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:
- 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 CFPB Summary of Rights document with the application.
- Share your rental criteria up front (before taking an application or screening fee) – emphasizing those factors that will result in denial.
- Screen applicants one at a time and in the order they come to you – to reduce the risk of a discrimination claim.
- Treat everyone the same – from the moment they present to the conclusion of the leasing process.
- Provide Notice of Adverse Action if you attach conditions to the tenancy (an increased deposit or co-signer requirement) or deny tenancy altogether based on the content of the tenant screening report.
- Respond quickly, respectfully and openly to complaints and disputes – presenting yourself as sweetly reasonable – willing to do what it takes to set thing right should there be merit to any claim.
Tenant screening impacts an individual’s ability to secure housing – a need that falls just behind access to food and water (in Maslow’s hierarchy). It is no surprise then that it has the attention of regulators.
By focusing on the above best practices, we take into account the unique nature (inherent sensitivity) of the leasing transaction, protecting ourselves and our residents in the process.