E-Renter News

Deciding which tenant is the right fit for your vacant rental property doesn’t have to be a difficult task. Your specific requirements will depend on your situation and the local rent market. But not matter how landlords’ requirements differ, the one thing all can agree on is that a thorough tenant screening check is a must for every tenant applicant. It’s just too risky to approve a tenant to sign your lease and live in your rental property unless you have thoroughly screened their criminal background and credit history.

Here’s what to expect from a basic tenant screening report:

Social Security Number and Address Confirmation: Using the Social Security Number provided, the applicant’s name and provided date of birth are compared with the records for that SSN. Alias names associated with that SSN will also be reported. Then, an address history is run, for insight into which court jurisdictions need to be researched for criminal records. With the SSN, alias names, and address report, all the information to run a criminal record check is on hand.

Evictions Reports: Standard credit reports do not include past evictions. Eviction reports provide details on any applicant court appearances, case numbers, dates, and the defendant’s name and address.

Bankruptcies, Liens & Judgments: Information about tax liens, small claims and civil action judgments as well as nationwide bankruptcy filings is provided, including court descriptions, case numbers, dates, amounts, and name and address.

Criminal Background: National court databases are checked, based on the tenant applicant’s name and date of birth. Data provided usually includes offense, date, courthouse, sentence, case number, and aliases. Not all states or all counties provide criminal database information.

Sex Offender Status: All 50 states require sex offender registration. From these registries, the report will include name, date of birth, SSN, physical descriptions, address, and offense type, date, and disposition. This information varies by state.

OFAC/Patriot Act Report: This report includes information from several government agencies to alert to an individual who appears on any terrorist watch lists or who is listed as an international narcotics trafficker.

Whether your new tenant applicant is a landlord’s dream or has a poor credit rating, lied about previous addresses, or hides a criminal past—you’ll want to know before you sign a lease! Tenant screening is your best choice if you want peace of mind about a new tenant.

Landlords pre-screen tenants to know whether or not they have prior criminal convictions, evictions, and poor credit records. Smart landlords take precautions to protect themselves from liability to third parties due to tenant behavior.

But in Georgia, a recent court decision stated that a landlord was not responsible for his tenant’s alleged drug dealing, and a small-claims court suit against him was dismissed.

The plaintiff, Lori Davis, accused landlord John Weigle, Jr. of renting a property in her neighborhood as a “known neighborhood drug house.” A judge in Richmond County, GA ruled that she failed to prove that the landlord owes her $5,000 due to his management of the rental property. He says he had no knowledge of his tenant dealing drugs.

Davis is described as an activist, pushing for a new city law to hold property owners responsible for Chronic Nuisance Properties. Current state law in Georgia says that landlords are not responsible to third parties for their tenants’ behavior—so she was ruled against.

Chambersburg, Pennsylvania’s mayor, Pet Lagiovane, is proposing an ordinance that will hold landlords responsible for tenant behavior. He says he fields telephone calls from residents who are forced to put up with problems from unruly tenants. The mayor maintains that landlords have a responsibility to the neighborhood, while landlords say they are not parents, they are business owners. A group of landlords banded together to oppose the ordinance, saying that the tenants—not the landlords—should suffer consequences when they break the law.

In York, PA, a landlord/tenant ordinance assigns points to violations like noise, disorderly conduct and domestic disputes. If a property earns a set number of points in a certain period of time, the city can shut down the property—and a landlord’s lack of knowledge is not considered a proper defense. The landlord group says the point system should be against individual tenants, not a property.

Does state law trump a local ordinance? It depends on the state and on the ordinance. As a landlord, you should know what your state law says about landlord responsibility concerning tenant behavior.

1. Tenants want a clean unit when they move in. If your previous tenant didn’t clean thoroughly, tenants expect you to do it (or hire a cleaning company). You might think this is a no-brainer, but from what we hear, tenants have just as many “filthy apartment” stories as landlords have “bad tenant” stories. A few examples: Twinkies in the fireplace, a dirty diaper under the bathroom sink, and cherry stems in the kitchen drawer!
2. When they move out, tenants sometimes plug picture holes with toothpaste—not spackle. It’s a common trick that you might have noticed (especially if the apartment smells minty fresh after they leave); but some landlords have never seen it done. Beware!
3. Tenants appreciate the small things: a roll of TP (new, of course) and an inexpensive shower curtain, a plant, or a small bottle of dishwashing soap will go a long way to establishing a good relationship.
4. Tenants think you don’t want to give them their deposit back. They are waiting for a fight when the lease is up, they move out, and they’re waiting for their security deposit back. They might have been victims of these tricks we’ve heard about: landlords deducting $150 cleaning fees for apartments that were left in immaculate condition, charging $10 for a light bulb, and deducting $50 for “rudeness.” It may sound hard to believe (and illegal) that landlords would do these things, but they’re true!
5. Tenants expect an adversary relationship. Landlords have a great opportunity to “wow” every new tenant by treating them with respect and maintaining excellent communication. Many tenants have not had good experiences with previous landlords—and of course, landlords have nightmare tales to tell about bad tenants—but when you consider that tenants are your reason for having a rental business, it can’t hurt to be the ultimate professional in establishing a good relationship. And who knows—you might end up even liking each other!
6. Tenants will break things and not tell you. Judy, a landlord we heard from recently, reports that her “great” tenant made sure everything in the apartment looked perfect when he moved out. When the new tenant moved in, she quickly heard that the shower was broken. Judy couldn’t tell by looking at it—and the previous tenant never mentioned it. Lesson learned: Judy now checks the function of all systems during the move-out inspection!
7. Tenants will often leave the rental unit better than they found it. Believe it or not, many tenants take pride in their personal responsibility and wouldn’t dream of leaving a dirty apartment or home.

Great tenants are not an extinct species—in fact, you can probably find some for yourself, if you’re willing to be picky and, of course—prescreen tenants carefully. 

Since 1970, the Fair Credit Reporting Act (FCRA) has enacted strict guidelines for credit reporting agencies and credit report users. At first, its definition of someone who “has a legitimate business need for the [individual’s credit] information” was rather vague.

In 2004, Congress passed changes to the FCRA in an attempt to increase credit report accuracy and prevent identity theft. Subsequently, Credit Reporting Agencies (CRAs) tightened up their guidelines and restricted many individuals, including landlords, from obtaining credit information.

To qualify to receive credit reports, a rental property business must submit to an on-site inspection, hold a business license, have a publicly-listed business telephone number and a business checking account, and maintain a separate, secure business office.

If your business does not meet the above guidelines, it is still possible to screen tenants—you just won’t receive their actual credit scores. Instead, you will receive a Tenant Background Check Report. This exclusive report contains all the basic validations, like Social Security Number, Patriot Act, Liens, Judgments, Evictions, and Bankruptcies—and much more. Plus, you can have the peace of mind that comes with knowing your potential tenant meets your minimum credit requirements, based on information obtained from his credit file.

Even though CRAs tightened up regulations back in 2007, individual landlords or large-scale property managers alike can continue to count on E-Renter.com to stay in compliance with the FCRA. We keep up with changing laws and regulations, so you don’t have to!

Some landlords wait for the perfect tenant, while others accept the first breathing body who arrives with a fistful of cash. In the happy medium are the landlords who know the perfect tenant doesn’t exist—but that there are plenty of good tenants out there. Proper marketing of your rental unit can help you find them—but once you have several prospective tenants interested in renting from you, then what?

You can reduce tenant turnover by carefully choosing the most qualified applicant. Just make sure you are evaluating every tenant applicant on the same criteria: like income level, credit history, employment history, and rental history.

Be sure you are complying with the Equal Housing Act, which prohibits discrimination based on race, religion, age, color, nationality, family status, gender, and disabled status. Using the exact same criteria to evaluate tenants will help prevent claims of discrimination.

Don’t use a tenant’s appearance as a screening mechanism—instead, use a thorough credit history screening and employment check to weed out unqualified applicants. The size of an applicant’s family, the type of car she drives, or the brand of shoes he wears will not reveal whether he or she will pay the rent on time every month.

Only you, the landlord, can determine your minimum qualifications. Acceptable income level, employment and rental history are as you define them. And a rough economy has inspired plenty of rental property owners to reset their qualifications. Like Sam, who recently signed a lease agreement with a couple who just moved to the city for a job transfer.  “I used to require at least six months on the job, but too many applicants have lost jobs over the past couple of years. If their previous work and rental history is good, I’ll take a chance on them in a new position,” says Sam.

Qualified tenants are still out there. Careful screening can help you sign a lease with the most-qualified tenant, no matter how you set your qualifications.

Next time you’re processing a new tenant application, do yourself and your other tenants a big favor—look twice at the photo and name on the ID you’ve been presented. It could be fake--and the person presenting it could have an extremely sketchy past to hide.

Not all applicants are who they claim to be. Some people have plenty of reasons to falsify identification—mostly to hide legal issues or criminal past. Underage kids who aren’t old enough to sign a lease might be holding a fake ID. Even poor credit records or prior evictions will lead folks to present a phony ID.

But the majority of fake IDs are used by those with a criminal history to hide. And they’re easy to obtain. From large-scale, global operations to small-time operators right in your neighborhood, graphics software has made it a lot easier to produce official-looking driver’s licenses and Social Security cards.

How is a landlord supposed to spot the phony documents? We’re not suggesting you become an expert. All it takes to make sure you’re renting to the actual person on the tenant application is a thorough tenant screening. Did you know professional screening can validate your potential tenant’s name, address, and Social Security Number?

Now you do. Don't take chances. Check your applicant’s photo ID carefully, but do the smart thing and run a tenant background screening, too.

As a landlord or property manager, you’ve probably seen it all when it comes to a tenant’s previous rental history reports. The facts are that some of your applicants have lived in non-traditional housing, or where it’s difficult to verify whether they paid on time or had any other problems:

Mom and Dad, Grandma, Aunt or Uncle: What family member is going to tell you that your potential tenant paid rent on time? What if they didn’t pay rent at all? You might get the true story out of a family member, but in general, they don’t make the best references.

Pay-by-the-week motels: These places don’t require applications or leases. They don’t verify employment or do credit checks. They don’t require more than a small payment at a time. Finding out from a motel that your applicant paid on time is not an indicator that they will live up to the terms of a lease agreement.

Their “friend” the landlord: Sure, living in a friend’s spare bedroom or on their couch is a typical living situation. The problem is that if the friend wants the couch back, then giving you a good reference is in the friend’s best interest.

If a tenant presents a previous landlord that doesn’t meet your standards, you are under no obligation to accept it. Consider stating in your application that “Parents, relatives, and pay-by-the-week motels will not be accepted as landlord references.”

Protect Your Property and the Community

Prescreening tenants is a common practice for smart landlords. Checking an applicant’s rental history and credit background are both vital to your rental property business’s success. Before renting to a new tenant, you should know if they are credit worthy or have been evicted by previous landlords.

Credit checks and previous rental history checks can help protect landlords against financial losses. They are the best way to predict whether a tenant will pay rent on time. But as a landlord, you are responsible for more than just your own financial protection.

Keeping crime out of rental properties is a goal every landlord shares. By failing to conduct criminal background checks on potential tenants, landlords risk bringing harm to other tenants and the residents of surrounding neighborhoods. No landlord wants to be responsible for a crime against a family, a child, or a business committed by their tenant.

And crime hurts more than just its direct victims. Quality of life is affected when people are afraid to go outside. Neighborhood home values and rents drop when crime rates go up. Increased crime puts everyone at more risk, including residents, pedestrians, drivers, business owners, and police.

There is no way to prevent a tenant from committing a crime. And since past behavior is a good indicator of future behavior, knowing what’s in a potential tenant’s criminal past is the best way to keep crime out of your property. Conduct a criminal background check on every tenant applicant.

Tips for New Landlords

The economy has helped to turn the dream of vacation homeownership into a nightmare for many investors. If you’re considering turning a vacation home into a rental, or have already, here are some basic tips for new landlords that might come in handy:

• Decide whether to offer long-term leases or make your vacation property a vacation rental, with short-term agreements. Do your research and weigh both the downside and advantages of frequent turnover.
• Consider your tax situation when making your decision. Homeowners can rent their property for up to 14 days without reporting the income to the IRS, which can be helpful if your property is only rented during high-volume times in your area, like New Orleans at Mardi Gras. Consult a tax professional for advice.
• Consult an attorney to review your rental agreement and lease. Loads of information is available online regarding pitfalls to avoid and items to include in your rental agreement.
• Tenant screening is a must for short-or long term rentals. Investing a little amount of money in thorough background checks pays for itself in peace of mind and can prevent financial losses.
• Advertise wisely. It doesn’t have to cost a lot. Spend time online if you’re not familiar with social networking site—they’re ideal for advertising your rental. Setting up a Facebook page is easy. Upload photos and invite friends and family to comment and encourage their friends to visit your page.
• Check out vacation rental websites, and compare their rates and features. If you decide to run an ad, promote it through your Facebook page and Twitter.
• You can also use WordPress to set up a website. WordPress is known as a blogging site, but it’s become a fast and easy way to start a website. Hundreds of templates are available, the site walks you through each set-up step, and help is just a click away if you become stuck.

Making the decision to rent your vacation home is the first step to becoming a rental property owner. Check our archives and come back often for valuable landlord advice!

What Landlords Need to Know

When screening potential tenants, keep in mind that landlords are required to comply to the Fair Credit Reporting Act (FCRA), which was enacted by Congress way back in 1970. The law was intended to protect consumers by ensuring that information in their credit reports is accurate.

Consumer reports are used every day by landlords to verify employment, rental history, and to determine credit worthiness. When landlords use these reports to reject a tenant’s application or take another adverse action, a notice to the applicant is required. (Other adverse action might be requiring a co-signer, a larger security deposit than other tenant’s pay, or raising the rent.)

The notice required by the FCRA must include the name, phone number and address of the Consumer Reporting  Agency (CRA) that supplied the report. It must also include a toll-free phone number for CRAs.

Additionally, the notice must contain a statement that the CRA did not make the decision for the adverse action, as well as a notice of the applicant’s right to dispute the accuracy of the report and to obtain a free credit report within 60 days.

Landlords who deny a potential tenant’s application for reasons other than an unfavorable consumer report are still required to give the adverse action notice in certain cases. For example, if the applicant has a previous bankruptcy, but the main reason for denial was a bad reference from a previous landlord, they must still receive the notice because the bankruptcy was a minor factor in the decision.

Non-compliance with the FCRA can lead to serious consequences; study the law and be sure that you are within its requirements.