One of the first things successful landlords tell anyone considering renting out a property is to always select good tenants. After all, it doesn’t take much for a bad tenant to turn your profitable investment into a money-losing nightmare. However, many federal, state, and local laws limit the ability to refuse to rent to an applicant. You can face a lawsuit and hefty fines if you don’t comply with the laws. So, what can you do about it? Today, we’re reviewing legal rules on housing discrimination, when you may be able to refuse to rent, and considerations for tenant screening.
Contents of This Article:
- Legal Rules on Housing Discrimination
- Can You Legally Refuse to Rent to Certain Applicants?
- Additional Considerations That May Disqualify Applicants
- Set Up a Legal Screening Process
- What to Do If You’re Accused of Housing Discrimination
Legal Rules on Housing Discrimination
Rental owners and property managers in Baltimore know how important it is to choose the right tenants for your properties. A good tenant is respectful, pays rent on time, and doesn’t cause extensive property damage. On the other hand, bad tenants may refuse to pay rent, damage your rental beyond normal wear and tear, and disregard rules stated in the lease.
If you fail to have a set of criteria you use to evaluate potential tenants, you may never make a profit from your rental. However, before you begin evaluating future tenants, you need to understand what criteria you are not allowed to look at when deciding to reject an applicant.
Federal Fair Housing Laws
Under federal Fair Housing Laws, you cannot deny housing based on:
- Race
- Color
- National Origin
- Religion
- Sex
- Disability
- Family Status
Family status means you cannot refuse to rent to someone because they are pregnant or have children. These rules apply everywhere in the country.
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 the following:
- Marital Status
- Sexual Orientation
- Gender identity
This means that in Maryland, you cannot refuse to rent to someone because they are single or married. You also cannot reject an applicant based on their sexuality or how they choose to identify.
Local Housing Laws in Annapolis
The city of Annapolis has city laws that follow all of the federal and state laws above, and it 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.
Can You Legally Refuse to Rent to Certain Applicants?
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. However, landlords in Annapolis and other areas around Anne Arundel County want to avoid potential housing discrimination based on the source of income. So, they must be careful when asking about the applicant’s ability to pay rent.
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Tip for landlords: Limit your questions to the amount of their monthly income.
Rental History
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 expensive 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 working with a Baltimore property management company, they likely already screen for this information during the application process. Just be sure to verify that this information is covered routinely.
Set Up a Legal Screening Process
You can’t refuse to rent to applicants based on your personal opinion. As such, the best way to both avoid housing discrimination claims and to reject bad tenants is to setup an effective and legal screening process. The keys to a strong screening process are thoroughness, consistency, and maintenance.
Consistency
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.
Post-Application Process
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. Here are some tips to consider.
- Have a policy of internally investigating all discrimination claims.
- Consult a lawyer familiar with landlord issues unique to your area immediately.
- 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 from 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 work with a local property management company, they should be able to refer you to a local lawyer and walk you through the entire process. Companies like Bay Property Management Group look out for property owners and keep their best interests in mind.
BMG offers comprehensive rental management services so that we can find you the best fit for your property, complete inspections, perform maintenance, collect payments, and more. Contact us today to learn more about our services throughout Baltimore, Philadelphia, Northern Virginia, and Washington, DC.