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Tips for landlords on how to prevent hefty lawsuit fines

Real Estate Report
By Lauren Bunting | Mar 01, 2018

(March 2, 2018) The National Association of Realtors official magazine, Realtor Mag, recently published these eight tips for property managers and landlords to help prevent discrimination lawsuits, as fines for violations of Fair Housing Law are hefty, numbering in the tens of thousands of dollars per violation.

•Do apply your policies and procedures uniformly. Avoid running a full tenant-screening report on some applicants and only a credit check on others. Be consistent or be vulnerable to discrimination complaints.

•Don’t get too personal on rental application forms. Ask about jobs, previous addresses, income, and references. But stay away from specific questions about spouses or children, as well as other protected characteristics under the Fair Housing Act. (You can provide space for an applicant to list all the individuals who would be living in the apartment).

•Do consider a “colorblind” screening service. Some services have a scoring system that enables landlords to establish their preferred tenant profile based on specific parameters, such as income, past evictions, and credit score. The software then evaluates each applicant according to the criteria and returns a “recommend” or “not recommend” verdict.

•Don’t automatically reject an applicant with a criminal record. In 2016, the U.S. Department of Housing and Urban Development issued a memorandum on housing providers’ use of arrest and conviction records to make housing-related decisions. You cannot have blanket policies excluding all applicants who are felons or consider arrest records. Instead, you should perform a case-by-case evaluation.

•Do stay abreast of new developments affecting screening.  Currently, eviction reports used in the tenant screening process can include records dating back seven years. Under the proposed amendment, called the Tenant Protection Act, only eviction records no older than three years and resulting in a judgment that is not being appealed would be allowed.

•Do keep all documentation for up to 10 years. That includes rental applications, signed releases, tenant-screening reports, and any other data or documents collected during the screening process – even if you don’t rent to the applicant. This information may be crucial if a rejected applicant questions your denial or selection of a different tenant.

•Do send a declination letter when rejecting a potential tenant. This document, also called an “adverse action letter,” specifies the reason or reasons for rejecting a rental application, such as income, employment, or credit history.

•Do call your attorney when in doubt. With new legal challenges and decisions coming out on a regular basis, it’s wise to have a legal resource you can turn to with questions.

– Lauren Bunting is an Associate Broker with Bunting Realty, Inc. in Berlin.

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