One of the first things successful landlords tell anyone thinking of renting out a property is to always select good tenants.
It doesn’t take much for a bad tenant to turn your profitable investment into a money-losing nightmare.
There are many federal, state, and local laws that limit the control you have to refuse to rent to an applicant.
If you don’t comply with the laws you can find yourself with a lawsuit and hefty fines.
But, if you fail to have a set of criteria you use to evaluate potential tenants you may never make a profit from your rental.
Legal Rules on Housing Discrimination
Before you begin evaluating future tenants, you need to understand what types of criteria you are not allowed to look at when making a decision on rejecting an applicant.
Federal Housing Laws
Under federal law you cannot deny housing on the basis of:
- National Origin
- Family Status
Family status means that you cannot refuse to rent to someone because they are pregnant or have children. These rules apply everywhere in the country, including Anne Arundel County.
Maryland State Housing Laws
Maryland not only prohibits housing discrimination for the same reasons as the federal government, but also doesn’t allow landlords to reject applicants on the basis of:
- Marital Status
- Sexual Orientation
- Gender identity
This means that in Maryland you cannot refuse to rent to someone because they are single or because they are married. You also cannot reject an applicant because they are heterosexual, homosexual, or bisexual nor can you refuse to rent to someone because they are transgendered.
Local Housing Laws in Annapolis
The city of Annapolis has city laws that follow all of the federal and state laws above and also prohibits landlords from using the source of a tenant’s income as a basis for refusing to rent. This means that you cannot reject an applicant because their income is in the form of government benefits. You can only use the amount of their income as a basis for denying an applicant.
Because there are so many different laws that govern housing discrimination, before you begin using a screening process for tenants, you should check with an Annapolis attorney who is familiar with housing discrimination laws and landlord issues.
Conditions That Can be Used to Disqualify Potential Tenants
While there is a long list of factors landlords cannot consider when evaluating tenants, there are many factors landlords can and should consider. While every landlord has a different situation, they should all check an applicant’s credit, rental history, and criminal background. You may also want to know if they smoke or have pets.
Ability to Pay
The ability to pay the rent is the most important factor for a landlord to consider.
Experienced landlords will run a credit check to see if the tenant has a history of being delinquent on his or her bills. The tenant doesn’t need to have spotless credit, but a history of collections and late payments should be a red flag.
You also want to know that they currently have enough income to pay the rent you charge.
Landlords in Annapolis and other areas around Anne Arundel County need to be careful when asking about the applicant’s ability to pay in order to avoid potential housing discrimination on the basis of the source of income.
Limit your questions to the amount of their monthly income.
Along with a credit check, landlords should ask about the applicant’s rental history. By following up with a few of the previous places the tenant has rented, you can see if they have a history of leaving units on bad terms or in bad shape.
Remember, your relationship with your tenants will be more than just economic. You will have to interact with them as you enter to do repairs and take care of other issues. You want someone who is pleasant to deal with and will take good care of the property.
Criminal Background Check
Landlords should also do a criminal background check. Someone with a violent history or with a history of drug crimes is probably not someone you want on your property. However, before creating a policy against renting to anyone with a criminal conviction, you should consult with a lawyer as the laws that govern this issue may be changing.
Additional Considerations that May Disqualify Applicants
Other factors that landlords may want to consider in disqualifying tenants are if the applicant is a smoker or has pets.
Smoking in and around a rental is expansive for landlords because it increases maintenance costs. Smoking can also be irritating to other tenants and can cause health problems in non-smokers.
Pets also make maintenance more expensive and may present a liability issue for landlords.
If you plan on having a property management company for your Annapolis properties, they likely already screen for this information during the application process. Just be sure to verify that this information is covered routinely.
Setup a Legal Screening Process
The keys to a strong screening process are thoroughness, consistency, and maintenance.
You must make sure that you always treat everyone the same way. The fastest way to be accused of housing discrimination is to treat some people differently. Even if you haven’t done anything wrong, you create the opening for problems if you do not require everyone to complete your questionnaire and do not take the same steps to check every single application.
By always performing the same tenant screening process, it also saves you from having to remember what you did in a specific instance. Instead, you know that you always follow the same steps.
You will need to keep rental applications for a set period of time. Even if you do not rent to an applicant, you will want a record of why you denied them. Because rental applications contain sensitive information, you need to store them securely and limit access to the records to authorized personnel.
What to Do if You are Accused of Housing Discrimination
The last thing any landlord wants is to deal with an investigation or a lawsuit. If a tenant or rejected applicant complains to you about housing discrimination you need to take the accusation seriously.
You should have a policy of internally investigating all discrimination claims. You also need to consult a lawyer right away who is familiar with landlord issues unique to Annapolis and Anne Arundel County.
You should avoid saying anything or putting anything in writing to a tenant before you have talked with a lawyer. If you have to communicate something, give the person a letter that states the date you received their complaint and that you are investigating it.
If you receive notice for any government body of a complaint about housing discrimination you should not say anything in writing or verbally without first talking to a lawyer.
If you have an Annapolis property management company, they should be able to refer you to a local lawyer and walk you through the entire process.