Need to Know!

Tenant Screening 101 – First Come-First Serve

July 10, 2013 6:23 pm

Fashion couple sitting together and using a tabletWhen we think about tenant background checks, we tend to think in terms of screening a single application for a single rental unit.  Simple, right?  We take an application and collect a screening fee.  We conduct a tenant background check and either approve, approve conditionally or deny tenancy.

But from time to time we are fortunate enough to have multiple applicants for the same rental unit.  What then?  Do we screen them all at once and “pick the best” – or do we screen them on a first come-first serve basis?

Best Practice – Screen Applicants on a First come-First serve Basis

Landlord tenant law often prohibits “…a landlord <from requiring> a fee or deposit from a prospective tenant for the privilege of being placed on a waiting list to be considered as a tenant for a dwelling unit”.  But the statutes may be silent or specifically allow collection of a screening fee for that same privilege.  A good example is RCW 59.18.253.  Why then screen prospective tenants on a first come-first serve basis – versus screening multiple applicants and “picking the best”?

“Picking” from among qualified applicants is more complicated than it might seem and increases the risk of a fair housing claim.  Here’s how it might play out:

  • You take multiple applications for the same unit.
  • Three of those screened exceed your threshold for approval – you select one of the three.
  • One of the two applicants you do not “pick” is protected (under state, federal or municipal law).
  • The protected individual (who desperately wants the apartment) is angry and files a claim with the Office of Civil Rights.
  • You defend the claim with criteria that goes beyond a simple threshold for approval – that you believe
    “objectively” ranks those who exceed the approval threshold – only to face a disparate impact discrimination claim.

The point is this.  Even if you win, you lose – given the time and expense associated with managing the process and dealing with the occasional fair housing claim.  Then there is the fairness issue.  Taking someone’s money knowing they may qualify (for tenancy) and not be accepted doesn’t set right with most.  So why do it?  Why screen multiple applicants and attempt to select the best?  The argument goes like this:

  • Screening multiple applicants provides a backup should our first choice bale.
  • Selecting the “best” applicant among qualified applicants improves resident profile – assuming, of course, we can accurately and objectively rank qualified applicants – a questionable assumption.

The question becomes… is there a better way to manage multiple applications for a single unit – one that accomplishes the same thing while reducing the risk of a fair housing claim?  The answer is yes.  Here’s how:

  • Raise your approval threshold – to improve resident profile.
  • Advise applicants that there are multiple applications and that they will be screened on a first come, first serve
    basis.
  • Share your criteria up front with each applicant – so that they can determine with reasonable certainty whether they will qualify.
  • Require a holding deposit along with the application (screening) fee.

Put yourself in the applicants shoes.  Are you going to part with a screening fee and holding deposit if you are not sold on the property or if you are likely to be denied?  Doubtful!

Visit MyScreeningReport.com® or Moco Incorporated for more information regarding tenant screening best practices.

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