New York tenant screening

[Meghan Cheek]

Hello all!

I'm looking to fill a vacancy and would love to use an online platform like cozy or mysmartmove for applications and screening.  However, with the new laws passed in NY limiting application fees to $20 and making it illegal to use a tenant's past eviction history during screening, I'm having difficulty navigating this process.  What are other NY landlords doing?  What online application and screening tools are you using that are compliant with these laws?  Any input would be greatly appreciated!

Thank you!

Meghan

[Michael McConlogue]

I have all serious applicants go through COZY. Its easy and you get all of the screening info right from the COZY main page. Also I was pre screening with Been Verified app on my phone but that just got expensive.

[Meghan Cheek]

Originally posted by @Michael McConlogue:

I have all serious applicants go through COZY. Its easy and you get all of the screening info right from the COZY main page. Also I was pre screening with Been Verified app on my phone but that just got expensive.

How do you handle the credit/background check fee?  I asked Cozy support and the only option they have is for the applicant to pay the $40 fee.  Do you reimburse the applicant $20?  Or do you opt to have them just fill out the application and run the background checks through a separate company?  Thanks!

[Cian R.]

I would think that the Background / Credit Check Fee is entirely separate to the Application Fee and the prospective tenant has to pay both. Is this other people's interpretation? 

[Wesley W.]

Here's the appropriate section of the law:

1. (a) Except in instances where statutes or regulations provide for a
2 payment, fee or charge, no landlord, lessor, sub-lessor or grantor may
3 demand any payment, fee, or charge for the processing, review or accept-
4 ance of an application, or demand any other payment, fee or charge
5 before or at the beginning of the tenancy, except background checks and
6 credit checks as provided by paragraph (b) of this subdivision, provided
7 that this subdivision shall not apply to entrance fees charged by
8 continuing care retirement communities licensed pursuant to article
9 forty-six or forty-six-A of the public health law, assisted living
10 providers licensed pursuant to article forty-six-B of the public health
11 law, adult care facilities licensed pursuant to article seven of the
12 social services law, senior residential communities that have submitted
13 an offering plan to the attorney general, or not-for-profit independent
14 retirement communities that offer personal emergency response, house-
15 keeping, transportation and meals to their residents.
16 (b) A landlord, lessor, sub-lessor or grantor may charge a fee or fees
17 to reimburse costs associated with conducting a background check and
18 credit check, provided the cumulative fee or fees for such checks is no
19 more than the actual cost of the background check and credit check or
20 twenty dollars, whichever is less, and the landlord, lessor, sub-lessor
21 or grantor shall waive the fee or fees if the potential tenant provides
22 a copy of a background check or credit check conducted within the past
23 thirty days. The landlord, lessor, sub-lessor or grantor may not collect
24 the fee or fees unless the landlord, lessor, sub-lessor or grantor
25 provides the potential tenant with a copy of the background check or
26 credit check and the receipt or invoice from the entity conducting the
27 background check or credit check.

It seems pretty clear to me (and was the intent, I am sure) that $20 is the maximum you can collect as part of the onboarding process, regardless of what you call it.

[Meghan Cheek]

This was the reply I received from Cozy about the screening fee:

"Prospective tenants can always submit an application for free by declining to run their credit report and background check. However, if you do require those reports, my best recommendation would be to have them order the reports through Cozy, and then reimburse them the $19.99.

Cozy is currently set up so renters purchase their screening reports themselves, and then share their reports with their potential landlord to allow self-initiated soft credit checks that don't harm applicants' credit. Because of this setup, tenants must provide their personal information and answer security questions prior to paying.

This may be more difficult or just not an option at this time, but what some landlords choose to do to pay for their applicant's screening costs is to have them order their screening reports at the rental showing. Then, after the tenant completes their verification, you can enter your payment information instead of theirs. But again, due to the current state of things, I know this may not be an option."

Doesn't sound like a process I would want to go through, pandemic or not, it's just not efficient or reasonable. 

I also reached out to MySmartMove regarding their screening process, as they run a report on past evictions.  In NY it is now illegal to use past evictions as a reason to deny an applicant.  If a landlord denies an applicant and it is found that the landlord purchased an eviction screening, it is automatically assumed the applicant was denied based on the previous eviction.  So I'm not sure how to go about screening tenants.  Some companies automatically check evictions.  For companies where its optional, I don't know if I should even request an eviction screen as I can't use it anyway and if poses more of a liability at this point.  I'm just curious how other NY landlords are handling these new laws when screening, because I'm at a loss 🤷

[Calvin Thomas]

For New York, we are now using Lease Runner to get into that 20.00 max fee.  If they have a pet, we now also charge 35.00 per pet, per month.  We own a few historic buildings in New York, so it's not that bad, but the new law last year slowed our acquisitions and rehab in the State of New York.

[Colin Stuart]

No question there are ton's of limitations with the new NY rent laws. I've been going old school (to compliment technology) and calling references. Everyone's references will say good things about them on the surface (otherwise they wouldn't put them down). Try asking references questions that sort of beat around the bush: about the prospective tenants reputation in the community, at work, within their family. Are they respectful of others? Respectful of their own things? If you were to change one thing about them what would it be? Etc, etc ----- Be as creative as possible here to flesh out who they are as a person and this should serve as a good baseline for how they will be as a tenant. 

[Michael McConlogue]

I don't charge anyone for background checks and screening. It's their responsibility to provide me with an accepted form of credit report and background check. I let them know that we use COZY for our online payments. They can do whatever they want. If they want to use another screening company that's fine, but at the end of the day it's up to me to decide based on the information that I receive. The Law States:

A landlord, lessor, sub-lessor or grantor may charge a fee or fees
 to reimburse costs associated with conducting a background check and
 credit check, provided the cumulative fee or fees for such checks is no
 more than the actual cost of the background check and credit check or
 twenty dollars, whichever is less

It does not restrict COZY from charging whatever they want. They are providing a service in a free market. Remember: The law is suppose to keep landlords from profiting on screening. 

[Meghan Cheek]

@Michael McConlogue

I have heard this interpretation from other investors so I appreciate the input.  I do like that it gives the option of using Cozy or other online programs to streamline the process.  I'm just a little paranoid about applicants doctoring information when providing their own reports, but then again, landlords have to accept reports that were run in the last 30 days so I guess that's just the way it is now.  I do plan to ask my attorney to get his perspective but I like this option. 

[Wesley W.]

@Meghan Cheek

Read the law.  The prospect needs to jump through a few hoops themselves in order to require you to accept their own credit report.

I, personally, absorb the cost of these checks myself.  It's worth the extra $40 to know it's completely legit.   (I only run these reports after all other due diligence is completed.  A benefit to this is I will not have to issue an adverse action letter if I find something untoward prior to running the report, not to mention saving that cost.) 

Anecdotally, a consequence of the laws enacted last year are that a lot of landlords (myself included) are increasing rents to make up for the increased business risks that have been created.  Exactly the opposite intention of these laws, I assume.

[Meghan Cheek]

Originally posted by @Wesley W.:

@Meghan Cheek

Read the law.  The prospect needs to jump through a few hoops themselves in order to require you to accept their own credit report.

I, personally, absorb the cost of these checks myself.  It's worth the extra $40 to know it's completely legit.   (I only run these reports after all other due diligence is completed.  A benefit to this is I will not have to issue an adverse action letter if I find something untoward prior to running the report, not to mention saving that cost.) 

Anecdotally, a consequence of the laws enacted last year are that a lot of landlords (myself included) are increasing rents to make up for the increased business risks that have been created.  Exactly the opposite intention of these laws, I assume.

Thank you for your insight!  Yes it is sad that most of these laws have the opposite effect, gotta love NY 🙄

[Elizabeth Harding]

I was trying to decide how to handle it for a rental we will be bringing to market soon. I like the idea of letting them choose where to go. My plan was to have them do the background check through Cozy and then tell them I need them to get me their credit report since they can get that for free. I am going to check out Lease Runner though since I saw it referenced. 

[Meghan Cheek]

I did check with my attorney and he said that requiring the tenant to provide the background/credit check did sound like sidestepping the law, but I still understand folks that choose to go that route.  During this sensitive time I would feel more comfortable just absorbing the cost.  I looked into Lease Runner and TurboTenant, both of which allow the Landlord to pay for the screening (Cozy and Zillow do not offer this feature).  They're a little pricier ($40-$50), but I feel more comfortable having the tenant fill out the application and do the screening through a third party company rather than dealing with the risk of having applicants provide me with their social security numbers and personal information.  I understand it's up to each individual's risk tolerance.  

[Bill O'Donnell]

@Meghan Cheek

https://nysar.mysmartmove.com/SmartMove/login.page

This link brings you to a NYS screening. It is $20. Doesn't put in evictions. I have used it successfully

[Meghan Cheek]

Originally posted by @Bill O'Donnell:

@Meghan Cheek

https://nysar.mysmartmove.com/... link brings you to a NYS screening. It is $20. Doesn't put in evictions. I have used it successfully

Thank you, I will definitely check it out!  

[Darran Giangiobbe]

Resolve Partners is another company that meets NY criteria.

[Mike Alt]

I just wanted to point out here that the laws state that the max you collect is $20.  In this case, you are not collecting a fee, the COZY is.  You have a requirement for acceptable background/credit checks.  Tenant's job is to provide you one from an appropriate vendor.  You make a recommendation for them to use COZY as your preferred vendor, but they are not obligated to.

FWIW, I don't charge any application fees -- that seems onerous to me.  I do require acceptable background/credit from all tenants.  I use cozy for the screening and never have an issue.  All adults get screened.  It is usually just a formality at that point anyhow since I make them self-state their credit and background history, which weeds most of the bad eggs out.