I live in Texas, so I have to comply with the rules for application fee listed on this website.
The website basically stated that "At the time a prospective tenant is given a rental application, the landlord must also provide written notice of the tenant selection criteria and the grounds for which a rental application may be denied".
Tenant Selection Criteria:
- Minimum lease term is 12 months
- No pets allowed
- No smoking allowed
- Monthly income is at least 3 times rent (approximately $4,000).
- Have not declared bankruptcy in the last 60 months
- Must pass the TransUnion MySmartMove screening process (credit score and background check), and recommended by the system.
- If you currently live in a rental property, you must be able to provide a reference from the current landlord
What do you guys think about the criteria I've written? Should I include anything else?
I think the requirement is more to qualifying issues and not so much as to lease requirements.
Owning a pet or smoking isn't a qualification matter, it's a contractual agreement under the lease. Is someone who smokes a cigar a week out on the town disqualify them? They may never smoke in the home. Pet ownership is really not a qualifying matter, their dog might be at mom & dad's house, the goldfish shouldn't be an issue. Owning an animal appears to be a disqualifying matter.
Now, we all know what you mean, but if qualifying matters must be disclosed by law there's a twist there the way it's stated as a qualification.
You're two years more strict about a bankruptcy. Actually, someone who has taken bankruptcy can be a better risk than others. They can't take bankruptcy on you, their debts have been reduced, they may have debts on an easier payment schedule and the reason for the BK is not considered. Even mortgage lenders give favorable considerations to those that may have a bankruptcy due to events beyond the applicant's control, like divorce or medical bills.
In the eyes of any regulator type, saying they must pass a credit check is not giving any qualification level to be met. What does "pass" mean? You might consider stating a credit score.
I'm surprised to hear of this disclosure in Texas, but the idiot lawmakers didn't think this through very well. I would never be cornered into having strict black and white qualifications. I wouldn't give up the right to change any requirement for the next tenant or a year later either. I get the intent of the requirement, I would comply but I wouldn't be terribly specific either.
I would put it back on any regulator type or on any attorney that may use that information against me by putting in terms of underwriting guidelines published by Fannie Mae as currently in effect as well as Housing and Urban Development guidelines as applicable to the type of property. A copy of such guidelines is made available at (the office, public library, on line @).
Such a disclosure could be incorporated at the bottom of the handout.
I'd probably just state that:
The applicant's family qualifying monthly income must be three time the rent established.
"Qualifying income" is a key phrase. Some income may not qualify, seasonal jobs that are not regularly performed, part time jobs that are not performed on a regular basis, employment income received from a job or line of work less than two years, child support payments that are not paid through any court system with a history of on time payments.
I would insist on saying that "Compensating factors effecting credit, income, employment and criminal histories will be considered to the benefit of the applicant". This leans toward the consumer, it appears so, but each area is then a judgment call, you might end up saying.....Yes, I considered your part time employment over the last 6 months, however this is not a sufficient period of two years showing such income and I can not count that income. Or, your credit score is 615 and not 620 however I see that you have paid your past landlord on time and I will accept your credit based on your past rent histories.
The intent of the legal requirement I'm sure is to keep landlords from arbitrary unjustified excuses as a selection tool in discriminatory matters, it's a consumer oriented requirement (surprised by Texas).
As to credit, I would select your risk tolerance level, might be a credit score of 620. However, past rents are not reported most likely unless there is a judgment, but could be.
The past two or three year's rent verification must indicate that rents were paid as agreed and that the landlord would most likely rent to the applicant again. What you have stated would disqualify anyone touring the past year in their RV or living overseas. Compensating factors shall be considered for military or government service within the past 2 years.
I'll stop as I could go on. What this requirement is doing is setting the stage for an applicant to cry foul if they specifically meet a requirement as you state it. I would not allow my qualification standards to be put into a box. What the TREC wants to see is fair standards evenly applied informing the applicant of what they may be disqualified for. If you were to adopt the underwriting terms and conditions for a mortgage allowing compensating factors there wouldn't be a judge, jury or any regulator that could find fault with that approach as it is federally accepted and done everyday in Texas. It also means they would have a heck of a time trying to through prudent practices if any complaint.
Lastly, I don't have a bigoted bone in my body as to the protected classes but I'm the one that will determine who I rent to. I may look at the facts very, very, closely and carefully with some applicants. If they really do fly through with good references and qualifying factors, I'll take their money. You get the picture. In other words, don't let the state suck you in to having to accept just anyone by meeting X,Y and Z, it's more complicated than that while being fair and reasonable.
Any disqualifying criminal background information that may surface if you do a background check.
Thanks @Bill Gulley . This is my first time trying to be a landlord.
I'm mostly just confused with what to do. I plan to use MySmartMove to process the application, and background checks for my tenants. However, I don't know if MySmartMove software comply with Texas regulation or not. That's why I would like to send out an additional email to ensure I comply with the rules.
@Donny Widjaja The real resource you want to follow is Chapter 92 of the Texas Property Code. It does mention many of the same things the pro-tenant page you linked does, but I believe it won't sound quite as onerous as the website. I have some written criteria myself but haven't needed them just yet. My goal is to avoid discrimination of any and all protected class while minimizing the commitment to other written criteria (at least publicly). The more you have out there, the more there is for someone to get offended and try to make your life miserable.
I think you will do well and only take advice from people that know the Texas law not someone that is throwing out uneducated remarks.
I agree with Mark, yes, we have our site idiots Joe.
When I leased my first property it was without knowing anything, I just talked to the guy, we signed a lease and that was it. This isn't 1972, but regardless, if you always try to be fair and to do the right thing, it's unlikely you'll really get in trouble. Common sense goes a long way.
As Mike said the more you put out there the more there is to complain about, the more specific you are the less room you have to make a decision.
You can make it simple by using guidelines adopted by the government. Such are so vast that no average tenant could ever break through the guidelines to make any attack, neither could or would most anyone who would be investigating any complaint.
I always had pretty good luck finding or getting answers by asking those in a position who 1. were doing stuff in my area (other investors, Realtors, property managers) 2. asking the regulator types calling the RE commission, asking officials in HUD, asking the department of finance or any municipal office applicable. After that, then your attorney if necessary.
Being on BP, you're asking #1 above. There are other sources and ultimately your attorney if needed.
You'll pick up clues in tenant selection in time. For example, if you get an applicant who holds any professional license, insurance agent, credit counselor, private investigator, bail bondsman, paralegal, registered gun dealer, or such others....or, who have certain jobs, armored car driver, bank employee, pharmacy worker at a hospital, nurse or many government employees, you already know these folks had to pass a criminal background check. In some cases you'll know that credit is acceptable, they aren't near bankruptcy as acceptable credit is required for the job. Those with poor credit are seen as a security risk in doing something for money, like giving out personal information they have access to. This isn't 100% but a very good indicator. When in doubt pull reports since data is available today and what you do for one applicant you need to do for all, treating everyone the same. Point is, what people do says a lot about them in many ways. Don't make assumptions about everyone, doesn't mean someone may have issues because they have some unregulated type job either. I'll stop. :)
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