Changing rent terms for less than ideal applicants?

Question

Hello BP,

I am renting a 3/2 house in Wilmington, NC and have had a hard time finding that "perfect" applicant.  Two 30ish guys came by and really want the  property, however one of them has about 6 arrests for drug and theft type crimes.  They were both upfront and honest about their past and have been very responsive to my questions about income, references etc.  They are both coming from a sober living house, I spoke with their house managers and sponsors and they both get glowing reviews that they are on the right track.  Both have good blue collar jobs, electrician and tile guy, and make plenty of money.

My question is, can I legally or should I change the terms to reflect the fact that many landlords would not even consider them because of their criminal background?  Specifically, I know I can charge up to 2x monthly rent as security deposit, but can I also raise the rent amount? It seems the same as a bank charging higher interest to those with worse credit.  I'm not trying to screw these guys over but I have to mitigate the risk of renting to them at all.

Furthermore, should I even rent to these guys? I believe that people can move on from their past mistakes, but I want to run this like a business, not a charity.

Thanks,

Matt

Laurie Carpenito · Answer

In NC having a criminal record is not a protected class in fair housing but having a disability is and someone who is in recovery is considered as having a disability. If you charge a higher rent it has to because they are a credit risk and it has to be the same amount you would charge any credit risk individual. With that being said, as a prior Probation Officer in New Hanover County and current realtor, I would check with the probation office to see if the individuals are on probation and are current in the monies owed to the court. You can also ask the individuals. If they are on Probation/Post Release, they will have an officer checking on them and how frequently depends on the level of probation they are on. Think about the neighbors around your house and if it is worth it. I believe in second chances and know people who have been successful in recovery but I also know ones that have not. There are so many more questions that need to asked and answered before I would feel comfortable renting to them.

Matt W. · Answer

I discovered one guy had a felony so I told them I can’t rent to them. I guess I’ll have to market more or drop the price to attract more qualified applicants...thanks everyone!

Dennis M. · Answer

Ugh ..Do more marketing so you are not stuck choosing between dumb and dumber !

Anthony Wick · Answer

@Matthew Wilson

NK other options for other tenants? This seems like quite the risk. What, 7th times the charm for these guys? Even if the half way house or program co-signed the lease I would pass on these guys. But if you must, it better be a MTM lease, with co-signers. What happens if their parole/probation is revoked? You’re SOL.

Daniel Smyth · Answer

@Matthew Wilson

This seems simple.

Your tenants will sign a lease. You write the lease.   This would be the same for smokers.

The lease last year allowed smoking in the house. You change your mind, and the lease this year says no smoking on the property.

Next year you let someone smoke, and the lease changes again.

I dont see a problem.

Amy Beth · Answer

@Matthew Wilson. I would hesitate to rent to someone with multiple criminal charges.

Justin Abdilla · Answer

I don't know the law in North Carolina, but in Illinois this wouldn't be a discrimination lawsuit.  You have a legitimate reason to question the ability of the tenant to pay rent, and occupy the premises safely without being a nuisance in the neighborhood.  I think the criteria you're using are criteria you're applying to all people.  You're asking everyone to come with FICO over 550 and with a decent criminal background check.  I can tell you those are the only two things landlords in my area ever ask about, and I don't know anyone who has had a suit in a long time.

Brent Paul · Answer

You need to be careful or you could be slapped with a discrimination lawsuit.  That's great you want to give them a 2nd chance in life.  However I would still look for other applicants.  This could either go really good or really bad.  Some cities are fining the landlord if the tenants are causing trouble.  Something to keep in mind and definitely check your local laws.  I know of one landlord that had major fines and the city forced him to sell the property.  Granted it was a pretty extreme case with lots of criminal activity.

Matt W. · Answer

Thanks everyone,

I understand about discriminating against protected classes, but being a criminal and having bad credit is not a protected class, otherwise what is the point of doing a background and credit check.

Jeff, my policy is credit below 550= 2x rent as security deposit, and that is applied to everyone across the board. However I have not heard if changing the actual rent amount is legal. I don't think the extra $100 a month I might get would be worth the potential legal issues,  so I'll probably skip that idea.

Bob A., yes I've had tons of interest but most people lead with "how low of credit will you take?" or "do you do a background check?" which of course throws up red flags.  Only a few people have applied and all have had absolutely awful credit and I never hear from again after I mention their report.

Laurie, thanks for the tip, I'll call the probation office.  Will they just tell me based on their name or do I need some sort of court/docket number?

Thanks again!

Rob B. · Answer

I would tread very carefully here. You want to be sure your reason for declining does not violate FHA laws. Please proceed with caution; as Jeff has carefully noted above you have to be super careful that they do or do not meet clearly outlined qualifications that you've set for your rental. I also share in a similar thought as Bob in that people can change from their past; whether or not to give them that second chance (in terms of renting) is up to you. I'll defer to others as far as other advice, but best of luck.

Changing rent terms for less than ideal applicants?

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