Best Practices for Tenant Screening in DC 2022
As you learned in the last installment of our Fair Housing blog series, fair housing applies to every action or inaction taken on the basis of protected classes; and that starts as soon as a prospective tenant engages with you, your rental listing, or your property manager. Much of what you need to know about fair housing is highlighted during the rental screening process, which is where we turn our focus today.
A common line of questioning we face from property owners is how we find the best fit and make sure they get a fairytale ending, so to speak when matching tenants to their property. And what those owners want in their perfect tenant varies, but it’s often along the lines of: “a young professional couple with stable employment, no pets, and a great rental history & 700+ credit score.” If you’re thinking, “that sounds reasonable” and don’t understand how that kind of criteria leads to discrimination, you may need to rewind and read our “Intro to Fair Housing” post.
Here’s what you’re actually allowed to base decisions on during the rental screening process:
- Credit history*
- Rental history*
- Criminal history*
Why all the asterisks?Those are because of the limitations outlined in the Eviction Record Sealing Authority and Fairness in Renting Amendment Act of 2022 and the Fair Criminal Record Screening for Housing.These Acts limit the what a property owner can consider and how far back into a resident’s history they can look. Essentially, eviction history older than 3 years and criminal history older than 7 years is off-limits, as well as a person’s actual credit score.
This may sound restrictive and/or reductive but what it does, just like blind screening during a job interview, is limit the decision criteria to only the factors that actually determine whether or not someone is able to pay the rent. In a nutshell, that is the only thing that matters when choosing a tenant.
Nest’s policy is “first come, first served, first qualified,” which means that the first person to apply will be offered a lease, so long as they meet our criteria. This does NOT mean that we choose the “best of the bunch.” There’s no way to justify “best” whereas “first” is very clear. Every step of the way, compliance with fair housing is of utmost importance.
So, how do you set your criteria now that you know what you’re allowed to base your decision on? There are many popular calculations here and it’s up to you, so long as you always apply the same criteria to every tenant. For example, you might say a household has to make 2x the monthly rent in net income and have 2x the monthly rent in liquid assets. You can also evaluate their rental history and consider late payments, evictions (within the parameters of the aforementioned act), or other complaints filed by their previous property managers.
Criminal and credit history requirements can be tricker to pin down, because the latest legislation does leave some gray areas that are open to subjectivity. While criminal records within the past 7 years can be considered, not every offense is worth of denial. They must be offenses that put the tenancy, property, or community at risk. Think: fraud, arson, or violent crimes. You absolutely should not deny someone for traffic violations or marijuana charges- two of the most common things we see and also not at all relevant to someone’s ability to be a responsible tenant.
Likewise, credit history can be tough to evaluate when as per the Act, “A housing provider shall not base an adverse action solely on a prospective tenant's credit score or lack thereof.” This means that rental screening must take into account a person’s full credit history (if they have one, to begin with) and a prospective tenant cannot be denied just because they have no credit history. At Nest, we have a nuanced but clear set of parameters we evaluate when digging into someone’s credit history. You will either need to hire a property manager that has an established and legal way of doing this (make sure to ask them specifics) or you need to come up with your own system that complies with the law.
Once you’ve established acceptable, legal criteria you are ready to begin screening your first applicants. But when you get your first applications, they won’t necessarily fit neatly into your parameters. What do you do when an application looks fraudulent, a prospective renter has a co-signer, or the income isn’t straightforward because the applicant relies on the gig economy?
The easy answer is, hire an expert property manager to make sure you are in compliance every step of the way, even in more complex circumstances. But, our next installment will cover some red flags, how to handle cosigners, and making sure you always get the full picture before proceeding to a lease offer.
If you’re looking for someone to manage your rental and the leasing process for you, call our Nest DC team at 202.540.8038. Renting beautiful spaces and keeping compliant is what we do.