion. Each CRA is a separate entity with its own consumer credit data files, reporting format, and proprietary scoring models.

Credit reporting agencies do not make any credit granting decisions. Consumer credit data is collected by the CRAs from sources such as financial institutions, credit card companies, finance companies, retail merchants, and various other credit-reporting entities. Not all creditors report credit data to all three credit reporting agencies; therefore there may be differences in credit data if credit reports were to be obtained from all three CRAs. Data collection schedules may vary among each CRA but generally consumer credit files are updated monthly with data related to the type of credit used, outstanding account balances, and payment histories.

A credit report is a primary source of financial information about the applicant’s use of credit and credit management. Taken in context the credit report can provide a reasonable expectation of the applicant’s future credit usage and management. The credit report details debt obligations, debt load, payments history, and public records of liens, judgments, bankruptcies, evictions and collections.

A credit report provides a documented history of payment behaviors. This provides the landlord with a good indication of the applicant’s willingness and ability to consistently meet his debt obligations or, conversely the applicant’s inability to meet those obligations. Satisfactory payment history with more than one creditor demonstrates an ability to manage total debt obligations.

The credit report details the applicant’s trade lines historical and current records of payment activities, such as:

• Creditor name, account number, and date opened.
• Type of credit (installment or revolving).
• Account holder (individual or joint).
• Total amount of the loan, high credit limit, or highest balance.
• Balance due.
• Fixed monthly payments or minimum monthly payment.
• Account status (open, inactive, closed, and paid).
• Payment history.
• New accounts.

Understanding the information on credit reports provides background for understanding credit scoring.

Credit Scores

While a credit score has oftentimes been regarded as a more objective screening and selection tool, the numerical score by itself has traditionally been a source of discussion regarding what constitutes a “good” number. However most landlords agree that a higher credit score is preferable if not predictive of a good tenant.

How a credit score is calculated is dependent upon the credit scoring model that is used. There are many different credit scoring models targeting various credit populations, industry applications, and specific credit products.

Each credit reporting agency generates its own scores by running the consumer’s credit data through a proprietary modeling process. Predictive variables could include, but are not limited to, prior credit performance, current level of debt, amount of time that credit has been in use, and new credit. Any characteristic or attribute that is prohibited by law for credit decisioning or that lacks predictive value would be excluded from scoring. This means that credit scoring cannot take into consideration race, color, religion, national origin, sex, marital status, receipt of public assistance, or the exercise of any consumer right by law. Age, occupation, sources of income, employment history, residence, interest rates on credit accounts or family support obligations (unless support obligations are a matter of adverse public records) cannot be used in calculating a credit score.

The scoring model summarizes the relevant available consumer credit data into a set of ordered categories that predict an outcome. The ordered set produces a numerical score which is a snapshot of estimated credit risk at a set date in time.

Scores statistically assess the consumer’s risk within the context of the total risk for the credit population being scored. In general, a model assesses the likelihood of the consumer’s propensity to default, generally to allow debt to become 90 days or more delinquent within a 24 month period following the analysis date.

While a model forecasts the probability of credit default, it is not necessarily a predictor of the level of risk or the magnitude of loss as a result of default. Landlords need to individually assess the amount of risk posed by the rental applicant in relation to the amount of risk the landlord is willing to absorb if the applicant is selected for tenancy and subsequently defaults.

A credit score serves as a general indicator of financial responsibility rather than an absolute measurement of credit risk. It is a predictive model of the individual’s ability to pay and to pay on time. It is not a guarantee that the individual will be a good tenant.

The question for many landlords is what number is considered a good credit score. Should there be a minimum credit score for qualification? A landlord can set his own standard in regard to credit score qualification requirements. As long as the landlord utilizes the same criteria for every applicant, the landlord can set a qualification for credit score. However each landlord must consider his own business necessity and local market conditions. For some landlords the minimum credit score that is acceptable is based for the most part on their rental property, the rental location and the rental property condition. A rental property that is distressed, either by location or by condition will not command the rents of higher end rentals and thus a lower minimum score would be appropriate for the rental market being served.

A credit score is not an absolute statement of credit risk nor does a credit score indicate financial strength or stability. However credit reports and credit scores when used in conjunction with other tenant screenings and risk reduction policies may help a landlord make a more informed tenant selection.

Credit reports and credit scores are the most commonly used tenant screenings to evaluate potential financial risk posed by an applicant. There are other options for credit screening such as services that provide rent recommendation models to evaluate credit risk. A rent recommendation is a report based on a software-based scoring model programmed with landlord specific credit risk criteria. The model uses a simple rules-based or a statistical based program to evaluate the applicant’s credit risk. Rather than a credit score, the decisioning model provides a credit recommendation for acceptance, acceptance with conditions, or decline based upon the applicant’s information and the scoring criteria as supplied by the landlord. A rent recommendation model does not provide direct access to the applicant’s credit report. The model performs the screening analysis and prepares a report as per the landlord’s specific standards. Some landlords prefer to use this type of credit screening as an objective third party review of the applicant’s credit data.

Credit reporting agencies may offer specialized proprietary services to landlords that provide industry specific renter risk scores or that incorporate tenant rent payment data into the credit report as part of the consumer’s credit profile.

Tenants have options as well to utilize rent reporting services to submit their rent payment history to credit reporting agencies. A landlord reviewing the credit report for an applicant using a rent reporting service may find a landlord listed as a trade line with associated payment history.

New tenant orientation includes multiple tasks: lease signing, a review of important lease terms and conditions, a discussion of rental rules and regulations, the communication of the landlord’s expectations and rental standards during tenancy, a review of landlord and tenant duties and responsibilities as detailed in the lease agreement, the collection of good funds for rents, fees and deposits, a review of rent collection policies and procedures, a walk-through and physical inspection of the rental unit, completion of the move-in property inspection checklist, and transfer of possession of the rental unit to the tenant. Because so much detail is covered during an orientation meeting, it is a good idea to provide the new tenant with a move-in information packet that includes lease and orientation details, and provides instructions and forms for contacting customer service and scheduling a maintenance/repair visit. The move-in information packet can be in the form of a Tenant Handbook, a manual that becomes a ready reference for information for the tenant at move-in, during the tenancy, and at move-out.

A Tenant Handbook can be made available to the new tenant at close of orientation as a printed hard copy included with the tenant’s copy of the signed lease agreement, other rental documents, and keys to the rental unit. Alternatively the Handbook can be made available on the landlord’s website or through the online tenant portal.

To better serve tenants, a Handbook should be customized to the landlord’s business – lease terms and conditions, specific policies and practices, and rules and regulations. There are many rental policies and practices that could be included in a Tenant Handbook. The following outline of landlord-tenant matters is representative of some of these policies and practices that may be included in Tenant Handbooks.

Welcome letter

A welcome letter prepared by the landlord introduces the new tenant to the rental community. The letter introduces the Handbook as a useful guide to assist and support the tenant during his residency. In the Handbook, the tenant can find general information about the property, the landlord/manager information, basic rules and regulations, rent payment procedures, and instructions and forms for maintenance and repair requests. Additionally many landlords provide safety and security tips, emergency instructions, vacation tips, holiday tips, and weather/seasonal climate tips that can be helpful for the tenant’s safety and security.

If the rental property is governed by a home owner association, the tenant should be given copies of the association’s CC&R’s, Bylaws, and Rules and Regulations and required to acknowledge their receipt by his signature on an acknowledgement document. The Handbook should include a reference to the HOA documents and the responsibility of the tenant to adhere to HOA regulations.

The welcome letter in the Handbook presents the opportunity for the landlord to thank the tenant in advance for being responsible in his tenant duties to pay rent on time and maintain the rental unit in good condition. The landlord hopes that the tenant will enjoy the rental unit and the amenities that are provided for his use. By encouraging the tenant to familiarize himself with the general information and the duties and responsibilities of landlord and tenant in the Handbook, the landlord hopes to avoid landlord-tenant misunderstandings and to develop a satisfactory landlord-tenant relationship. It is a best practice to ensure that the tenant receive as much information and clarification as needed to ensure his understanding of what is required to fulfill his tenant duties. After reviewing the information in the Handbook and at any time during residency, the tenant is encouraged to contact customer service/rental office/online portal with any questions and concerns.

The Handbook should contain general business information such as the address of the landlord or the property management company, business office staffing information including hours of operation, emergency/after-hours contact name and phone number, business fax number, website address, tenant portal address, business email addresses, and cell numbers used for property management. It is helpful to include community resource information and contact numbers for law enforcement, fire and safety, utility companies, and other business services that may be of help during move-in and tenancy.

The following rental topics may be included in a Tenant Handbook with full description and details of the landlord’s policy, rule, or regulation addressing the topic. Topics are listed here in outline form since most topics are quite familiar to landlords and tenants.  All rental topics are covered in greater detail in the many landlord help articles found on LandlordOnLine.com.

• Fair Housing Compliance policy and practices
• Tenant screening and selection policy and practices
• Application Process
• Lease agreement terms and conditions
• Occupancy of rental premises

• Only the named tenants on the lease and their minor children are permitted to occupy the rental premises.

• Use of rental premises

• The use of the rental premises is restricted to residential purposes only. Illegal activities are prohibited.

• Guest Policy
  • Limitation of guest stay without approval
  • Written landlord approval needed for extended stays
• Security Deposit
  • Dollar amount of security deposit
  • Use of deposit per statute

• Procedures for accounting and return of deposit

• • Itemized statement of deductions

• Deposit replenishment requirement for damage deduction before end of lease term
• Written approval of landlord required if security deposit may be used for last month rent

• Fees and Deposits
  • Insufficient funds fee
  • Application fee
  • Holding deposit
  • Pet rent, fees, pet deposit
  • Non-refundable fees such as cleaning fees
• Utilities
  • Tenant responsibilities
  • Landlord responsibilities
  • Disclosure of shared utilities
• Landlord Disclosures
  • Lead-based paint pamphlet
  • Other environmental disclosures
  • Disclosures required by state statutes or local ordinance
• Rents
  • Monthly amount
  • Due date
  • Manner of payment
  • Delivery of payment
  • Pro-rated first month’s rent
  • Last month’s rent
• Late Rent
  • Grace period, required by law or desired by landlord
  • Late fee policy
• Move-in Procedures
  • Property inspection and checklist
  • Fees, deposits collected
  • Keys/access codes transferred to tenant

• Repair and Maintenance responsibilities

• Landlord responsibilities
• Tenant responsibilities
  • Tenant required to keep rental premises clean, sanitary and in good condition
  • Tenant required to notify landlord of defective or dangerous conditions on rental premises
  • Tenant required to reimburse landlord for costs of repairs for damages caused by the tenant or the tenant’s guests

• Repairs and Alterations
  • Tenant alteration or repair to premises prohibited unless authorized by written consent of landlord or as provided by law
  • Tenant prohibited from altering, rekeying, or installing locks or security systems to premises unless authorized by written consent of landlord
• Covenant of Quiet Enjoyment
  • Tenant right to quiet enjoyment of rental premises
  • Tenant, guests, or invitees prohibited against violation of laws and ordinances, committing waste or creating nuisance
• Landlord right to access rental premises
  • Notification to tenant as required by statute
  • Permissible reasons for entry
    • Scheduled inspections
    • Property repairs and maintenance
    • Property showing to prospective tenants or buyers
    • Repairs or maintenance during tenant’s extended absence
    • Emergency situations
• Property Inspections
  • Health, safety inspections as required
  • Scheduled property inspections for interior and external conditions
• Lease Defaults
  • Default of material terms and conditions of lease
  • Disruptive behaviors
  • Criminal activity
  • Waste, nuisance
  • Warnings, Notices, Landlord-Tenant Remedies
• Termination of Lease and Move-out Procedures
  • Tenant instructions regarding move-out responsibilities
  • Property inspection and checklist
  • Return of rental premises in good condition to landlord
  • Early termination of lease and buy-out option
• Alternative Dispute Resolution
  • Mediation
  • Arbitration
• HOA
  • Tenant acknowledges receipt of HOA CC&R’s, Bylaws, and Rules and Regulations
  • Tenant held responsible to comply with HOA requirements and pay landlord for any penalties incurred
• Sublease/Assignment
  • Tenant is prohibited from subleasing or assignment of rental premises
• Tenant Absence from Premises
  • Absences from the rental premises for more than the landlord specified number of days require written notification to landlord
• Abandoned Property
  • Personal property of the tenant abandoned in the rental unit handled in accordance with state statute requirements
• Hold over Tenant

• Reverts to month-to-month,
• Automatic renewal with rent increase

• Other Rental Policies
  • Home-based business
  • Pet policy
  • Parking policy
  • Smoking policy
  • Lost keys, lockout policy
  • Alarms and detectors

• Tenant acknowledgment of operable smoke alarms, carbon monoxide detectors at move-in

• Renters insurance

• Required tenant purchase of renters insurance as a condition for tenancy if allowed by law
• Proof of insurance required at move-in

A Tenant Handbook is for informational purposes for tenant education and guidance during the tenancy. The lease agreement is the legal contract between landlord and tenant that governs the landlord-tenant relationship. A handbook does not replace the lease or any addenda to the lease. If information in the landlord’s Tenant Handbook conflicts with the lease and/or addenda, the lease and addenda prevail. A tenant should conduct his own due diligence for relevant statutes, codes, and ordinances and review his lease agreement and associated rental documents for full understanding of his legal duties and obligations by contract.