The Dos and Don’ts of Tenant Background Checks
Poor tenant selection can cost you money, months of wasted time, and stress. You may have problems with unpaid rent, code of conduct violations, destruction, or illegal use of your property. In addition, you may lose existing clients or get a bad reputation. Of course, in that case, eviction is one of the ways you can solve your problem, but this process can take months and cost you thousands of dollars in legal fees. That is why it is necessary to avoid these problems in the first place by choosing reliable and responsible tenants, which is impossible without thorough background checks. But we must do them right because mistakes can put us in a very unpleasant situation, with potential lawsuits and huge costs on our hands. We offer you a few tips on the dos and don’ts of tenant background checks to help you avoid such a scenario.
Benefits of tenant background checks
If done correctly, tenant screening can be an effective tool in selecting suitable tenants. The advantages it offers are:
-Reduced risk of liability
-Reduced crime and vandalism
-Fewer vacancies and lost rent
By choosing not to perform a tenant check, you are putting the safety of your property at risk, as well as the other tenants that use it. Depending on the type of tenant background check you decide on, it may only include a list of questions that you consider significant in making your decision or a more comprehensive applicant review that incorporates rental history, credit reports, and criminal records. However, be careful not to take steps that could expose you to legal liability. It’s helpful to talk to a property management professional if you’re unsure of what you’re doing.
What information do you need for a tenancy background check?
Some information will help you make the right decision while gathering others would be an unnecessary intrusion into your tenant’s privacy and, at best, make you look rude. Do your best to obtain only the most necessary data. The information you need includes the following:
Rental history – Do they have a history of evictions, and why did it happen? You can get information from the previous landlord, but be careful. Often, former landlords do not provide accurate information to avoid further problems and conflicts with the former tenant. They will tell you what is most convenient for them, happy that it is now your problem and not theirs.
Income Verification – Find out how much money your potential tenant earns. Is their income sufficient to pay the rent regularly every month?
Credit score – What is the applicant’s credit score? Most credit scores range between 600 and 700. The higher the credit score, the more reliant you can be on your tenant’s financial decisions.
Criminal History – Check if the applicant has a criminal history. If there is criminal history, consider how much it affects their suitability as a potential tenant. How much time has passed since the crime? Problems from ten or more years ago do not have to worry you like those from a few months ago. Likewise, the nature of the crime is significant. You cannot equate traffic violations with violent crime or arson.
You must equally apply the criteria you used during the evaluation process to each potential tenant you are considering. In this way, you will avoid possible lawsuits due to discrimination.
What are the don’ts of tenant background checks?
The law precisely regulates all possible interactions between landlord and tenant. It also applies to tenant background checks. There are red lines that you must not cross, and your ignorance of the law or your good intentions do not exempt you from responsibility if you do.
For any landlord, the most important thing is knowledge:
-Fair Credit Reporting Act
-State screening laws
-Fair housing laws of 1968
Fair housing law prohibits any type of discrimination based on the following:
- Nationality, ethnicity, origin, or citizenship
• A physical or mental disability or disease
• Personal beliefs or opinions
• Marital and family status
• Gender and sexual orientation
• Current expenditure
• Employment history
• Familial Status
What to do after a background check
When you complete the background check, notify all interested parties of your decision. Create a tenancy agreement following the relevant laws and send it to the chosen tenant, along with the official letter of acceptance. You’ll also want to ask for a deposit. Once both parties sign the contract and the deposit is paid, it becomes legally binding. All that remains is the move of your future tenant. You can offer them a helping hand as Hansen Bros Moving & Storage Seattle experts advise and help them look for reliable movers in the area.
Consequences of discrimination and violation of privacy
If, during the pre-screening of the tenant, the landlord discriminates against the potential tenants in any way or violates the tenant’s privacy, they can file a complaint. They can submit it to the Human Rights Commission or the Tenancy Tribunal, which can award exemplary damages against a landlord of 4000 dollars. In case of violation of the Human Rights Act, the penalty can be significantly higher. We mustn’t base our selection of tenants on age, nationality, employment status, gender, sexual orientation, or shopping habits, nor must questions be asked about them when collecting information about tenants. Regarding the invasion of privacy, the landlord has the right to collect the data he needs to evaluate the tenant. But, as we said earlier, it is better to gather only a minimum of carefully selected applicable data than risk a breach of privacy.
Choosing good tenants is necessary. They should be respectful with manners, so it is easier to work with them. But landlords need to be respectful as well. It goes both ways. Tenant background checks are mandatory for landlords to gain some more information.
Nevertheless, there are some lines that you, as a landlord, shouldn’t cross. We hope you found our advice valuable and interesting. In the end, a good relationship between a landlord and a tenant lies in respect. If you have that, there’s no need to worry.
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