Tenant Screening: Avoiding Discrimination Lawsuits
Last week I discussed the importance of screening tenants. I noted that tenant screening was perhaps the key to being a successful landlord. This week I want to follow up on that article by discussing methods to screen your prospective tenants to avoid a discrimination lawsuit.
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What is discrimination?
A quick Google search defines discrimination as “Recognition and understanding of the difference between one thing and another.” It is pretty simple. We humans discriminate between things all the time. We may choose a blue shirt over a red one or a blonde over a brunette or any of a myriad of other criteria that fill our everyday lives.
Protected Classes in Housing
Federal law defines seven protected classes of people that you cannot discriminate against. You cannot discriminate or base your tenant selection upon a person’s race, skin color, sex, national origin, religion, disability or familial status. In other words, you cannot choose to rent an apartment to someone because they are or are not black for example. You cannot even ask questions about these terms without appearing discriminatory.
Do not for example put a space for someone to list their spouse on your application; just provide spaces for all adults. These seven criteria have no basis in determining if a person has the ability to qualify for your property as far as the federal government is concerned.*
Be forewarned that there are federal testers out there who randomly call for rent ads to “test” landlords. I recently saw an ad in my local paper looking to hire such testers.
To avoid a federal discrimination lawsuit, here are some must do’s:
- Treat everyone who responds to an advertisement or calls about available rentals in the same manner. Ask everyone the same questions and provide everyone the same information. You may even want to have a script prepared.
- Never, never, never ask questions relating to the seven protected classes mentioned above. Do not ask about age, or where a person is from or if they are married, etc. These things have no bearing on the ability of someone to rent your property in the eyes of the federal government. You may ask how many adults (18+) will be living in the property as you will want to screen every adult. It can be so easy to slip up here and appear to be discriminatory. So just stick to the facts about the property.
- Keep your rental application form neutral and simple. Do not ask questions about anything related to the above mentioned protected classes. Do ask about jobs, previous addresses, income and references.
- Never try to guide anyone to a particular property or part of town. When someone responds to an ad you have placed and they ask what else you have available, tell them about everything you have available. Do not try to steer a person towards or away from a particular property, even of you know they cannot afford it. If they want to see a property or apply for a property, show it and let them apply and go through the application process. Otherwise it may appear that you are being discriminatory even though you are actually just trying to help and save everyone’s time.
- You must develop a set or written criteria or standards that everyone has to meet in order to be able to rent one of your properties. These standards can be based upon just about anything other than the 7 protected classes. Write it down folks and keep it handy in a file. These written criteria could be a real lifesaver to you if you are every accused of being discriminatory.
In sum, do not discriminate. It is wrong and just plain stupid. Plus, it can get you into a world of trouble. Every once in a while federal testers will descend upon an area, find some ignorant landlord and make a prime example of him or her with fines in the five figure range. Also keep in mind that local jurisdictions may add other classes to the list, such as age or sexual orientation. So do keep up with your local laws as well.
Finally, remember to treat everyone equally. Tell everyone the same information about every property you have available. Don’t ask discriminatory questions on your application and have a set or written criteria for applicants available for inspection. What should your criteria be? I will save that for a later post.
Until next time, happy investing.
* There are some very specific exceptions such as and all female dormitories or an over 65 retirement community. If you run such a facility, seek competent legal advice on setting up a tenant screening process.