Can "having a job" be part of your tenant screening criteria?

Question

Hear me out.

Let's say part of your screening criteria is a minimum of 3x rent as income.  In CA and some (all?) other states, you cannot discriminate based on source of income.  That means if the prospective tenant receives unemployment, Social Security, etc., you have to count that as income, just like income from a job.

So, separate from the 3x rent as income issue, can you also have a requirement that the prospective tenant must be employed or work in some way (self-employed, etc.)?  Would this be viewed as discriminating against those receiving unemployment, SS, etc.?

This is more of a curiosity for me.  We accepted tenants last year where the wife worked but husband got unemployment, for a sum total of over 3x rent, and they've been great tenants.

Account Closed · Answer

Since you're in CA you might find this informative:

http://www.hrfh.org/housing_discrimination.html

Be careful should you choose to make such a requirement in the future.  These days a prospective tenant is only a few clicks away from easy to understand information that makes it clear that landlords cannot require tenants to have jobs.

Most landlords I know with S8 tenants feel very secure about those rent payments and would have more such tenants if there more vouchers out there. Providing services to the poor has its perks. Really depends on whether or not your local housing authority is easy to deal with.

Bill Gulley · Answer

There are several Acts overseen by HUD, they may not be on HUD's site. What should be in HUD guidelines are the rent to income guidelines of 33%. These regs are intertwined with Fair Housing, Equal Credit Opportunity, two that come to mind. Additionally, there are consumer laws at the state level and I'm not familiar with matters at the state level.

The words "regardless of the source of income" are used I assure you. It's probably not as a category, but in direction of applying the intent of regulation.

I spent years reading and studying regulations, I may not remember someone's name 5 minutes after meeting them (depends on how impressed I was, LOL) I've always had trouble with names, but I can remember text for decades, it depends on how impressed I was. I'm usually pretty impressed with and by HUD, Federal Acts, banking regulations, real estate laws and the application of such restrictions.

In book form, HUD regulations are in volumes, we had the complete set in the library of our PHA, the book case is for the regs was about 6' long and on 3 shelves. Just saying, it's a lot of material and as a Commissioner of the PHA, it was my duty to know what was in there. Now, I'm sorry I can't direct you to a specific paragraph.

There are some other aspects of posting here that I'd like to bring up, just haven't been compelled to really, perhaps I should and take it to the Off Topic forum as it would be straying from the subject here. It might be rather long.

My authoritative writing style probably ticks off a lot of people, I won't change it, but read it as my opinion based on my experience. It's the shortest way to present what I have to say getting to the point rather than touching on all the side issues that may be applicable, like verifying drug money. I really don't embellish, I do stress certain points of what I consider applicable and important to a topic that I have experience in.

Anyway, I'm sure if it's important to you, you can keep searching the HUD and various Acts and you'll see what I addressed. I'd have to search just like you do.

Sorry if our OP's post wasn't clear, it's the way I read it, I don't hammer someone personally (usually) but to the expressed intent or idea, wasn't personal. :)

Kimberly T. · Answer

@Bill Gulley perhaps you were reading into my question, or perhaps I didn't make it clear enough, but I'm not trying to get out of renting to anyone for not having a job.  We have rented to someone on unemployment and they've been a great tenant.  Again, I asked because I was curious, since I'd seen responses on BP from landlords in other states about denying a unit to someone without a job, or someone on unemployment, so I was wondering if that was legal in other states.

Bill Gulley · Answer

No, you can't require a tenant to have a job. You can require they have an income and the ability to pay. Federal law, meaning everywhere.

Some guy comes along, you have 600 buck rents, he has no job, but puts $7,200 in a demand deposit account, you as a signator to draft on the account, you secure the account with a UCC filing, are you suggesting you don't want to rent from him because he isn't working? Maybe he's a college professor taking 2 years off doing research and writing a book.

Trying to mix your political views in a RE business can get you in trouble. :)

Derrick Craig · Answer

Kristine Marie Poe  AMEN!!!! ON YOUR POST BELOW!!!

"Most landlords I know with S8 tenants feel very secure about those rent payments and would have more such tenants if there more vouchers out there. Providing services to the poor has its perks. Really depends on whether or not your local housing authority is easy to deal with."

Matt Devincenzo · Answer

Bill Gulley not a problem. I'll definitely keep looking, because I would like to know myself personally. I can definitely appreciate the remembering text but not where you found it 5 years ago so no problem there.

Matt Devincenzo · Answer

Bill Gulley I'm going to have to say I disagree, or I'm misunderstanding your posts.

Based on the HUD guidelines the income inclusion/exclusions they list are only with respect to PHA. All the other income guidelines I saw were with respect to a specific grant or need program, so in both cases that applies to the specific agency policies but is not federal law that applies to fair housing standards LL must follow.

Also the fair housing site mentions nothing about "income source", and doesn't have any discrimination charges in the last years for income but has them for the six federally protected classes.

Several states have adopted it as a specific requirement for tenant's rights within that state. In all the state's guidelines I've seen they specifically state that income source is not federally protected. There are also several organizations with missions to lobby for it to be added federally.

I'm not saying you are wrong.....but I think you're wrong ;) that's a new one for me, but unless you have something to back it up I'd say it is not federally protected, only state (at least for now).

Account Closed · Answer

Many property managers are very wary of tenants who want to pay in advance or who would be willing to set up such an account. They don't cook meth or have grow houses in MO?

Bill Gulley · Answer

3 months is not a sufficient period to look at, go to tax returns of commissioned sales and self employed as well as with anyone who has fluctuating monthly income for any reason. What's the average monthly income for the past two years? That should be your qualifying mark.

That said, there is room for common sense. Is a military housing allowance used when the service member has 6 months left in service?

Is a doctor getting out of residency a consideration?

What about a college student graduating in 3 months who has a verified job offer?

Cash reserves that can supplement income can be a factor, look closer at credit and past rental experience to consider the intent and probability of such reserves being utilized as needed. In K. Marie's post about her dealing in RE, this could have been used to cover perceived dry spells.

I have found that you're always better off looking at the factors surrounding any applicant as your primary underwriting concern, not personal matters (initially) or issues that relate to the person. After you get past the facts of the ability to pay you can then take in other issues. Just be fair. :)

Wendell De Guzman · Answer

@Bill Gulley , thanks for sharing this with us. Now what about if the landlord requires a certain portion (say at least 50%) of the income to be "STABLE"? What if you get a tenant who does not have a base salary but is paid commission only? What if you see a tenant who made $7,000 in January, earned $0 in February and has already made $6,500 March? The rent is $1500 per month.

Will you rent to his person? It meets the 3x the rent but the income fluctuates.

Can "having a job" be part of your tenant screening criteria?

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