First Rental - Pittsburgh, PA Rejection / Add'l Deposit Laws

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First Rental - Pittsburgh, PA Rejection / Add'l Deposit Laws

Austin Everett
Pittsburgh, PA · Member since 2016 · 6 posts · 0 votes

I recently listed my first rental in Pittsburgh, PA (Allegheny County) and got my first batch of applicants. Unfortunately they weren't the shining stars I was hoping for so I'm curious about a few items as I haven't been able to get any concrete answers from my research.

1. If I were to deny based upon 1 of the applicant's credit check, is there a regulated process I need to follow or a form I need to provide them? Or can I just state that their credit score falls well below my minimum threshold?

2. Should the other 2 tenants checks come back fine and I am willing to rent the place to them even with the 1 bad egg, am I able to request an additional deposit from the one bad egg? Currently I'm asking for a full month's rent ($500/each)....I would look to ask for at least 3 month's rent from the bad egg ($1500 total).

3. This is a side topic but I'm a bit uncomfortable with the thought of accepting them so I'm curious if you all would. The bad egg has a 505 credit score with almost $130K in debt between student loans, car, and credit card debt. She's late on multiple payments across this spectrum and has a $12K open credit due that is 9 months past due. I plan to discuss this with her but just wanted to get your all's thoughts. The one other applicant has an average score of 653 but his income is only $35K so he doesn't have the greatest financial stability as well (he is current on all payments though). Still waiting on the third applicant's information.

Let me know, any help is appreciated!

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Sam T.
Investor · Pittsburgh, PA · Member since 2008 · 163 posts · 50 votes
8y

You need to brush up on Fair Housing Laws. You can deny them based on low credit you would be required to provide them with the information you saw that the decision was based off. I use mysmartmove for tenant screening and its very easy for them and will give them access to their report if you deny them. You need to create some form of a tenant selection plan and before they apply they will know what your criteria is.. example 600 credit score 3x income etc. You can request additional security deposit but new laws affect how long you can keep that, I believe only one year but you will need to independently verify this. I would rather have an empty unit for 6 months than to let the wrong person in you have to be very disciplined in selecting proper tenants. I am not in the second chance business! 

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  • Joe M.
    Erie, PA · Member since 2018 · 413 posts · 348 votes
    8y

    No advice on who to choose, but for the applicant who had a few late payments, maybe get 12 checks in advance all post dated for due date or have auto payment from their bank to yours every due date

    1Reply
  • Sam T.
    Investor · Pittsburgh, PA · Member since 2008 · 163 posts · 50 votes
    8y

    You need to brush up on Fair Housing Laws. You can deny them based on low credit you would be required to provide them with the information you saw that the decision was based off. I use mysmartmove for tenant screening and its very easy for them and will give them access to their report if you deny them. You need to create some form of a tenant selection plan and before they apply they will know what your criteria is.. example 600 credit score 3x income etc. You can request additional security deposit but new laws affect how long you can keep that, I believe only one year but you will need to independently verify this. I would rather have an empty unit for 6 months than to let the wrong person in you have to be very disciplined in selecting proper tenants. I am not in the second chance business! 

    4Reply
  • Austin Everett
    OP
    Pittsburgh, PA · Member since 2016 · 6 posts · 0 votes
    8y
    Originally posted by @Joe M.:

    No advice on who to choose, but for the applicant who had a few late payments, maybe get 12 checks in advance all post dated for due date or have auto payment from their bank to yours every due date

     Thanks I would definitely put in some control to ensure payment as much as possible. Post-dated checks isn't bad as that would hurt her should she not have the funds or close her account...then of course I would just have to go through the hassle of eviction/collections. Need to see if there are any legal aspects to consider her up front before I discuss with her.

    0Reply
  • Austin Everett
    OP
    Pittsburgh, PA · Member since 2016 · 6 posts · 0 votes
    8y
    Originally posted by @Sam T.:

    You need to brush up on Fair Housing Laws. You can deny them based on low credit you would be required to provide them with the information you saw that the decision was based off. I use mysmartmove for tenant screening and its very easy for them and will give them access to their report if you deny them. You need to create some form of a tenant selection plan and before they apply they will know what your criteria is.. example 600 credit score 3x income etc. You can request additional security deposit but new laws affect how long you can keep that, I believe only one year but you will need to independently verify this. I would rather have an empty unit for 6 months than to let the wrong person in you have to be very disciplined in selecting proper tenants. I am not in the second chance business! 

     I do have a base criteria which she very clearly falls well below unfortunately. I am definitely anticipating declining them due to her report but just figured it was a good opportunity to see what all there is to consider and do before going through with the declination. Thankfully I have received other interest in the unit so I don't believe it will be too difficult to fill after this group.

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  • Brian Shirey
    Property Manager · Pittsburgh, PA · Member since 2017 · 14 posts · 11 votes
    8y

    Some answers:

    1. Yes you do need to disclose an adverse action notice based on the consumer/credit report you used.  They have a right to contact the agency and request a copy or dispute the report.  Here is the language we use in our adverse action notice to applicants:

    " The Consumer Reporting Agency listed above did not make the decision to deny your application and cannot give you any information regarding your denial. It is your legal right to request a free copy of the report within 60 days of receipt of this notice from the above named Consumer Reporting Agency or to dispute the accuracy of the report with the above named Consumer Reporting Agency. We regret we are unable to provide any further information. "

    2. You can require an additional deposit, but PA law limits that to two months rent on the initial term.  

    3. Be careful, the writing is on the wall.  You could ask for a guarantor or co-signor on her behalf, but make sure you require they show documented income of at least 5x the rent she is responsible for.  Remember, a big part of finding the RIGHT tenant is saying no the WRONG tenants.  Don't be afraid to say no and move on.  It may take a few more weeks but usually someone qualified will come along.  

    3Reply
  • Austin Everett
    OP
    Pittsburgh, PA · Member since 2016 · 6 posts · 0 votes
    8y
    Originally posted by @Brian Shirey:

    Some answers:

    1. Yes you do need to disclose an adverse action notice based on the consumer/credit report you used.  They have a right to contact the agency and request a copy or dispute the report.  Here is the language we use in our adverse action notice to applicants:

    " The Consumer Reporting Agency listed above did not make the decision to deny your application and cannot give you any information regarding your denial. It is your legal right to request a free copy of the report within 60 days of receipt of this notice from the above named Consumer Reporting Agency or to dispute the accuracy of the report with the above named Consumer Reporting Agency. We regret we are unable to provide any further information. "

    2. You can require an additional deposit, but PA law limits that to two months rent on the initial term.  

    3. Be careful, the writing is on the wall.  You could ask for a guarantor or co-signor on her behalf, but make sure you require they show documented income of at least 5x the rent she is responsible for.  Remember, a big part of finding the RIGHT tenant is saying no the WRONG tenants.  Don't be afraid to say no and move on.  It may take a few more weeks but usually someone qualified will come along.  

     Great feedback I appreciate it. Given it is my first one as well I definitely want the tenants to be a good group and not someone I am uneasy about. I'll be sure to provide the denial notice with the reasoning as well as the information that she can request/dispute the report should she wish. 

    0Reply
  • Austin Everett
    OP
    Pittsburgh, PA · Member since 2016 · 6 posts · 0 votes
    8y
    Originally posted by @Brian Shirey:

    Some answers:

    1. Yes you do need to disclose an adverse action notice based on the consumer/credit report you used.  They have a right to contact the agency and request a copy or dispute the report.  Here is the language we use in our adverse action notice to applicants:

    " The Consumer Reporting Agency listed above did not make the decision to deny your application and cannot give you any information regarding your denial. It is your legal right to request a free copy of the report within 60 days of receipt of this notice from the above named Consumer Reporting Agency or to dispute the accuracy of the report with the above named Consumer Reporting Agency. We regret we are unable to provide any further information. "

    2. You can require an additional deposit, but PA law limits that to two months rent on the initial term.  

    3. Be careful, the writing is on the wall.  You could ask for a guarantor or co-signor on her behalf, but make sure you require they show documented income of at least 5x the rent she is responsible for.  Remember, a big part of finding the RIGHT tenant is saying no the WRONG tenants.  Don't be afraid to say no and move on.  It may take a few more weeks but usually someone qualified will come along.  

     So they actually came back stating the payment delinquencies are due to a broken ankle which stopped her from her serving job which was almost half of her income. She's back healthy now and working her two jobs as normal. She has offered to have someone co-sign....I know various states give landlords a lot of restrictions about going after co-signers should the tenant not pay. How do you handle co-signers and do you think I should consider it? 

    0Reply
  • Andre Crabb
    Investor · Tampa, FL · Member since 2017 · 205 posts · 92 votes
    8y

    Hey @Austin Everett, what neighborhood is the property? is this typical of the tenant base there?

    0Reply
  • Brian Shirey
    Property Manager · Pittsburgh, PA · Member since 2017 · 14 posts · 11 votes
    8y
    Originally posted by @Austin Everett:
    Originally posted by @Brian Shirey:

    Some answers:

    1. Yes you do need to disclose an adverse action notice based on the consumer/credit report you used.  They have a right to contact the agency and request a copy or dispute the report.  Here is the language we use in our adverse action notice to applicants:

    " The Consumer Reporting Agency listed above did not make the decision to deny your application and cannot give you any information regarding your denial. It is your legal right to request a free copy of the report within 60 days of receipt of this notice from the above named Consumer Reporting Agency or to dispute the accuracy of the report with the above named Consumer Reporting Agency. We regret we are unable to provide any further information. "

    2. You can require an additional deposit, but PA law limits that to two months rent on the initial term.  

    3. Be careful, the writing is on the wall.  You could ask for a guarantor or co-signor on her behalf, but make sure you require they show documented income of at least 5x the rent she is responsible for.  Remember, a big part of finding the RIGHT tenant is saying no the WRONG tenants.  Don't be afraid to say no and move on.  It may take a few more weeks but usually someone qualified will come along.  

     So they actually came back stating the payment delinquencies are due to a broken ankle which stopped her from her serving job which was almost half of her income. She's back healthy now and working her two jobs as normal. She has offered to have someone co-sign....I know various states give landlords a lot of restrictions about going after co-signers should the tenant not pay. How do you handle co-signers and do you think I should consider it? 

     I think it is worth considering with a co-signer given that:

    1. The other applicants are well qualified

    2. Medical hardship is something where we should have a heart and try to understand where they are coming from.  

    Just make sure that if you do go forward, she needs to provide proof of this income and it needs to be at least 3x the rent she is responsible for.  Also require the co-signer to fill out an application and screen them.  We require applicants with sub par credit who we consider to enroll in our credit reporting program.  This means we will help them build their credit by reporting on time rent payments to the bureau's, and it also keeps them honest knowing that if they are late it will ding their credit.  

    0Reply
  • Lucas Blazejewski
    Pittsburgh, PA · Member since 2018 · 3 posts · 0 votes
    8y

    Hi Austin,

    If you enjoy reading, I'd recommend "Landlording on AutoPilot" by Mike Butler. By no means all inclusive source of information due to different state and municipal laws, but he does frame a some pretty good strategies for recruiting, managing applications, and setting tenants up for success. Super quick read. 

    Cheers,

    Luc

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