What Information Should I Require in my Rental Application?

It’s difficult to overstate the importance of a rental application when it comes to effective tenant screening.  Even a bare bones application with little more than personal contact info can be cross-referenced against a credit report to weed out many of the more obvious bad apples. But a rental application offers you an opportunity for much more. By requesting the right info and asking the right questions, you can greatly increase your chances of finding the right tenant.

What is a Rental Application?

Typically, before signing a lease agreement, a landlord will require their tenant to submit a rental application. A rental application is simply a form that requests preliminary information about a tenant. It can be paper or digital. There are pros and cons to each method of collection, so be sure you’ve carefully considered your clientele and the way in which they typically find your property. Generally, the requested information in an application includes things like former residences, identification numbers (driver’s license and / or SSN) and monthly income. A rental application also provides a landlord with an opportunity to obtain written permission to run a credit check. But keep in mind, a rental application in no way guarantees a renter a right to a property. To put it frankly, a rental application is a non-binding agreement used to evaluate tenant eligibility and assist with the tenant screening process.

What Information Should I Include in My Rental Application?

There is standard information that you should absolutely require from tenants in your rental application. The first is basic applicant contact information. You’ll want to ask for a tenant’s full legal name, their cell phone number, and their email address. Traditionally, landlords have also asked for a social security number and / or driver’s license number. We recommend against this. There are stringent laws around the handling of this sensitive information and you do not want to be on the wrong side of them. If you’re grabbing an SSN to run a credit check, you’re better off allowing a digital service to do this for you. And if you’ve heard you need either of these in order to collect in the case of an eviction, this is actually not the case. You can request that the judge in the eviction proceeding force disclosure of the SSN if and when you win. So be safe and skip the potential headache.

Next, make sure you ask for current and prior residence information. Asking for at least five years of residence history will allow you to pick up any patterns (does the tenant like to live in one place for many years?) and gives you enough references with whom you can follow-up. To make sure that you can accurately confirm their history, you should require the name of all current and previous landlords and their contact information. Calling a previous landlord is one of the most important verification steps you can take. A previous landlord is less likely to hide anything than a current landlord, and they’ll be aware of the challenges and relationships unique to a landlord and their tenant.  You’ll also want to request several years of employment history and require contact information for someone at the listed business. In some cases, it may be necessary to acquire the applicant’s written consent to validate their claim of employment. Evaluating a tenant’s employment stability and asking for proof of income will help you decide whether or not they can cover rent payments. Applicants can provide proof of income with various documents such as recent pay stubs, a W2 or an employment offer letter. As a general rule, if a tenant’s gross income is at least three times the rent amount, they should be able to afford the property.

Legal Disclosures – Protecting Yourself & Potential Tenants

Since you will be digging quite a bit into a tenant’s personal information, there are legal disclosures that you should include in your rental application to make certain you’re abiding by the law and keeping yourself and the applicant’s data protected. The first, and arguably most important legal clause is the Applicant’s Assurance. This validates that the information a tenant provides is true and that an incomplete application or information discovered to be false is reason for denial. This helps protect you from any Fair Housing violations. You’ll also want to tell the applicant in writing that their application fee is non-refundable and will be used to cover costs associated with verifying the information they’ve listed on their application. In many states, it’s illegal to profit from an application fee, so keep that in mind. Additionally, make applicants explicitly aware of what references you will be contacting to obtain verification. Other important disclosures to consider including in your rental application are:

Liability – to release yourself from any consequences that may arise from screening the applicant while running a credit or background check.

Extended Authorization – to collect debts after a tenant has vacated. This section should include a line stating that the information supplied by the applicant on the application may be used at any time during their tenancy or after their tenancy has ended.

Holding Fee – to provide the terms of when the security deposit must be paid to guarantee their position if they are approved. If the tenant fails to supply the holding fee for the rental within the specified time period, they should be made aware that the rental will be available to other applicants.

Move-In Requirements – to let the tenant know what would be required of them if they are approved and before they are given keys. Examples include paying all move-in fees, deposits, transferring utilities…etc.

What Information Should I Not Include On My Application?

A rental application is an opportunity to ask as many legally admissible questions as possible to help you understand a tenant’s background. Even though it’s up to you to set whatever conditions you want in terms of who is an acceptable tenant, there are certain laws that limit how far those conditions can go. The Federal Fair Housing Act prohibits a landlord from discriminating against a tenant based on their race, national origin, religion, gender, familial status, physical or mental disability, and in some states, sexual orientation. Also, with bill AB396 recently gaining momentum in the rental housing world, it is best to refrain from asking direct questions about a tenant’s criminal past on your application. Examples of questions to avoid include “What race are you?” “In what country were you born?” “Do you have any kids?” or “Have you ever been arrested?” If you find yourself concerned about any criminal charges an applicant may have, refer to the background check.

It may seem like there’s a lot of questions you can’t ask, but two areas where you CAN legally discriminate against a potential tenant are in regards to smoking and pets. Since these two provisions aren’t protected under anti-discrimination laws, you have the right to reject or accept an application based on these factors. Despite all of these conditions, it is crucial that you subject ALL applicants to the same basic set of questions. If you do not follow the exact same procedures for all tenants, you could be accused of discrimination.

Final Words

Screening tenants can be a lot of work. Deciding on who to accept, who to re-evaluate and who to reject can be even more challenging. But missing the screening process can be a costly mistake. Fortunately, if you know exactly what information you need from a tenant and how to respond to it based on your rental application standards, the whole process can become a lot simpler. Just like every tenant, every landlord has different wants, needs and preferences. Educating yourself on what content you can and should include in your rental application will not only ensure that you are following the law, but it will also help you find the right tenants, keep the right tenants and avoid unnecessary problems in the long run.

 

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