What factors can I legally consider when deciding whether or not to rent to someone?
As a landlord there are certain factors that you are legally permitted to consider to accept or reject a potential tenant. Permissible factors to consider when deciding whether to rent to a tenant are the tenant’s credit standing and credit score, their employment history, the amount of their monthly income, their rental history and past bad conduct which could be an indicator of a potential future threat to the health or safety of your current tenants or neighbors. However, it is illegal for the landlord to ask the tenant questions about race, color, national origin, ancestry, familial status, source of income, disability, age, medical conditions or whether they have persons under the age of 18 living in the household.
I’ve heard that it is okay to refuse to rent to a tenant based on amount of income but not the source of their income? What is the difference?
If you choose not to rent to someone because of the amount of income, it typically means that you do not think they make enough money to afford the monthly rental amount that you charge. This is permissible. It is impermissible to say that you will not rent to a tenant because of their line of work, even if they make enough money to afford their monthly rental payments. In other words, you cannot discriminate against a tenant because you do not like the way they make their money or the type of job they have if they do make enough money to afford your rent.
I was told that I do not need to give a reason when denying an application, but what if I’m denying them based on a poor credit score?
If the applicant is rejected because of the information in the credit report, the landlord must immediately send the applicant 1) the name, address and telephone number of the credit reporting agency 2) a statement that the decision to reject the applicant was based wholly or partially on information in the credit report 3) a statement to the applicant that they have the right to obtain a free copy of the credit report from the agency within 60 days, and the right to dispute the accuracy of the information in the credit report. [Use AOA’s Form #140 -Tenant Rejection Notice.]
I have two potential tenants that would like to rent my apartment, they seem like nice people, do I really need to check their references listed on the application?
YES. You should always contact all persons or firms named as references, former landlords, or employers on the rental application and verify the contents of the application, including running a credit check, [eviction and criminal report] on the applicant. You want to make sure that everything that they state on their application matches up to what their references tell you. If after calling the tenants references you believe that they may have lied about something on their application, you should not rent to them. In addition to calling the tenants’ references, you should also consider asking for their past pay stubs, 1099s, or any state benefit or legal award letters, which may indicate alternative amounts of income (such as disability benefits, unemployment or a lawsuit settlement pay out). To verify that they are representing themselves correctly, ask for a copy of their personal ID, driver’s license, passport, or green card. If you do not feel comfortable calling the past landlord you can write the prior landlord a letter or email to verify past rental information. Finally, ALWAYS run a credit check, obtain a credit report, and compare the information on the credit report to the information provided on the rental application to make sure it all matches up.
How do I know if the tenant has a good credit score versus a bad credit score?
The highest possible credit score someone can have under the FICO system is 850. If the tenant has a score between 720 and 850, that is considered to be excellent. If the tenant has a score between 600 and 719 that is still considered good credit and they are probably still okay to rent to. Any score between 300 and 599 is considered high-risk and you should be very careful if you decide to rent to someone with a score below 599. Sometimes it is okay to rent to an applicant with a low credit score if they have a co-signer with a good score to agree to be on the hook if the tenant defaults on rent.
What if the tenant already had their credit report ran recently and they want me to use the report they already have?
You should always run a potential tenant’s credit and pull your own report. If the tenant gives you a credit report they ran themselves, there is chance it could be altered. You will never know if the report is altered until you run their credit report, so do not skip this step in screening your prospective tenant.
Editor’s Note: For thorough, low-cost, instant screening reports, always call AOA!
Attorney Franco Simone, of the Landlords Legal Center and has been doing evictions for 20 years. He is also an adjunct law professor at the University of San Diego. Mr. Simone’s office is open Monday- Friday from 9:00 AM to 5:00 PM .- Tel: 619-235-6180, website: www.landlordslegalcenter.com or email firstname.lastname@example.org