This article was posted on Friday, Aug 01, 2014

Q:  I have several applicants applying for my rental.  Do I have to screen everyone the same or can I screen only for credit on some and require a criminal background check on others?A:  All applicants should be screened the same regardless of their gender, age, ethnicity or your “gut feeling”.  In order to comply with Fair Housing laws, if you check one individual’s criminal background, you need to screen every individual that way.  If you require verification of employment on a certain individual, then you need to make sure that you verify that information for all of the applicants who submit an application.

Now, of course the answer to this question is not completely black and white.  There is always an exception to the rule.  In this case, one exception might be if you were screening an applicant and a co-signer or guarantor.  The applicant should be screened through the same process that you put all of your applicants through.  However, you may only verify financial information for the co-signer/guarantor checking their credit or income status since they will only be providing financial responsibility and not residing in the rental unit.  Just make sure that you screen ALL guarantors through the same process so that you show consistency.

Another exception would be if you have two individuals applying who are married or in a domestic partnership and only one individual is employed or receives income.  In this case, you may opt to check on both of their credit and background information, but it would only be necessary to verify employment on the individual who is going to be financially responsible.

You also need to decide how you are going to handle the application process.  Are you going to process one application at a time and take the first qualified tenant?  Or are you going to run a series of applications and take the most qualified tenant?  Whichever method you choose, you should disclose this to your applicants.

It is recommended that before you begin accepting applications, you look at the options your screening company offers and compare them to your qualifying criteria to help you decide what information is pertinent when screening your applicants.  In my opinion, the more you know about your applicant, the better.  Credit report, criminal and eviction search, rental and income verifications are all key elements to conducting a comprehensive tenant screening that will help you make the most informed decision as to whether or not an applicant qualifies.

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Two Applicants – Only One Qualifies

Q:  I have two applicants who have applied for my rental together.  Based on my criteria for tenant selection, one of them qualifies but the other does not.  How do I handle this? 

A:  This is a frequently asked question among rental property owners and managers.  As a best business practice, two (or more) applicants applying together as co-applicants should be treated no differently than applicants applying individually.  So, if two applicants apply together for a rental unit and one passes the screening based on your criteria for tenant selection and the other does not, then as co-applicants, their application does not qualify.

You need to notify them that their application for tenancy has been rejected or approved on a conditional basis.  This means that you are taking adverse action on their application and you need to fill out and provide each of them with a [Tenant Rejection Notice – AOA form 140].

The Fair Credit Reporting Act (FCRA) mandates that when you obtain a consumer report on an individual, their information is to be viewed by the property owner or manager to decide if they qualify.  You may not share the reported information with anyone including the individual’s co-applicants.

For this reason, an adverse action notice [Tenant Rejection Notice] should be individually filled out to each applicant that is part of the co-application that does not qualify.

When filling out the notice, you need to identify what caused the declination or reason for conditional renting.  In the instance where the only reason an applicant is being rejected is because they applied with a co-applicant(s) that failed, you can select the reason for declination as “other” and note that the review of the application as a whole has been rejected, however, there was no problem with their individual consumer screening report. 

This article contains general information and is not intended to apply to any specific situation.  If you need legal advice or have questions about the application of the law in a particular matter, you should consult an attorney. Reprinted with permission of the Rental Housing Association, UPDATE.

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