Can property managers withhold tenant screening info from owner?

Question

My parents have a property in Las Vegas that they are renting out and the property manager recently found a tenant and has a lease agreement signed. We asked for the tenant’s information such as their credit score, background check, employment, etc. but the property manager said they do not share that information with owners. Is that allowed? I find it odd that the owners know nothing about the tenant living in their property.

Peter Tverdov · Answer

I can tell you right now I am not sharing credit reports with owners. There is a right to privacy with these things.

You hired the PM to do their job. Let them do it. If you don't trust them, fire them or do it yourself but let them work.

Beth Wheeler · Answer

@Arjay Estrella In PA and DE, my property management company always presents all applicants. The tell credit scores, work history, landlord reference information, eviction information, and any criminal history. At the end of the day, the owner chooses the tenant based on this information. There are certain things that can’t be discussed that are covered by the Equal/Fair Housing Act, such as gender, sexual orientation, race, religion, etc.

Anna Sagatelova · Answer

A property manager should absolutely share what their screening criteria is with an owner.

Information from specific screening tools, including credit information, should not be shared. You the owner gave the PM the right to lease your property - read the agreement, I'm sure it says something to the effect of the PM will abide by all Fair Housing laws and will qualify all applicants the same way, etc. The applicant also gave the PM permission to run their credit/background check, for the sole purpose of qualifying them for the property. They (ordinarily, per the standard disclosure language) did not give the PM permission to share that information. The owner's preference/opinion does not factor in.

Before you sign the management agreement, be clear on what the screening criteria is, how they verify the information needed to pass that criteria, and in what situations they might go to the owner. If you agree to what their process is, let them perform it. Screen your PM company, let them screen the tenants.

Colin Reid · Answer

I set my criteria with my PMs in our management agreement. When we turnover a unit, I usually get an email that presents the applicant in a general way, in reference to our criteria. The last one I received a few weeks ago went something like this. "We have an application for 123 Shady St. It is a couple with no children, thinking of getting a small dog, but no pets at this time. Both are Active Duty military, and they'd like to move in Sept 15th when they're released from their lease on the base. Their credit is around 650, and they make $X,000 a month. No evictions and no criminal record. Do you approve?"

I don't even know their names until I see it on my monthly statements from the PM.

Arjay Estrella · Answer

Account Closed Thank you very much for that information. I'm wondering is that specific to the state of Nevada? Because I was always under the impression that the owner gets the final say on accepting a tenant. I've never heard of information being withheld like that, though I am extremely new to all this. I guess I just have to trust my parents' property manager. I appreciate the reply!

Account Closed · Answer

There are credit protection laws for individuals that provide their personal information for a credit check or background check.  It would be against the law for you pull someone's credit/background and then provide the individual's, applicant's, personal data to the property owner, landlord.  You can provide the landlord information as to whether or not an individual meets certain criteria, yes or no, but any specific details, even sharing their credit score, could land you with big legal problems.

Drew Sygit · Answer

So, let's look at this logically.

@Arjay Estrella - did you thoroughly read the property management agreement BEFORE having your parents sign it? Besides not giving you what you want, what have they done wrong? Are the incompetent?

It never ceases to surprise us how many owners sign a CONTRACT and then want to chnage it and blame the PMC when they find out it's not to their liking!

@Elise Hazzard - why would you point blame at the PMC and suggest firing them, when you don't have all the facts? Way to stick up for our industry!

@Peter T. and @Tony Edington - thanks for getting it right!

@Beth Wheeler - You may want to check the Fair Credit Reporting Act, check with your credit vendor and your attorney because sharing a credit report with someone that is not an employee of your company may create a lot of liability for you.

@Brian Ploszay - you're assuming your better at tenant screening than all PMC's? Suggest you find better PMC's that are as good or better at tenant screening than you are. Then let them do it! Doubt you micro-manage your doctors, attorneys, financial planners, etc.

@Richard Weinberg - why are you assuming the PMC is the bad guy here and advising they capitulate or be fired? The owners signed a contract the PMC is probably following and may be doing a great job.

@Colin Reid - Congrats! You just exposed yourself to a potential lawsuit for a Fair Housing Act violation! "It is a couple with no children" implies you discriminate based on family size. Don't believe it? Here's a link: https://www.fairhousingnc.org/newsletter/occupancy-policies-and-the-fair-housing-act-how-many-is-too-many/#:~:text=A%20family%20of%20five%20applies,in%20a%20two%2Dbedroom%20unit.

While it's understandable that property owners are concerned and nervous about the property "babies", are any of you telling doctors how to do their job in the delivery room?

And yes, there are a bunch of crooks and well-intentioned, but clueless property management companies out there. Same goes for every profession. So, why aren't we discussing how to better screen PMC's?

Richard Weinberg · Answer

@Arjay Estrella

In today’s pandemic marketplace that’s a great reason for concern. Governors, mayors, even federal agency’s are intervening and creating unanticipated liabilities for owners and landlords and it’s incumbent on the landlord to assure these laws are complied with while protecting their investment and minimizing their liabilities. This is not the time for blind engagements or commitments. This is a perfect example of why I think beginner investors should stay engaged, self manage and learn the business before sending a third to half of the beginning years cash flow profits to a property manager.

I would ask for a copy of the contract your parents signed and blank copies of the applicant screening tools and scoring charts  the property manager uses. You should also be able to see their advertised applicant criteria on their website. If they won’t share, you probably have the wrong pm.

If you need to step in and do it yourself, it will be a little work, there will be a learning curve but you will find it beneficial and profitable. You will also be much more qualified to interview and select a property manager in the future.

Brian Ploszay · Answer

Very interesting post.  I never thought of such a situation.  Tenant screening is so important to me, that I do it in-house.  I can't imagine why one could not make a legal agreement stating that the owner has the right to review, confidentially, all financial information about a tenant.

Full 3rd party management is obsolete if I cannot review this very important information.

Arjay Estrella · Answer

@Beth Wheeler I really appreciate your reply. I guess it all depends on where the property is.