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What questions can I legally ask a potential tenant for a home I want to rent?

By: Bill Wortman

 

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I have a home I want to rent but don’t want to go through a property management company. I want to make sure the tenants are able to make their payments on time and not be late but I don’t know what questions to ask or what is allowed by law?

 
Answer: Tenant screening laws: We can provide you with government and rental industry information and resources like those below; however, we always recommend that landlords unfamiliar with laws and tenant/landlord laws and regulations consult their lawyer in order to develop legally compliant tenant screening policies and procedures. As discussed in the information below, income verification, bank account review, and other financial checks are common in tenant screening.
 
The Rental Application

Before renting to you, most landlords will ask for you to fill out a written rental application form. A rental application is different from a rental agreement. The rental application is like a job or credit application. The landlord will use it to decide whether to rent to you.

A rental application usually asks for the following information:

– The names, addresses, and telephone numbers of your current and past employers
– The names, addresses, and telephone numbers of your current and past landlords
– The names, addresses, and telephone numbers of people whom you want to use as references
– Your Social Security number
– Your driver’s license number
– Your bank account numbers
– Your credit account numbers for credit reference

The application also may contain an authorization for the landlord to obtain a copy of your credit report, which will show the landlord how you have handled your financial obligations in the past.

The landlord may ask you what kind of job you have, your monthly income, and other information that shows your ability to pay the rent. It is illegal for the landlord to discriminate or harass you because of race, color, religion, sex, sexual orientation, marital status, national origin, ancestry, familial status, source of income, any disability, or whether you have persons under the age of 18 living in your household. With the exception of source of income, the landlord may not ask you questions in writing or orally about your race, color, religion, sex, sexual orientation, marital status, national origin, ancestry, familial status, any disability, or whether you have persons under the age of 18 living in your household. Further, the landlord may not ask about your immigration or citizenship status. Although the landlord may not discriminate on the basis of source of income, the landlord is allowed to ask you about your level of income and your source of income. Also, the landlord should not ask you questions about your age or medical condition.

Credit Checks

The landlord or the landlord’s agent will probably use your rental application to check your credit history and past landlord-tenant relations. The landlord may obtain your credit report from a credit reporting agency to help him or her decide whether to rent to you. Credit reporting agencies (or “credit bureaus”) keep records of people’s credit histories, called “credit reports.” Credit reports state whether a person has been reported as being late in paying bills, has been the subject of an unlawful detainer lawsuit (see pages 72-78), or has filed bankruptcy.

Some credit reporting agencies, called tenant screening services, collect and sell information on tenants. This information may include whether tenants paid their rent on time, whether they damaged previous rental units, whether they were the subject of an unlawful detainer lawsuit, and whether landlords considered them good or bad tenants.

The landlord may use this information to make a final decision on whether to rent to you. Generally, landlords prefer to rent to people who have a history of paying their rent and other bills on time.
 
A landlord usually doesn’t have to give you a reason for refusing to rent to you. However, if the decision is based partly or entirely on negative information from a credit reporting agency or a tenant screening service, the law requires the landlord to give you a written notice stating all of the following:
 
– The decision was based partly or entirely on information in the credit report and
– The name, address, and telephone number of the credit reporting agency; and
– A statement that you have the right to obtain a free copy of the credit report from the credit reporting agency that prepared it and to dispute the accuracy or completeness of information in the credit report.
 
If the landlord refuses to rent to you based on your credit report, it’s a good idea to get a free copy of your credit report and to correct any erroneous items of information in it. Erroneous items of information in your credit report may cause other landlords to refuse to rent to you also.
 
Also, if you know what your credit report says, you may be able to explain any problems when you fill out the rental application. For example, if you know that your credit report says that you never paid a bill, you can provide a copy of the canceled check to show the landlord that you did pay it.
 
The landlord probably will consider your credit score in deciding whether to rent to you. Your credit score is a numerical score that is based on information from a credit reporting agency. Landlords and other creditors use credit scores to gauge how likely a person is to meet his or her financial obligations, such as paying rent. You can request your credit score when you request your credit report.
 
Many land lords will establish a minimum income requirement, i.e., all residents must have a combined gross income of at least three times the rent; however, this minimum level may change over time and may not necessarily be static. Consider all legal sources of income. Employment, unemployment, SSI, child support, alimony, and public assistance, are sources of legal income and must be considered. Consider asking to see the original bank statements of the prospect so that you can verify the actual deposits made over the past several months. If he claims to make $4,000 per month, you should see regular monthly deposits of $4,000 per month on the bank statements.
 
Tenant Application: Tenant screening typically includes credit checks and verification of other information that is generally collected on lease/rental application forms. The screening process may also include criminal background checks. Reviewing sample lease/rental application forms can be the best way to see what type of information you need to collect and how to structure your own forms. While we do not provide residential lease/rental application forms on our website, you can locate sample lease/rental application forms (some free and others for a fee) with an Internet search.

Tenant screening services: We do not have a specific recommendation to a tenant screening service; however, there are many tenant screening services available in the marketplace. You will need to research the various services in th

Published: October 28, 2013
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Bill Wortman

As the Chief Business Consultant at BizCoachingOnDemand.com, Bill has over 40 years of business experience. He's held multiple executive-level positions and fulfilled the role of CFO at large, publicly-held (NYSE, NASDAQA, and AMEX) corporations. In addition, he's also been an owner of several successful private ventures in real estate and in the automotive industry.

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