What Landlords Need to Know About Background Screening

Managing rental properties effectively is no easy feat. With many elements to consider, being a landlord often requires active engagement to ensure that everything proceeds smoothly. From tenant selection to the move-out process, there are many rules and regulations to consider along the way. Knowing how to navigate these rules while ensuring a safe and thorough tenant selection process requires staying up to date on the legislation changes in your area.

There are also lessons to learn from changes taking place nationwide on tenant background checks. Some headlines serve as cautionary tales for landlords on regulatory pitfalls, while others indicate big changes on the horizon for local laws.

Asking rental applicants to pay for their own background checks as a part of the application fee is not uncommon. However, those fees have become burdensome to many tenants, especially low-income individuals in search of affordable housing. In California, where an ongoing housing crisis and skyrocketing prices mean fierce competition for open rentals, applicants can end up spending hundreds of dollars out of pocket on application fees and background checks. Legislators wanted to change that.

Under the new law, the state would create a system for "reusable" background checks and credit reports. Someone preparing to apply for a rental property could pay for one of these checks, which would then be valid for 30 days. A third-party service would furnish the results securely to a landlord for consideration. This new system is entirely optional: landlords would still be free to demand that applicants submit to drug screening or their own preferred criminal background checks.

The 30-day window could mean that an applicant can commit a crime and then continue to apply for housing with a clean background check despite the new pending charge. However, landlords are still considering the potential convenience of the process. An applicant who applies while equipped with a completed background check will allow for a faster vetting process. 

It’s possible that the new system could favor individuals without serious records, which may lead to unfair discrimination. California landlords will need to think deeply about how to handle these changes.

Landlords should also be mindful of the legal risks that accompany the appearance of discrimination or failure to follow rental application rules. In New Jersey, 30 landlords received warnings from the Division of Civil Rights for continuing to ask about criminal history on rental applications or outright stating that they would not consider anyone with a criminal history. New Jersey currently requires a conditional housing offer before landlords can use background checks.

Blanket bans on criminal records have been ruled discriminatory, and more jurisdictions have begun to pass "Fair Chance in Housing" laws to ensure broader access to housing for ex-convicts. For landlords, this trend presents a particular challenge—but with the appropriate background check tools and a well-defined process for evaluating results, landlords can better separate trustworthy applicants from potential risks. 

Review the laws in your area today and ensure you have a plan in place for safely operating as a landlord.

Michael Klazema

About Michael Klazema The author

Michael Klazema is Chief Marketing Technologist at EY-VODW.com and has over two decades of experience in digital consulting, online product management, and technology innovation. He is the lead author and editor for Dallas-based backgroundchecks.com with a focus on human resource and employment screening developments.

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