Category Archives: Property

Pitfalls of Poor Tenant Screening Part 1

One thing to keep in mind while screening applicants is the federal Fair Housing Act, which:

“prohibits discrimination in the sale, rental, and financing of dwellings, and in other housing-related transactions, based on race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women, and people securing custody of children under the age of 18), and disability.”

2Does this mean you can turn a prospect down because they don’t dress well?  Absolutely.  How about if they show up reeking of smoke?  Sure.  What if they just give you a bad feeling?  Yes.  None of these reasons are provided for in the FHA.  But here’s the rub.  What will stop a prospect from suing you for discrimination because you did not rent to them because they were minorities, and not due to the fact that they showed up to view in a car with trash falling out of it.  You felt that represented how they may keep up your property.  The problem is convincing the court this was your reason for not qualifying them.  Whether it’s true or not, you can run in to a lot of liability issues if you deny applicants who otherwise meet your screening criteria.

You should also be familiar with your state and local laws to make sure you are not violating any laws or statutes.  Please consult an attorney if you have any concerns.  I am an advocate of one of the prepaid legal programs.  I pay $25 per month and can ask them for legal advice when anything comes up. They will also review legal documents you have, such as leases, addenda, etc. to ensure it is legal.  Or have a professional Charlotte property management handle things for you.

Just to reinforce the need to properly qualify prospects, here is another video showing the result of a Landlord who did not property qualify their tenant who moved in to a brand new town home:

One valuable trick is, while processing the application, if an applicant lives locally, visit them unannounced.  Tell them you were in the area and wanted to stop by for them to sign their application in person, or for some other reason.  This will give you a chance to see how they maintain their current unit.

Investing some additional time and effort into the qualification process can pay big dividends in the future.  What you save now could cost you more down the road.  Best of luck.