Running a background or doing a “tenant screening” as it’s called for this process is an absolute must – no ifs, ands, or buts.
Whether you decide to conduct the tenant screening or hire a screening company to do so, there are three parts to a tenant screening: Credit Report, Eviction Search, and Criminal Background Check. Make sure that you or the screening company is checking and reviewing all three of these areas. These are all going to tell you more about your potential tenant and how they pay their bills, if they’ve ever been evicted, and if they have any criminal activity.
The credit report, although important, does not weigh as heavily in my consideration as the other eviction search or the criminal background. Normally, tenants are renting for a reason and that’s typically because they have bad credit. Sometimes, people are relocating from out of town and don’t want to buy until they discover where they want to settle, but this isn’t typical.
The top three credit reporting companies are Transunion, Equifax, and Experian, and typically you or the screening company are only going to pull from one of them, not all three. These reports do not all report the same details and information of a person’s credit history, but generally are the same. This is not a perfect system, but do the best you can.
Some say, the best way to tell future behavior is to look at past behavior. If you do an eviction search on your potential tenant, you can see if another landlord has had to go through the pain and expense of evicting this tenant before.
Here’s a trick that most people don’t know: once an eviction is filed, in the absolute beginning of the process, it shows up on an eviction screening, even if a full eviction process was not carried out. So if a tenant made things right, the record that it was filed does not go away.
Evictions are files with the county courthouse in the county where the property the tenant resided is located. So, when hiring a screening service, see what their options are in eviction screening. Most will do a screening for the state you’re located in. With that said, keep in mind if you know someone is coming from another state, you’ll need to search the courthouse records yourself.
Probably the most complicated of the screening process is the criminal history screening. Because there are so many different levels of criminal activity, you’ll need to learn a little about each to make a good tenant decision.
Misdemeanors: These crimes are generally punishable with incarceration for one year or less, like a DUI (Driving Under the Influence), but these normally will not be a problem for landlords. However, if your property is part of a neighborhood that has a home owner association, they may turn a tenant down based on their rules and regulations on misdemeanors.
Felonies: The federal government defines a felony as a crime that is punishable by imprisonment of more than one year or, in some cases, by death. Typically felonies are assault that caused bodily harm, theft of property or money over a certain dollar amount, sex-based crimes, and murder. Probably not the behavior you want to see from a potential tenant. However, you cannot just turn down a tenant application if they have a felony on their background.
Due to a guidance that was released by HUD (Housing and Urban Development) in 2016, just establishing a blanket refusal to applicants who have felonies can indirectly discriminate against the Fair Housing Laws as well as make it very difficult for the large number of felons who will have served their sentences to acclimate back into normal life. Thus, we need to decide whether we will let a person with a felony on his or her record become a tenant on a case-by-case basis. If you are ever in any doubt and faced with a difficult decision, please take a moment and contact your attorney. It’s better to get a second opinion than to do something discriminatory.
Innocent Until Proven Guilty
Reading and interpreting the criminal background screening can get a little confusing. What to remember is that if something does pop up on a criminal screening, it’s important to remember that, just because someone may have been arrested for something, that doesn’t mean they were guilty. Ignore the arrest records section and look to the conviction records section. This will have the outcomes of the arrests.
Another term that you may or may not be familiar with is nolo contendere (Latin for “no contest”), which means the person entered a plea in which they accepted the conviction as though a guilty plea has been entered, but they do not admit guilt.
Make sure you really review and understand what you are reviewing on the background screenings. Make sure you pull all three – credit, eviction, and criminal screenings. It’s better to take your time and review rather than make any decisions that could come back to you later.