Before we can screen any tenants, it is mandatory that we have a fully completed and signed rental application for each applicant who is 18 years of age or older.
Only then will it be worthwhile to run a tenant screening report or contact employers or previous landlords.
Still, there are plenty of regulations at both the federal and state levels that landlords need to consider before distributing rental applications. Landlord-tenant relationship and anti-discrimination laws are especially important to know, given the number of free rental applications available on the good old internet.
National Rental Application Do's and Don'ts and Fair Housing Laws
Nearly everything surrounding real estate investing comes with rules, rules, and more rules. The lease application process is no exception, so having a clear guide to state and federal lease application laws is essential to avoid legal issues.
The federal Fair Housing Act is part of the Civil Rights Act of 1968. The idea behind it was to protect and defend against discrimination based on color, race, national origin, religion, familial status, disability, and sex. Over the years, lawmakers have added new protected classes, such as age.
More recently, criminals have been granted some fair housing protections. While people with criminal records may not necessarily qualify for protection, they still face limitations when landlords decide whether to rent to them. The Department of Housing and Urban Development (HUD) has implemented rules that prohibit property managers and landlords from having blanket guidelines regarding criminal records.
When landlords are selecting rental properties, what can they do to avoid becoming the next fair housing lawsuit against their landlord?
To be safe, document your selection criteria. Be careful what information you ask for and how you ask for it. Don't use words like “single” or “married” or make any distinctions between protected classes.
Treat everyone who submits a rental application equally and don't screen anyone more than others. For example, you definitely shouldn't require all young single people to have a higher credit rating than married couples. Understand the pitfalls of fair housing and how to avoid them.
Overview of Protected Classes and Discrimination
To make it easier to understand, here are some of the main things prohibited by the Fair Housing Act:
Protected Class Examples of Discrimination to Avoid Race, color, and national origin Refusing to rent to someone based on race or ethnicity or applying different rental terms based on race or ethnicity Religion Refusing to rent to someone because of their religious beliefs or enforcing rules that restrict religious practice Gender Refusing to rent to a single woman or man or applying different rental standards based on gender Family status Refusing to rent to a family with children or restricting families to certain areas of the property Disability Denying reasonable accommodations to tenants with disabilities Other protected classes (which vary by state) Age discrimination, sexual orientation discrimination, source of income discrimination
Fair Credit Reporting Act (FCRA) Requirements
There's just one more federal regulation regarding how landlords should collect and review rental applications. The laws found in the FCRA, or Fair Credit Reporting Act, are an important part of our guide to state and federal rental application laws.
These laws regulate how a landlord or property manager can use, store and dispose of the information received on rental applications and tenant credit reports. The information cannot be used for any purpose other than renting and screening tenants, and must be stored securely.
Additionally, you must get written permission from applicants to collect and view personal information on rental applications and credit reports. Proper rental applications contain a permission form with a signature line for each applicant.
Tip: Be careful when receiving and storing all private tenant screening information electronically. If possible, meet all potential tenants in person. Additionally, ask them to show you their ID. There are a lot of rental scammers out there today. Renting without seeing them in person is very risky.
How many residents can live in the home?
Determining the maximum number of occupants in a rental property depends on the size of the property, local ordinances, and state laws. Nationwide standards usually follow a two-person per bedroom formula, but some states have different rules. California has a “two plus one” rule, which allows two people plus one more person per bedroom.
Landlords must check their local housing laws, comply with state regulations, and follow the policies of the Fair Housing Act, the Keating Memorandum, and the International Property Maintenance Code to set occupancy limits.
Landlord prepayment rent restrictions
The amount of prepaid rent that landlords can charge varies by state, and in Pennsylvania, a 2018 court case brought the issue into the spotlight.
The Pennsylvania Superior Court ruled in ES Management v. Yingkai Gao et al. that under the state's landlord-tenant law, residential landlords cannot require a security deposit in excess of two months' rent during the first year of a lease.
The law is intended to protect tenants from excessive upfront costs while providing reasonable assurances to landlords.
The “furry” problem with service and emotional support animals
There has been much discussion about what constitutes a service animal, support animal, pet, etc.
According to the Americans with Disabilities Act (ADA), as of March 15, 2011, only dogs are recognized as service animals under Titles II and III. These dogs are considered working animals, not pets. Dogs have a specific purpose.
Federal law requires landlords to provide reasonable accommodations for tenants with disabilities. This means that if Fido is classified as a service or emotional support animal, he can live in your rental property even if your landlord has a “no pets” policy. If there is specific and sufficient evidence that the animal is in fact a service or emotional support animal, your landlord cannot refuse.
As with anything, there are exceptions. One such exception is if the landlord lives in the rental property and the landlord or a close relative has an allergy. Another exception is if the support or service animal in question is intentionally aggressive towards someone.
As you can see from the table to the right, landlords and property managers are obligated to accommodate service animals and emotional support animals, but they are not obligated to accommodate therapy dogs.
(Article continues below)