Leasing Success Aligns with Consistent Screening
Are you a landlord managing your own rental properties? Regardless of the size and type of your properties, your goal should be to qualify applicants in a timely manner, and then lease the units to well-suited, reliable applicants. This can lower vacancy related losses. such as turnover costs.
A frequently asked question is “How can I properly determine if the applicants are eligible”.
The number one rule is to consistently screen applicants. In other words, you must treat every applicant in the same way. Thus, it’s essential for the landlord to develop a written tenant selection criteria which is uniformly applied to all applicants.
This approach helps you comply with fair housing compliance regulators should you be accused of discrimination. A thorough process, well documented via your property management platform, will provide transparency that regulators require.
Some of the common and major criteria in the tenant selection policy include:
- Income requirement — e.g. owner may require applicant’s minimum income equals 2 times the monthly rent
- Proof of income — e.g. owner may require applicant to provide paystubs, income tax returns, bank statements, etc.
- Rental History — e.g. owner may require verifiable residency with current and prior landlord for the past three years
- Credit History — e.g. owner may disqualify applicants who don’t meet a required credit scores or the debt to income ratio
- Criminal and Background — e.g. owner may disqualify applicants with a felony conviction in the past 7 years)
Fair Housing Laws
Establishing and enforcing consistent screening policy helps to prevent fair housing violations and allegations of discrimination. Remember fair housing is law not an option. Failure to comply with fair housing laws at both federal and state level can result in significant penalties, liabilities, and ongoing brand damage.
What are the reasonable causes to decline a lease applicant?
- Applicant did not meet the minimum income requirement
- Household’s size was over occupancy standard for each type of the unit
- Application was incomplete such as missing signatures
- Applicant falsified information on their application
- Owner/management agent was unable to contact the applicants after several attempts
- Negative or unverifiable landlord reference
- Negative Credit history
- Eviction filings or judgments
- Criminal history *** In San Francisco, owner needs to consider other mitigating factors and determine in a case-by-case scenario pursuant to Fair Chance Ordinance. You may also be subject to other city and county ordinance for your property location. Consult with an attorney if needed
Fair Housing Matters
What else can save you from fair housing issues? Document, document, document! If you later decide to change your tenant selection plan, you must document all changes. In addition, you should make your policy available for potential applicants to review. A one-page selection criteria summary attached to the application is recommended.
Also, don’t forget to document the application denial by sending a rejection letter to the applicant timely. It is highly recommended that all denied applications and correspondence be kept for 5 years. Remember, apply your policy consistently to all applicants at all times!
Looking for ideas on how to improve your releasing success, and become a more successful property manager? Read further on the ManageCasa property management blog. Learn now how about how easy it is to switch property management software and take a free demo of ManageCasa.
Gordon Leung has worked in property management for more than 13 years and specialized in strategic planning and people development. If you have questions, you may contact him at email@example.com
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