Fair Housing Question

[Marshall Rousseau]

Since I became a landlord several years ago, I have always use the same screening process. When I show a property, I have prospective tenants show up dispersed every 10 minutes on a given evening. The typical evening showing consists of around 3-10 different groups or individuals that show up over an hour or two. I have already prescreened them over the phone and they all meet my minimum requirements. Even through every one that shows up for the showing is technically qualified, if I don't have a good feeling about them, I will hold out and see if someone more qualified comes along for a showing later in the week. Once I have someone I feel good about, I do all my background/eviction checks and will rent to them if nothing surprising pops up. I have always thought this was a pretty solid way to do it and it doesn't break any fair laws. with that said, I listened to Brandon Turner's "The Book on Rental Property Investing" on a long drive the other day and he had a very different approach. He basically rents to the first qualified person that comes along and then he makes sure to send everyone else who applied a letter saying why he did not rent to them.  Brandon says that he has found this is the best way to avoid being sued over discrimination accusations. This methods seems to me to make more work and give less control to the landlord. 

Has anyone ever had any fair housing legal issues arise from a screening process similar to mine? What approach do you all take?

[Richard F.]

Aloha,

When you are relying on "feelings" to make your decision, you are no longer treating every applicant the same.

If you pre-screeen, keep records of your process. You should be asking the same questions every time, and documenting name, date, and phone number/email of each person you contact. This becomes your record of fair and equal treatment to every prospect, as long as your questions are within guidelines.

Similar to Turner, for 30 years I've processed applications one at a time, in the order received. If the first one does not meet our general criteria, we deny them, sending an adverse action letter. There is never any negotiation or "do overs", although occasionally we will request additional documentation prior to making a decision. With full time student applications, we may wait to request parent co-signer if the student states they have a high credit score and savings.The entire application package, with my contemporaneous notes and copies of all reports and documents received, and a copy of the denial letter are filed by date and kept as evidence..."in case." Obviously, they should be securely locked up for security.

The first one that clears all the hurdles gets approved initially. If they are not able to produce the SD within two days, they are then denied and we move on to the next prospect. Any applications not processed once an approval is granted and deposit received, the applicants are simply contacted and allowed to pick up their application and app fee (or pitched for another available property).

It is a bit of work to dot all the i's and cross all the t's, but in the end it is the most important work you do as a property manager. You get a quality tenant that will likely spend several years as actual good tenants at your property. Shortcuts, exceptions, and, in my opinion, algorithms, will all set you up for unnecessary aggravation, and unnecessary expense. By maintaining a file of your past decision processes, you (theoretically) put yourself in a strong, easily defended position when someone does try to raise a discrimination issue. The documentation will show your process was the deciding factor, not your control, or your feelings.