In seminars across the country this year, I’ve been making a point of challenging all attendees with a simple Fair Housing quiz.
Q: If several applicants approached you to rent a home and all chose to go through your application process, who would you select?
That question seems easy enough. The overwhelming response is always, “the most qualified”. If you too agree with that response, as 95% of most landlords would, STOP what you are doing! Let me give you a wake up call, because you need to make a major mental adjustment to your current way of thinking.
- Selecting the most qualified is NOT the right or “fair” housing response. If you select on that basis alone, you open the door for a possible discrimination claim which is becoming the landlord nightmare. “Trick or Treat” is becoming an expression of reality for rental owners. You either treat all applicants who approach your door with special care or you will receive a trick. Last year, the average fair housing claim cost landlords $35,000.
- You are not entitled to select the most qualified applicant. The “fair” response is that you must select the FIRST person who meets your qualifications and there is a difference.
Let’s say one prospective tenant showed up at 10:00 Saturday morning to fill out an application for your rental. He met your minimal requirements, but you wanted to take applications from others that day to see if there might be somebody better before you make your decision. You are happy you waited because at 3:00 that day, a second applicant shows up who makes more money than the first applicant and he dresses a lot better. The average landlord would go with the second applicant. But in this scenario, prospective tenant number one could file a discrimination claim and win.
How to Avoid a Discrimination Lawsuit
To avoid or reduce the chances of a discrimination accusation against you, there are several steps you can follow.
- You need to start by having a WRITTEN LIST of minimal “objective” criteria for selecting and determining whether an applicant is qualified. I suggest your list include criteria that can be proven or documented. For example: Monthly income is at least three times the monthly rent. Avoid subjective criteria that you would have a harder time proving like “dresses poorly” or “there’s something not quite right about that person.” Besides … both of those reasons do not provide you with a legal or “fair” reason for turning someone down. And please don’t use the old fashion typical qualification of “must be working or employed”. If that is one of your qualifications, let me give you another wake up call.
- You cannot turn somebody down simply because they are not working! You can turn someone down based on insufficient income, but you can’t be the judge on whether their source of income is proper (as long as it’s legal).
By having a written criteria list, you will be able to know when the first person meets your criteria and therefore avoid turning someone down who would be able to file a discrimination claim against you because you went with someone later who you thought would be better.
Please note: I don’t stop taking applications until the first person who qualifies pays all the money due for move-in and signs the lease. Until then, I continue to take applications. However, I judge all applicants in the order received. (I do number my applications) to see who next meets my criteria.
Most landlords don’t have a written list of criteria outlined and make their decisions on general but not consistent guidelines. Others judge by vibrations given off by the prospective tenant and still some go by a gut feeling they have to select the best tenant.
[AOA members may download a “sample” copy of a written criteria list by visiting f http://www.aoausa.com/forms. If you don’t have one, draw one up today to give today!]
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