As a landlord, screening is one of the most important things you can do to reduce the chances of ending up with a problematic tenant. Tenant screening is relatively straightforward, however, it’s essential to make sure that you’re staying compliant with the guidelines laid out by the Department of Housing and Urban Development (HUD) when determining whether someone would be a suitable tenant. Failure to comply with HUD rules and denying a tenant your rental for an invalid reason could cause you to incur a large penalty ($21,039 for a first-time offender!) so it’s essential to stay on top of the latest guidelines.
The Federal Fair Housing Laws
HUD guidelines are also known as the Federal Fair Housing Laws and are derived from the Fair Housing Act that was enacted in 1968. The Fair Housing Act was created to ensure that landlords can’t legally deny an applicant for reasons of race, religion, ethnic background, national origin, family status, gender, or mental and/or physical disabilities. Legally, landlords cannot ask for information about any of these topics on a rental application or use the knowledge of any of these factors as a reason to deny them tenancy at their rental. Doing this is illegal and can put you at risk of incurring a large fine.
Recent Changes to HUD Guidelines
HUD released a memo in April 2016 to clarify some of the aspects of the FHA’s Fair Housing policies that prevent tenant discrimination, and for the most part, it revolved around those who have criminal records. There were no housing discrimination protections granted to those with criminal records for a long time. Some cities, like San Francisco, created their own form of housing protections, but these city-derived protections tended to be fairly limited in scope.
After a 2015 US Supreme Court case, it proved that landlords could be discriminating against a protected class of tenants by blocking a commonality of that group. Following this court case, HUD determined the following:
- Landlords that included a “no arrest or conviction” requirement on their application were preventing Hispanics and African Americans from renting their properties due to both groups’ higher arrest rates.
- Landlords shouldn’t feel the need to reject a potential tenant with an arrest without conviction status because the status doesn’t indicate that there was any actual wrong-doing or potential threat.
- All races should be included in the elimination of denying tenancy based on and arrest-without-conviction.
- The memo urges landlords to consider the severity of the conviction and the amount of time that has passed between the occurrence and their application.
This isn’t to say that criminal records can’t be considered during the tenant decision process; criminal records can still be considered if you have a concern about safety for your property, neighboring tenants, or yourself. For example, an applicant who was convicted for a physical altercation with a neighbor 3 years ago could legally be denied; an applicant who was convicted for petty theft a decade ago could not. That distinction is important, as is the fact that an arrest is not a conviction. A blanket “no arrest or conviction” policy could be denying housing opportunity to someone who deserves a fair chance.
The HUD memo hasn’t been passed into law or officially adapted into the Fair Housing Act, however, it should still be an important consideration when screening tenants.
How to Screen Your Tenants and Stay Compliant with HUD Guidelines
Here are some important considerations to keep in mind when screening potential tenants:
- Give a lot of information about the property, your policies, and expectations at the beginning of the application. It should include the cost, address, included amenities, smoking policy, pet policy, and all the other non-negotiable information right away. If a tenant doesn’t agree to these, you’ll both know that from the start – no need to go any further in the application process.
- Require the applicant to provide you with rental history and employment information. This will allow you (or your screening service) to verify from employers and previous landlords whether the potential tenant is a good rental candidate.
- Collect personal references to find out more about an applicant’s reliability.
- Run a credit check and background screening through a reputable tenant screening company to give you a complete picture of the applicant’s history.
Proper tenant screening is essential! It allows landlords to find reliable tenants that are a good fit for your requirements and your property; it can also ensure that you’re less likely to end up with tenants that have trouble paying rent. Screening also offers protection from potential lawsuits. While proper vetting of tenants can be time-consuming on your own, relying on a tenant screening service like Tenant Screening Center saves time and can ensure that you have all the information you need to make the most informed choice.
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