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Categories for Tenant Screening

January 19, 2016 3:24 pm

Tenant Screening 101 – “To Screen or Not to Screen”

This is the first in a series of posts focused on the fundamentals of tenant screening – information and advice for those who are new to residential property management, and those who have paid a price for what they didn’t know. “To Screen or Not to Screening” We are busy.  We (some of us, anyway) have an inflated sense of our ability to “read people”.  We  operate for years without a problem – reinforcing this flawed notion. Then it happens.  A serial evictee with a nice personality stops paying rent.  There is damage to the home.  Neighbors complain or move out. You come to your senses.  You issue notice.  You ask the resident to leave.  They blow you off.  You hire an attorney who files an unlawful detainer action with the courts.  Time passes.  The tenant moves out and the case is dismissed – since there is no hope of recovery.  Ouch! And then it dawns... View Article

January 13, 2016 12:32 pm

Tenant Screening 101- The Fundamentals

Following is a series of blog posts addressing the fundamentals of tenant screening – information and advice for those who are new to residential property management or those who may have paid a price for what they didn’t know. Syllabus  To Screen or Not to Screen Applicant Identification First Come-First Serve Report Content Report Accuracy Rental Criteria Rental References The Fair Credit Reporting Act Screening & Fair Housing Landlord & Tenant Law Forms – Leases & Notices

December 30, 2015 7:38 pm

Tenant Screening 101 – Rental Criteria

There has never been a more hostile legal and regulatory environment for landlords and tenant screening companies.  It is more important than ever, therefore, that we know what we are doing – that we take the proverbial high-road in our effort to strike a balance between carefully underwriting prospective tenants and minimizing the risk of legal and regulatory problems. Step 1 is to take the time necessary to develop, refine and formalize your rental criteria.  “How to Develop Landlord Rental Criteria” addresses the steps necessary to develop your criteria and the benefits associated with a consistent application of those criteria as part of the tenant screening process.  A Criteria Worksheet (including sample criteria document) is available at no charge under Landlord Resources on MyScreeningReport.com®. A critical step in developing criteria is deciding what is acceptable in terms of credit, rental history, criminal and eviction history, length of employment and income... View Article

December 29, 2015 11:56 am

Tenant Screening 101- Report Content

Tenant screening reports are a specialized type of “Consumer Report” as defined by the Fair Credit Reporting Act (FCRA). Tenant screening reports nearly always include: 1.  A consumer credit report – provided by one of the three national credit reporting agencies (Experian, Equifax and Transunion.  There was a time when some landlords opted for reports from all three bureaus – unnecessay today since most creditors report to all three. 2. An eviction search – a search of the public record for unlawful detainer claims against the applicant. 3.  A criminal records search – a search of the public record for evidence of criminal activity on the part of the applicant.  The criminal records search may also include a national sex offender registry search and the U.S. Treasury Department’s  Specially Designated Nations search (often referred to as an OFAC search). 4.  An Employment (income) verification – though landlords often rely on pay stubs these... View Article

December 2, 2015 12:46 am

Tenant Screening 101 – Accuracy, Why It Matters!

We’ve written at length about the importance of accuracy in tenant screening – devoting a ton of real estate to the applicable provisions in state and federal consumer reporting law – notably the Fair Credit Reporting Act (FCRA). We need to know the law, certainly, given the vigor with which regulators and trial lawyers pursue such claims.  But concentrating on the law sort of misses the point – that there is (arguably) an even better reason to concern ourselves with the accuracy of tenant screening reports. Accurate reports drive better decisions.  Better decisions are reflected in improved occupancy, resident profile, NOI and equity.  Accuracy in tenant screening implies two things.  First, the report is thorough.  Secondly, that which is reported is true! Public Records Perhaps the most common error in tenant screening is a failure to search the public record for AKA’s and additional addresses (disclosed or undisclosed). An equally common error... View Article

November 19, 2015 6:44 am

Tenant Screening 101 – Legal & Regulatory Environment

Landlords and tenant screening companies face an increasingly hostile legal and regulatory environment.  There is a large and growing body of law governing the production and use of tenant screening reports – a specialized form of consumer reports. Vigorous enforcement of the Fair Credit Reporting Act (FCRA) by the Consumer Financial Protection Bureau (CFPB) – created by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) – has increased the risk associated with owning and managing rental properties. There is good news, however. By following a few simple rules – best practices – we can thoroughly vet prospective residents without becoming targets ourselves. Here’s how: Best Practices Develop your rental criteria before accepting applications to rent. Inform the applicant that a background check will be conducted as part of the leasing process.  Secure their authorization (in the form of a signature on an application containing the required disclosure and authorization language – as well as the name and contact information for the tenant screening company. Provide the... View Article

November 5, 2015 9:07 pm

Things to Consider before Applying for a Rental Home

There is a great deal written for landlords about screening prospective residents… much less written for applicants about screening prospective landlords.  So here goes. What is it you should consider before signing on the bottom line of a rental agreement. There are the obvious, of course: Is the property attractive & well maintained? Are there units (available) that meet your needs – bedrooms, bathrooms, appliances, etc? What amenities are included – exercise facilities, a pool, spa, etc? Is there adequate parking and access to transportation?   Less obvious but equally important, are the landlord’s “tenant screening” practices – notably their rental criteria. So what is rental “criteria” and why do you and I care? Rental criteria are the standards by which a landlord evaluates a prospective tenant – often a document outlining various thresholds the applicant must meet to be granted tenancy – as well as those things that will result in denial of the application. Criteria includes one or more of the... View Article

October 12, 2015 6:11 pm

Screening Resident Managers – Tenants, Employees or Both??

It is reasonable  to take the position that resident managers (and other employees who live on “the property”) must satisfy the landlord’s rental criteria. The question arises, however, as to what “Permissible Purpose” applies and is relied upon to procure a screening report.  Is it tenant screening, employment screening or both? It is likely that this scenerio was not considered by the drafters of the Fair Credit Reporting Act (FCRA).  Nor is there legal or regulatory precendent to guide us.  So we are left to our own devices to determine which provisions apply. Owners and managers generally take the position that resident managers and employees must qualify for tenancy – by meeting or exceeding their tenant screening criteria.  Since the content and quality of tenant screening reports can equal or exceed that found in an employment background checks – few procure separate employment screening reports. True or False? The problem is that the FCRA imposes some additional requirements upon us (as a... View Article

September 21, 2015 3:43 pm

Investigative Consumer Reports, To Be or Not To Be

The federal Fair Credit Reporting Act (FCRA) and its progeny in state law focus heavily but not exclusively on consumer credit reporting. After all, the Congress, in its findings in Section 602 the FCRA [15 U.S.C.§ 1681] begins with the statement that: “The banking system is dependent upon fair and accurate credit reporting. Inaccurate credit reports directly impair the efficiency of the banking system, and unfair credit reporting methods undermine the public confidence which is essential to the continued functioning of the banking system.” But Congress goes on to say: “An elaborate mechanism has been developed for investigating and evaluating the credit worthiness, credit standing, credit capacity, character, and general reputation of consumers… <and that> there is a need to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer’s right to privacy.” Consumer Reports are subsequently defined as “…any written, oral,... View Article

July 7, 2015 10:27 pm

Supreme Court, Disparate Impact & Tenant Screening

The Supreme Court of the United States (SCOTUS) delivered several important decisions in June of this year (2015).  One of those decisions has a direct impact on the rental housing industry – specifically, the tenant screening process. In Texas Department of Housing and Community Affairs(The Department) v. The Inclusive Communities Project, Inc.(ICP), the court held that business practices that (even if unintentionally) have a disproportionate (or disparate) impact on protected group can form the basis of a Fair Housing Act (FHA) claim.   The case went something like this: ICP alleged that The Department fostered “…segregated housing patterns by allocating too many tax credits to housing in predominantly black inner-city areas and too few in predominantly white suburban neighborhoods.” Relying on statistical evidence, the District Court decided in favor of plaintiff ICP, ruling that they succeeded in establishing that The Department’s allocation practices had a disparate impact based on race; and that while those practices met the business necessity test, The Department failed to show there were... View Article