Tenant Screening Becomes More Difficult As Concealing Checkered Pasts Become Easier
Clearly, tenant screening is one of the most important aspects of your rental business, but today’s climate makes this essential task more difficult as it becomes increasingly easier for prospective tenants to conceal any blemishes in their past.
At Bornstein Law, we understand that the past doesn’t equal the future, and we are all about second chances. Yet we are also about transparency and equipping rental property owners with the information they need to make informed decisions regarding their selection of tenants.
Let’s talk about a couple impediments to getting a clear glimpse into a tenant’s history, starting with the three major credit bureaus’ joint National Consumer Assistance Plan, which will eliminate the appearance of certain “red flags” on the prospective tenant’s credit report.
Rolled out over a 3-year period, NCAP established, among other things, new standards for personal identifying information, or PMI, for a record to appear on a credit report. These identifying factors include a consumer’s name, addresses, Social Security Number and Date of Birth. Experian estimated that about 96% of civil judgment data and as much as 50% of tax lien data would not be discernable from the tenant’s credit report.
TransUnion chimed in and though it stopped short of giving hard and fast numbers, claimed that there would be a “significant change” to civil judgment data, and at least 60% of public record tax lien data would evaporate from its database. The translation for landlords: The presence of a monetary eviction may not be readily ascertainable from the applicant’s credit report.
As a sidebar, we’ll say that depending on the credit scoring model used, some tenant applicants that are saddled with medical debt could potentially have their score boosted and enter the pool of eligible rental candidates, but we don’t want to get bogged down into the finite details of NCAP, merely forewarn landlords that credit reporting may not be a total portrayal of the incoming tenant’s history.
State law has an open mind, as well.
In the following video, Daniel Bornstein alludes to AB 2819, which will impact a landlord’s ability to obtain an applicant’s prior unlawful detainer (UD) history. The bill essentially seals an applicant’s prior unlawful detainer history under certain circumstances.
Another footnote is that one consequence of the law, in our view, is that it disincentives unlawful detainer defendants to speedily settle the case, as frivolous motions and other stalling tactics can ensure the judgment does not enter the public record.
We can’t help but draw a loose parallel to AB 1008, dubbed the “Fair Chance Hiring Bill” or “Ban The Box”. This Bill places severe restrictions on employers to pry into a job applicant’s criminal history, concerning for the rental housing industry because property management employees usually have close access to a tenant’s personal belongings and their children.
Rightly or wrongly, it seems that there is a forgiving culture that says we are all human, and that certain mistakes should be overlooked. Our job is not to evaluate people, but to offer informed and pragmatic advice in developing a framework for you to make your own calls.
In parting thoughts, do your due diligence when vetting tenants and employees, for that matter, but do so smartly, in compliance with the law. Don’t be over-exuberant or cross the nebulous line into discrimination.
We’ve only scratched the surface here and will continue our thread on a myriad of tenant screening issues in the near future — follow us on Facebook to stay in the know.
