Tenant Screening: Homework Pays Off
“Screening tenants is probably the most important task a property owner undertakes.” These words of wisdom come from Property Management Manual for Massachusetts Rental Owners, 4th edition, published by HAP, Inc. Too often we at HAC hear a landlord lament renting to someone who “seemed like such a nice person” without checking references or credit and then regretting that decision. Following are excerpts from the HAP property management manual chapter on tenant screening. Procedures on obtaining a manual are included at the end of this information.
In general, an owner wants to find a tenant who will:
- Pay the rent in full and on time.
- Keep the unit clean and not cause damage.
- Not disturb the quiet enjoyment of other building occupants.
- Not engage in illegal activities.
- Abide by the rules established for the building and other terms of the tenancy.
Your decision about whether someone will be a good tenant must be solely based on real and objective criteria, and each applicant should be considered in a fair and consistent manner.
First, establish your selection criteria. How many people do you want to allow in your unit? The State Sanitary Code will give you guidance on required square footage of living and sleeping space. What rent will you require? This will help you determine approximately what income the family will need to afford the rent and utilities for which they would be responsible. Third, establish any other restrictions or rules for occupancy. This should be written down and provided to each potential tenant. Remember, to comply with fair housing laws, every applicant should be treated fairly and uniformly.
Screening applicants takes time. Although checking references and credit information may seem unnecessarily time-consuming, it will help you find the best possible tenant and is virtually guaranteed to save you money in the long run. A summary of the types of checking you should do follows.
- Can the applicant afford the rent? Determine whether there is a dependable source of income. You can verify if someone is employed where he or she claims to be. Be sure to check with the applicant’s previous landlords for a payment history. Note that the HAC subsidy will be adjusted up if the client’s income decreases.
- What is the applicant’s rental history? Ask previous landlords if the applicant paid the rent on time, whether there was damage beyond normal wear and tear, and whether there were disturbances or difficulties getting along with neighbors. Note that this information is subjective and therefore might be inaccurate. The best protection is to check with at least the last two owners from whom the applicant has rented. HAC can provide you with the name of the client’s last landlord. Take steps to ensure you are actually talking with a property owner and not just a friend of the applicant.
- Has the applicant routinely paid his or her bills? If so, it’s a good bet the rent will also be promptly paid. You can check this with a traditional credit bureau, or you can use a specialized agency that provides tenant screening services. Be sure to obtain the applicant’s release so you can legally perform this investigation. Remember, however, they are only reporting data they have obtained from other sources, and the reliability is only as good as these sources. There are many reasons – not necessarily negative – that some people have not established a credit history. Ask these applicants to help in obtaining their history, perhaps with a utility company or an employer.
- What other factors should be weighed? You are required to make reasonable accommodations for disabled individuals. This may involve seeking alternative sources of information about their ability to meet tenancy obligations. The basic rule of thumb is that the accommodation be reasonable and realistic. If it involves costly renovation, it might be acceptable to ask the tenant to pay for it. But remember to use caution in inquiring about disabilities, as it can be illegal to ask about certain categories protected under state and federal law.
This is a basic outline of what is covered in more detail in the HAP manual, which has 20 chapters of valuable information for landlords. It is to every property owner’s advantage to buy and read this guide. If you want to purchase a copy for $25, contact:
322 Main Street
Springfield, MA 01105
Attn: Stephanie Oullette
Stephanie can also be reached at 800-332-9667, ext. 1612.