The Importance of an Accurate Rental Application
The importance of a thorough and accurate rental application cannot be overstated. As a careful landlord, you want to know as much as possible about anyone seeking to rent your property in order to avoid renting to the wrong person. In the long run, accepting a deceitful tenant can cause you a great deal of grief and money.
A comprehensive rental application can protect you from undesirable tenants and future problems, such as evictions and damage to your investment property. It will allow you evaluate potential tenants in order to find the right fit for your rental. It will make the screening process easier and allow you to run a rental credit check and a tenant background check.
A Comprehensive Application to Rent is available on the AAOA web site at no charge to all members. It will help landlords and property managers make informed decisions about who to rent to. It also protects the landlord’s investment by minimizing the risk of property damage, unpaid rent, and legal complications.
As a legal document, the application includes basic information as well as a series of specific questions that help you decide which applicants are a good fit for your property and which you should turn away.
What is included in a rental application?
Please note that local, state, and federal regulations determine what you can and cannot ask. A comprehensive application to rent will ask the applicant for the following information.
- Social Security Number. A credit report will be provided by a major credit bureau based on the applicant’s Social Security Number.
- Date of Birth. The date of birth is used to search criminal and other sources used in background screenings.
- Driver’s License/ID number. Necessary to verify identity. Also used for Telecheck® reports.
- Email address. The credit bureau will send an email with a link to verify identity.
- Names of other proposed occupants. All applicants over the age of 18 must be on the lease and should be screened.
- Current and previous addresses and landlord contact information. Landlord verifications reveal what kind of tenant an applicant will be. Has the applicant been a disruptive tenant? Paid rent on time? Damaged the property?
- Employment history and employer contact information. Employment verifications will confirm whether the applicant has been truthful about his job title, responsibilities and employment history.
- Personal and professional references with contact information. Additional references can fill in the blanks about a person. Personal references, including previous employers, colleagues or even neighbors, can sometimes offset a poor rental history by highlighting the applicant’s positive attributes and trustworthiness.
- Additional sources of income. Additional sources of income might include regular pay as a member of the Military or Armed Forces, Unemployment benefits or Worker’s Compensation, Public Assistance, child support, alimony, Social Security, etc.
- Credit and banking information. The applicant should provide checking and savings statements for the last two months to show property managers whether they are financially stable and have enough monthly income for rent as well as other living expenses.
- Agreement and authorization. Will be used to legally obtain a credit report and background screening.
- Applicant’s signature. The applicant’s signature guarantees that all disclosures included in the application are true and complete while providing permission to run any rental credit reports and tenant background screenings. This statement can be used in a lease termination or eviction if the tenant misrepresents information on the application.
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What can you NOT ask on a rental application or in an interview?
Administered by the U.S. Department of Housing and Urban Development (HUD), the Fair Housing Act protects people from discrimination when they are renting or buying a home, applying for a mortgage, seeking housing assistance or engaging in other housing-related activities.
In accordance with the FHA, landlords may not ask certain questions of their applicants:
- Race
- National Origin
- Religion
- Color
- Familial Status
- Gender
- Sexual Orientation
- Physical or Mental Disability
As a potential landlord, you must ask every applicant the same questions to avoid being charged with discrimination. You must use the same application for everyone applying for the rental.
In limited situations, the FHA does not apply to buildings with four or fewer units that are owner-occupied, single-family homes rented or sold by the owner without an agent and housing run by private or religious organizations that offer residences to members only.
What are legal grounds for rejecting an applicant?
Although the federal government does not allow rejection of an applicant based on the Fair Housing Act, there are specific legal ways to refuse an application:
- Lack of income
- Poor credit history
- Criminal background
- Prior evictions
- Falsifying the application
- Applicant smokes (Must apply to all applicants)
- Pets (Note: Service and support animals are exempt and must be accommodated per the Fair Housing Act)
Why are rental applications so important?
Choosing the right tenant can be one of the most important tasks a landlord can undertake. Rushing into a lease agreement without an application and professional screening could end up being the biggest mistake you make. You could be facing months of missed payments or extensive property damage from which you may never recover.
The time has passed when you could rely on your “gut instinct” when considering a potential tenant. Application fraud is rampant and you need to have actual data to determine if a tenant can consistently pay rent on time, take good care of your property and abide by the terms set out in the lease agreement.
When considering a potential tenant, you want to be certain that they meet the following standards:
- Their monthly income should equal three times the monthly rent*
- A good or excellent credit score with no collections or bankruptcies
- They should have no criminal convictions for the past seven years
- You don’t want them to have any evictions on their record
- A confirmed history of steady employment
- Positive business and personal references
How do you find such a paragon of virtue? By having them complete your comprehensive application and running a professional credit report and background screening. A thorough vetting process minimizes the risk of property damage, unpaid rent or potential legal complications down the line.
Note: The possibility of a federal claim exists for two years, even though the right to file a state law complaint may expire after one year. Therefore, you should keep a rental application and any other documents related to the application in a locked filing cabinet for at least two years after the application is denied.
*If your applicant appears to be a good prospect but does not earn enough money to cover the rent, you may want to ask for a co-signer, guarantor or LeaseGuarantee protection.
Disclaimer: All content provided here-in is subject to AAOA’s Terms of Use. Nothing contained on this website constitutes tax, legal, insurance or investment advice, nor does it constitute a solicitation or an offer to buy or sell any security or other financial instrument. AAOA recommends you consult with a financial advisor, tax specialist, attorney or other specialist who is able to properly advise you.
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