Last Updated on October 15, 2021 by Kelvin Nielsen
It’s on your wishlist as a landlord to only rent your units to high-caliber tenants. Tenants who, among many things, will afford rent, care for your property, and live peacefully with other tenants.
However, as you probably know, it’s not only the good tenants that will want to rent your units. Among the applications you’ll receive, there’ll be all sorts of renters, from great tenants to rent defaulters to law-breakers. And there’s only one way you can get rid of them – by running a thorough background check.
Now, a background check can reveal several important things about a prospective tenant. To mention the very least, it can highlight their credit report, criminal background, and renting history. But how exactly do you go about checking tenants’ backgrounds? If you wonder, then this article is for you. Here’s how to do a background check on a tenant.
What shows up on a background check?
Before you get down to the check, it’s important to understand the details that will show up. Broadly speaking, this is what you can expect from the marjority of screening services out there:
- Report information. The applicant’s identity and contact information pop up here. What’s more, the date and time of the search.
- SSN search. This highlights the names affiliated to the social security number, and the place and time the SSN was issued. If the applicant provided an invalid number, it will be displayed here.
- Eviction search. If the applicant has faced any evictions, the full information will appear here. That is, the time of the eviction and the place where it was filed and executed.
- Sex offender search. You’ll find search results from every state’s sex offender registry here. If applicable, the date of registration and current status will also appear.
- Global watchlist search. This section will highlight any sanctions and watchlists, whether US or foreign. This could cover terrorism, drug trafficking, and so on.
- National criminal search. Here, you’ll find summary case information that can help you dig for more at the county level.
How to Run a Background Check
1. Ask for the tenant’s signed consent.
One big mistake you can make as a landlord is to screen a tenant while they’re unaware of it. Not only is it unethical but also illegal and could land you on shaky legal ground. To be on the safe side, get written consent from the tenant before running the check.
There are several ways to obtain the tenant’s consent. One, you can ask for their signature and approval through an additional section on the rental application. Two, you can have a separate form that they should sign and give consent.
Whichever way you opt for, make sure to ask for their full name, date of birth, and social security number. These are the details required to fetch the details of a tenant.
2. Find a background check service that works for you.
While you can opt to screen your tenants the traditional way, background check services can make this process a breeze. There’s a smorgasbord of services to choose from, and each has its upsides and downsides.
For instance, while some offer a free trial period, others don’t. Also, the comprehensiveness of the report differs from service to service. In the same way, some services are available on both site and app while others aren’t.
Some of the best services you can use to screen your tenants include:
- Instant Checkmate
- Truthfinder
- Intelius
- Been Verified
- Peoplefinders, and others.
Do your due diligence before settling on a platform. While choosing a service, have it in mind that it must be approved by the Federal Trade Commission.
3. Decide how you’ll pay for the background check.
Depending on the service you go with, a background check can set you back by around $15-$40. Generally speaking, the quality of the report you’ll get will depend on the amount you pay. As for the bill, you can either foot it yourself or require your tenants to pay. One effective way to get tenants to cover it is by simply including it in the application fee.
That said, it’s in your interest to familiarize yourself with the policies regarding the application fee. While some states don’t limit the amount you can charge, others have put a price cap. If you don’t abide by this, you could be in friction with the law.
Policies aside, tenants will shun your property if you charge exceptionally high. Simply put, set an application fee that works well for both parties.
4. Make an advance plan on how to go about the information that may show up.
What follows after receiving the tenant’s report is taking a course of action. And, it goes without saying, it’ll be much easier if you plan this ahead. So, even before you commence the check, know how you’ll go about each situation.
For instance, which types of crimes will you consider deal-breakers? Will you turn away a tenant on the grounds of a past eviction? What income to rent ratio rule will you employ? What will be the fate of the tenants who slimly miss it? These are things you need to decide on beforehand.
That being said, you must apply the requirements uniformly to all applicants. If, for example, you’ll decide to reject sex offenders, none should pass through regardless of any offers they might make. Fairness is key when it comes to renting out a property, as per the Fair Housing Act. And speaking about the act…
5. Understand the law.
The Fair Housing Act (FHA) protects tenants from discrimination and mistreatment by landlords. Among many things, it restricts the questions you can ask tenants and the grounds you can use to reject them. Also, it clearly states the rights that tenants are entitled to. It’s crucial to familiarize yourself with these laws in order to avoid friction with the law.
As per the FHA, it’s illegal to ask questions on matters regarding:
- Race. It’d be illegal to ask a question that touches on a prospective tenant’s race. For example, are you White or Hispanic?
- Religion. Are you a Christian? Regardless of the religion a tenant professes, that should not be a criteria during the tenant qualifying process.
- Sexual orientation. Whether straight or a member of the LGBTQ community, all prospective tenants should have equal chances of renting an apartment.
- Familial Status. You cannot ask a tenant about how many children they have. What you can instead inquire from them is the number of occupants that will be living with them.
- Age. Whether 18 or 60, all prospective tenants must be treated equally when applying for an apattment to rent.
- Disabilities. People who have a physical or mental disability have special protections in most states.
Screening tenants is a process that you cannot afford to ignore. It can help you avoid problems later on by weeding out various types of problem tenants. If you are just starting out and don’t know where to start, consider hiring expert screening services.
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Hi, I’m Kelvin Nielsen, an experienced landlord and accomplished real estate lawyer. My focus is on answering your questions about renting in the hopes of making your life as a renter or a landlord a bit easier.