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Landlord’s Legal CenterFranco Simone, Esq.
1660 Hotel Circle North, Suite 610San Diego, CA 92108
(619) 235-6180 Telephone(619) 235-6392 Facsimile
www.landlordslegalcenter.com
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Screening Applicants Purpose:
The primary goal of the screening process is to find a desirable tenant, typically a stable occupant who is a good credit risk and will not damage the premises or disturb other tenants.
IN OTHER WORDS— TO AVOID BAD TENANTS WHICH CAN COST YOU $$$$$$$$$$$$
Damage to your unit Eviction fees and attorney’s fees
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Landlord May Use These FactorsCredit StandingEmployment historyAmount (not source) of incomeRental HistoryPast bad conduct relevant to
reasonable belief applicant may be direct threat to health or safety of current tenants/neighbors
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What Steps Should I Take To Screen ApplicantsRental Application
Verifying Information on Rental Application
Credit Report
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GOAL OF RENTAL APPLICATIONIs to obtain information about an Applicant to determine if
that person will be a stable, responsible individual who will have the ability to pay the rent. (See Form #1-Rental Application)
The application should contain the applicant's express written authorization for the landlord
1) to contact all persons or firms named as references, former landlords, or employers;
2) to verify the contents of the application, including obtaining a credit report on the applicant;
3) A written application must be signed by the applicant before a landlord can obtain a credit check.
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Written Rental ApplicationsWhat NOT to Ask:
It is illegal for the Landlord to ask Tenant questions about race, color, religion, sex, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, age, medical condition, victim of domestic violence or whether you have persons under the age of 18 living in your household.
LL can’t ask about immigration or citizenship status.
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ExceptionsLL can’t discriminate because of source of income BUT
can ask Tenant’s source of income and the level of income
Tenant asks for an “accommodation”-Proof of Disability
For housing limited to persons of one sex who will share living areas in a single dwelling unit
LL can limit the number of persons per unit-however…..
Section 8
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RED FLAGS ON APPLICATIONSIncomplete applicationTenant wants to move in quicklyCheck ID with name on application-Get copy of IDMake sure name matches Social Security number
IF employer sounds fishy try calling through separate telephone number you obtain on your own
Get an application from any one over 18 years of age
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Verify Application Information!!! Contact all persons or firms named
as references, former landlords, or employers
andVerify the contents of the
application, including obtaining a credit report on the applicant.
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BAD EXCUSES NOT TO VERIFY INFO“They seemed like nice people.”
“I didn’t have time.”
“They were referred to me by a friend/Pastor/family member.”
“I really enjoy the eviction process.”
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Verifying InformationIncome-Pay stubs, 1099s, award letters, call
employer
Personal ID-Drivers Lis., Passport, green card
Past residences-Send a letter/Call past Landlords
Pull a Credit Report to compare with the information on the Application
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Credit ReportLL can charge up to $49.50 in an Application
fee to apply to actual out of pocket costs to cover credit report and checking personal references. (2012)
Three credit bureaus: Equifax, Trans Union and Experian
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Who Provides the Credit Report?
Even though you may do so, do NOT accept the tenant’s copy of his/her credit report.
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Credit Scores-An OverviewThe highest possible credit score under the FICO
system is 850.
Any score between 850 and 720 is considered to be excellent.
Scores between 719 and 600 still qualify for credit.
Scores between 599-300 high-risk
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Reading a Credit Report
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Part 2
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Part 3
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Part 4
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Part 5
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Part 6
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Part 7
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Part 8
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Fair Credit Reporting Act (FCRA)What a Landlord Needs To Know:
If you are a LL or management company who uses “consumer reports” to evaluate rental applications your need to follow FCRA
FCRA designed to protect the privacy of consumer reports information and guarantee that the information is correct.
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What If I Don’t Follow FCRA?
Applicant can sue in Federal court for damages, attorney’s fees and court costs.
If deliberate…..punitive damages
Federal Trade Commission or the states may sue LL for non-compliance and get civil penalties.
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What is a Consumer Report?
Credit Reports
Tenant-Screening Service-rental history
Reference-Checking Service
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What Actions Are Covered?Depends on who is verifying the
references?
If by an Agency hired by LL------ COVERED
If by LL’s employees------ NOT COVERED
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What is an Adverse Action?Any action taken by the LL or
management company that is unfavorable to the interests of a rental applicant is covered by the FCRA
For example:
Denying applications, requiring a co-signor or requiring an additional deposit.
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What Does This All Mean?
If you use a consumer report issued by an agency you hired and that report causes you to take an adverse action against a rental applicant the YOU MUST give the applicant notice that this occurred.
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When is a Notice Required?Take the Case of……
1. Further investigation2. Consumer report part of the decision
3. Increase in deposit4. Using Agency to check employment
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What Information Must Be Included In a Notice?Name, address and telephone number of the
Agency which issued the report.
Statement that the Agency supplied the report did not make the decision for the adverse action.
A statement that the applicant has a right to obtain, within 60 days, a free copy of the credit report from the agency and the right to dispute the accuracy of the information. See Form 2
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Some Legal Protection
If LL inadvertently fails to provide a required Notice in an isolated case, then LL has some protection from damages if LL can demonstrate “that at the time of the…violation he maintained reasonable procedures to assure compliance” with the FCRA.
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Final ThoughtsBe consistent in the Application Process:Use same rental application
Always pull a credit report
Always verify the same information
Exceptions-Disable Applicants-”reasonable accommodations”
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Screen criteria should relate to legitimate LL objectives
No Subjective Criteria-long hair, smells bad
More Final Thoughts
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QUESTIONS