New Seattle Law Lays Out Tenant Selection Rules: Here's How It Affects Landlords

I don’t know about you, but I want to pick who my tenants are.

That seems reasonable for any landlord. If I owned property in Seattle, Washington, however, beginning Jan. 1, 2017, I would no longer have that right.

The First-Come, First-Served Law

Seattle recently approved an ordinance that forces landlords to do the following:

Document the date and time of every application received.
Rent to tenants on a first-come, first-served basis.
Disclose to prospective tenants their minimum screening criteria.
Provide the documentation needed for the owner to conduct a screening.
Provide information explaining how to request additional time to complete an application.

The City Council says this law’s purpose is to ban discrimination. But discrimination against whom?

Who Said Anything About Discrimination?

Don’t get me wrong. I’m a firm believer in the Fair Housing Act that prohibits discrimination based on race, color, national origin, religion, sex, disability, and familial status. No landlord should deny tenants based on those reasons alone.

And that’s the point — there’s already a federal law that bans discrimination. The Seattle City Council has another agenda, and let me give you a hint: It’s one that doesn’t favor landlords.

Seattle Is Unique

Landlords who have multiple applicants for a property in every other jurisdiction in the nation can pick who rents their property — as it should be. But in Seattle, the quickest person to submit an application will be the first in line for a landlord to review. And if that person meets the minimum requirements, the landlord must choose that applicant and can no longer review any other applications.

The City’s goal is to provide housing for people with “alternative sources of income,” according to The Seattle Times. This applies to people who receive their income from Social Security or from subsidies instead of from a job.

This isn’t a bad thing. There are plenty of people who make a decent income without having a typical J-O-B, and that shouldn’t prevent them from qualifying. Income is income, as long as it’s legal.

But someone who makes $200,000 a year, however the means, is likely to be more qualified than someone who makes $50,000 a year. The risk for the landlord is less, and the landlord should have the right to choose.

The ironic (and crazy) thing is that “Source of Income” isn’t even a protected class in Seattle.

An Underlying Agenda

And here is the underlying agenda voiced by Seattle Councilmember Lisa Herbold. Herbold, according to The Seattle Times, is a proponent of the new first-come, first-served law because it will stop landlords from “picking the renters they like best among qualified applicants.”

Is she kidding? Assuming that landlords don’t discriminate on the protected classes, why shouldn’t landlords pick who they like best to put in property they pay for and maintain?

Unintended Consequences

Whenever the government gets involved, for good or bad, there are unintended consequences. And this first-come, first-served law will be no different.

Landlords must tell prospective tenants what their minimum requirements are. The result? You can bet that those requirements will be raised.

So what happens to people who might have made a bad financial decision in their past or who have a short sale or a bankruptcy on their record? If landlords can be free to choose whomever they like, they might consider applicants who don’t meet some arbitrary minimum requirement and instead look at other factors, such as whether potential applicants have been paying their rent on time for the past year or whether they have a steady job.

With the new law, good tenants can’t apply if they have a bad credit score because they probably won’t meet the minimum requirements Seattle requires landlords to set.

The Irony of the First-Come, First-Served Law

The irony of this law is that it does exactly what it intends to stamp out: discriminates against a certain class of people.

And which class might that be? People with jobs.

They will be working and likely unable to put in their application until after work. But since landlords must date- and time-stamp applications, people who don’t work have plenty of time to get in their application.

The Seattle Government Is Watching You

Do you know how renters will know whether landlords are properly time-and-date stamping applications? The Seattle Office of Civil Rights (SOCR) will be able to look through your records. Or if a potential renter even thinks that you skipped over them, they are encouraged to sue you.

Not only that, the SOCR plans to set up sting operations to catch landlords who want to choose their own tenants, fining them between $125 and $500 per occurrence, and that operation will cost the city over $200,000. Seattle is essentially saying, “Let’s go after the people who pay our salaries via their property taxes. Let’s bite the hand that feeds us.”

How Landlords Work in the Real World

Let’s face it: Landlords rent to the people they believe will be the best tenants — based on tenant screening, reference checking, and interviewing. Landlords want tenants who will pay the rent on time, who will treat the rental property as if it were their own, and who will be a good neighbor to those around them. As long as tenants meet those criteria, landlords don’t and shouldn’t care what color they are.

Conclusion

So to summarize, landlords, under this Seattle law, will need to note the date and time of each application they get and will then have to go over the applications in the order received.

As soon as an application meets the minimum requirements set, the landlord must offer the unit to that applicant and can no longer look at other applications.

I can say this: I will never be a landlord in Seattle as long as this law is in effect. And if others feel that way too, renters will have an increasingly difficult time finding a place to rent.

Landlords: What do YOU think about this law?

Let me know your thoughts with a comment!

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.