What Landlords Need to Know About Tenant Screening and Compliance with the New Rent Laws

The newly passed Rent Laws, dubbed the “Tenant Protection Laws of 2019,” have changed the way landlords do business. One area you may have read bans the use of the “tenant blacklist.” While there is no actual “list”, the “blacklist” is a name commonly used in reference to tenants who have evictions or previous housing court history on their record. The most notable changes to the law as it relates to screening potential applicants are:

  1. Bans the use of the Blacklist or refusing to rent to an applicant because they have an eviction on their record.
  2. Caps the amount you can charge for any screening at $20 (twenty dollars).
  3. If a tenant brings you a credit report that is less than 30 days old, you are not allowed to charge the tenant to run another credit check. You may still pull your own report, but you cannot charge the tenant if they bring you a report that is within the past 30 days.

Bottom line - screening tenants is, arguably, one of the most important tools a landlord has available when deciding whether or not to rent to a tenant. Rent Application is a flexible and customizable tenant screening platform that gives landlords more control over the application and screening workflow - providing landlords the tools to review and screen applicants efficiently and effectively.

Rent Application allows for a la carte report selection for the following reports:

  • Credit check at $19.95 which allows you to pass the fee directly to your applicants
  • Nationwide Eviction (no longer allowed in decision making)
  • Criminal Background Check
  • Employer Verification
  • Landlord Verification

We recommend that landlords consider a two-step application review process. First, have the prospective tenant apply with application details, supporting documents, and run a credit check (as long as the fee is under $20), charged to the applicant. Rent Application charges $19.95 for credit and this is paid by the tenant upon submission of the application.

The law does not appear to place any restrictions on evaluating the applicant’s financial situation. Additionally, landlords may want to perform verifications with previous landlord(s) and employers.

In addition to the credit/ criminal check, we recommend that landlords request:

  • Two (or more) month’s complete bank statements
  • A valid State ID (Driver’s license, Passport, or State issued ID)
  • Two (or more) paystubs
  • Previous year (signed) Federal tax return
  • Letter of employment
  • Previous Landlord reference letter with contact information
  • Proof of additional income

When reviewing an application, it’s important to cross-reference pieces of information. If an application asks for salary/compensation information - check this against the attached pay-stubs AND against the deposits made/shown in bank statements.

Cross reference the name of their current/previous landlord with the rent checks/rent payments that are shown in the bank statements.

Additionally, review the dates of these rent payments made in the bank statements. This can help to identify applicants pattern for rent payments. Once the financial credibility has been ascertained, consider performing previous landlord and employer checks.

When denying an applicant based on credit, be sure to provide an Adverse Action Letter (or use a platform like RentApplication.net which has them built into the approval workflow).

The new laws are certainly an adjustment to the way that landlords are doing business. Thanks to Rent Application for their help in explaining the changes to screening, as cited by the new laws, and for their ease of use in performing tenant credit checks for under $20.00.

Contact @Rent Application here for more information and to get started today!

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