TIP OF THE MONTH - August 2011

Permissible Tenant Selection Criteria

Source: Essential Facts of Real Estate Management
             Joseph DeCarlo & Crossett Real Estate Services

In selecting Tenants, property owners and managers may use any criteria or guidelines that do not discriminate against the protected classes.

Income and ability to pay. The law does not guarantee a person a right to rent property that he or she cannot afford.  Property owners and managers may, therefore, establish reasonable guidelines to assess the prospective Tenant’s ability to pay.  
Example: The owner may require that the rent not exceed 30/35 percent of a residential applicant’s income. In assessing the prospective Tenant’s ability to pay, the property owner must consider ALL income that the Tenant has a reasonable expectation of collecting in the future.  This may include welfare, social security/disability income, child support, pensions, dividends, etc.

Credit history.  The property owner may assess the Tenant’s credit history and reject any Tenant whose history shows late payments, prior evictions, bankruptcy, overdue credit card payments, or other evidence of lack of creditworthiness.  Computerized credit reports may be obtained through credit bureaus, local apartment associations, or associations of realtors. A release of information form must be signed by the prospective Tenant (s) for permission to obtain a credit history or credit report.

History of violence or destructiveness. Past instances of violence or destructiveness may be considered in assessing a residential Tenant'’ ability to coexist peacefully with other Tenants or neighbors.

(Employment history/prior rental history is very helpful)

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This web page was updated on 07/29/2011.