As I’m going through another rental turnover — and qualifying applicants– I’m reminded on how important this step is, not only for choosing the best renters, but also to protect myself from possible lawsuits and legal trouble.
In fact, this step is so important that this is my 3rd blog about it (see https://blogaboutlandlord.wordpress.com/2019/09/15/running-your-rental-business-an-example-of-a-tenant-selection-criteria-letter/ to learn how to create a selection letter and https://blogaboutlandlord.wordpress.com/2019/08/25/running-your-rental-business-use-established-guidelines-to-clear-potential-tenants-and-avoid-legal-problems/) for some basic information. I have some other points to make, along with some helpful hints:
- Use the law as your excuse! Let’s say that you want to turn down an applicant who has a potentially aggressive dog. Maybe this dog is even a service pet. You’re worried that the pet could cause problems for you, which it will if it bites someone while on your property. But you’re worried about being sued for turning the applicant down. If your insurance policy doesn’t allow certain dogs (like mine doesn’t), you can show proof of your insurance policy to avoid any hassles. If it’s true, and legal, this will give you extra strength and ammunition!
- Update — and date it!– your rental criteria before each new lease period. There might be a change that you want to make (live and learn!). Now is the time to do it.
- Keep records! Keep the application, supporting materials, and notes about why you turned down certain applicants. The law varies from place to place, but I keep mine basically forever. This not only will help provide information to why I turned down, for example, John Smith, if John Smith accuses me of unlawful practice, but also will protect me from another renter’s challenge by showing a similar example. Which brings me to:
- Be consistent! If you turned down John Smith for having a low credit score, make sure that you also turned down all others with the same score. Having another example is an easy way to prove that you weren’t discriminating in any way.
In many areas, if you have only a few rental units, are renting a room in your house, and are not using a real estate agent, you have a lot more leeway about who you can rent to. For example, if you are simply renting a room in your house, on your own, and you have no other rental properties, there’s a good chance that you can say “no children allowed” and be within your legal right to do so (please check your local, state, and country-wide laws). Here in the U.S. this is sometimes called the “Mrs. Murphy exemption”. Be careful, and know your rights.