One of the beautiful facets of the Internet is that you can find answers to almost any question. If you’re a landlord, it can be a great tool for researching potential tenants and screening them prior to signing the contract … or is it?
While search engines, social media sites, and other online resources may carry useful information, you have to understand the intricacies of the Fair Housing Act to know what you can and cannot do.
Why tenant screening matters
As any experienced landlord knows, tenant screening is an essential step in the process of renting for three primary reasons.
• Lower turnover. Quarrelsome tenants, people with financial problems, and renters who have unstable backgrounds all have one thing in common: They’re unpredictable and rarely make for long-term tenants. So you’re stuck with a high turnover rate, more vacancy periods, and less cash flow. On the other hand, good tenants have a tendency to renew leases and stick around for months or years … which is cost-effective for you.
• Property protection. Bad tenants often fail to treat your property with respect. They may leave it damaged when they move out. This means expensive repairs or cleanup, and plenty of headaches trying to track down reimbursements. Good renters, on the other hand, keep your property safe and sound.
• Less time-consuming. When you’re a landlord, time is money. That makes selection of tenants very important. Troublesome renters will demand constant attention, while good and reliable tenants call for less of your time. They allow you to devote more of your precious hours to handling more vital aspects of your professional and personal life.
Complexities of using the Internet to screen tenants
The web may provide extra conveniences that 20th-century landlords didn’t have, but you have to be very careful about how you employ the Internet for tenant screening purposes.
As you know, the Fair Housing Act makes it illegal for any landlord to discriminate based on factors such as gender, color, race, religion, disability, familial status, or national origin during the rental application process. When it comes to social media and the Internet — where it’s easy for a landlord to learn about these various factors — the risk of violating the Fair Housing Act is high.
Even if you were to deny a potential tenant based on a completely legal basis, the fact that you viewed his or her social media profile or researched the person’s online history could expose you to potential backlash if the applicant were to discover these facts and claim you used the information in a questionable manner.
Some states are actually cracking down on social media access and explicitly prohibiting employers and landlords from asking tenants to share their private online information. The state of Wisconsin is leading the way, but additional social media and Internet privacy laws are surfacing elsewhere … so try to stay informed about that.
If you do choose to use social media or various online resources during your applicant screening process, you need to have a concrete and detailed plan for how you handle the information you uncover. Most important, make sure you treat all potential tenants equally, keep in mind that mistaken identities are common online, and always document the information you find for future legal protection.
A glance at some better alternatives
While online screening is convenient and accessible, it’s rarely your best option. Instead of taking the risk of violating the Fair Housing Act, choose the safe route and use these proven, legal alternatives:
• Credit check. One of the best ways to look at a prospective tenant’s financial history and current situation is to obtain a credit report. This is good for two reasons: (1) it allows you to identify tenants that will pay in full and on time, and (2) it’s completely legal — as long as you follow certain protocol.
That protocol requires you to send an “adverse action” letter that informs the denied applicant of three things: (1) the reason you rejected him, (2) the information of the agency that reported the information you were given, and (3) the applicant’s right to obtain a free copy of that report from the agency within a certain timeframe.
• Background check. Just because a person has a solid financial history, that doesn’t mean the prospective tenant is safe. It’s also a good idea to run a background check to see if he or she has run into any trouble with law or may be classified as a sex offender. Depending on the thoroughness of the report, a background check will likely cost you somewhere between $20 and $50. That’s money well spent to keep your property and the neighbors safe.
• Landlord referrals. It’s also completely within your rights to ask for referrals and references. Ideally, you’ll want three or four different referrals with at least one being a former landlord. Most landlords will shoot straight and tell you the honest truth about the individual; they’ll either recommend the person or warn you against her. This is invaluable information that can be the final deciding factor.
• SSN and driver’s license numbers. On an application, you can ask tenants to include their Social Security number and/or driver’s license number. These make it easy to run a background check and will help you verify the person’s citizenship status.
• Professional tenant screening service. If you want to remove yourself from the process completely and let someone else handle the screening, you can hire a professional service to run background checks, conduct interviews, and research information on your behalf.
While you need to be careful about screening tenants through social media or your own investigative activities, the Internet can serve as a helpful resource for conducting the above legal screening procedures. There are plenty of online-based companies that specialize in running credit and background checks.
Using these websites and databases, you can quickly and effortlessly find the information you need on prospective tenants without leaving your office or even picking up the phone. Better yet, let the professionals take care of it all!
Let Green Residential help
At Green Residential, we take pride in helping our clients find the right tenants for their properties. Instead of navigating the legal complexities and pursuing the time-consuming labor of finding tenants on your own, let us handle the entire process from start to finish.
Contact us today for more information and find out why we’ve been Houston’s go-to professional property management company for more than 30 years.