What Is A Landlord To Do Now In Seattle?

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Business woman checking credit now hat is a landlord to do now in Seattle blog by David Pickron

3 Actions A Landlord Can Start In Seattle With Without Using Criminal Background Checks

What can a landlord or property manager do to protect themselves now that there is a new ordinance coming in Seattle that bars landlords from using criminal background checks in screening tenants?

The Seattle City Council has passed an ordinance 8-0 to bar landlords from using criminal records to screen tenants based on past arrests or criminal convictions, with the exception of sex offenders.

Rental Housing Journal asked one of the foremost authorities in the country on tenant screening and background checks, David Pickron, to give us his opinion – not legal advice – on what landlords could do to cope with this new Seattle ordinance.

First, three actions a landlord could start with, if they cannot use a criminal background check and Pickron will explain more below:

  1. Call the prospective tenant’s prior landlord for a reference
  2. Verify the prospect tenant’s employment to make sure they have a job at the salary they report
  3. Raise your credit criteria and require a higher credit score for prospective tenants

Pickron wanted to put in perspective, his opinion in general, on some of the issues in Seattle that revolve around landlords and business, especially smaller mom-and-pops.

“First of all Seattle has a $15-an-hour minimum wage. That is way ahead of the national average.  Most small mom and pops cannot absorb those massively increased expenses no matter what business they are in and still make a profit in the City of Seattle , so the City is telling small mom-and-pop businesses to get out of Seattle if you want to survive,” PIckron said. So businesses will be shutting down, moving out to Kent, Washington or other Seattle suburbs to be competitive.   Raising prices and offering less service is not something that keeps clients coming back especially if just down the road, the same service is being offered for much less with better service. 

This new landlord law is going down the same road,  they are telling landlords ‘Hey we don’t care about your safety or your investments…. so you can go ahead and get out of town and go buy rentals in the suburbs around Seattle where you have more property rights as a landlord.

“Then they are telling the families who are trying to raise their kids in a safe multifamily community who do not want to live next to criminals for the sake of protecting their kids and family, to get out of Seattle and move somewhere else – where it is safer because landlords can do criminal background checks on their neighbors who live next door,” Pickron said.

“And then they are opening up their loving arms saying, ‘Come to Seattle those with a criminal record. We will protect you.”   I love how they carved out the sex offender exception…of all the criminal records we look at only 6% are sex related and most of these will not be on the Sex Offender Registry so you will never find them.  But what about the 37% theft, 26% drug, 10% assault charges we find everyday?  Landlords come in contact with their applicants and residence all day long in private intimate settings.  They hand over a $100,000 or more asset to their residents….If the majority of crimes we see are theft…will the dishwasher or stove be there when they move out. Will their units become drug hangouts with wear and tear on their rentals.   Now I don’t want to lump all people who have had a run in with the law the same, but as a landlord we are vulnerable in so many ways….our personal safety and our financial investments are in jeopardy.

“So in my opinion they are telling all the responsible people like landlords who have worked hard, saved a little money, and bought an investment to get out of town. They are telling people who have kept their nose clean living in rentals,  to get out of town.”

 “They are telling all the good to get out of Seattle. And, inviting all the bad to come in, its not the way a city should treat it citizens.  And I think in 10 or 15 years – my opinion is – Seattle will become Detroit.” Pickron said.

If you stay as a landlord in Seattle what can you do?

“I’m not attorney. I have read it and tried to understand it, but some things confuse me. This is what  I would be looking into. – or have my legal counsel look into. –  if I owned a home I would go to renting out by the room to individuals because as I understand it,  if you share a kitchen or bathroom you can still run criminal background checks,” Pickron said.

So if you have a property around a college, or a property that fits that model, you can rent by the room. You need to make sure everybody has separate leases for each of the rooms in the house. So that is one way to protect yourself and your property, he said.

“Second, I would raise my credit criteria a little bit. You know, I haven’t seen a repeat offender very often have a 700 FICO score with their five felony drug , assault or bank robbery charges.  So I would raise that bar a little bit if you really wanted to rule out some of the criminal elements in your property,” he said.  Unfortunately now that will limit those good people with lower scores and no criminal history.  The good news is there is help for them just over the city border.

He said the issue could get a little muddy if someone owns multiple rentals, some in Seattle and some in nearby suburbs.

 “They have jurisdiction over you if your property is in Seattle, but right outside the city limits they don’t. But beware, I would only qualify someone for a specific rental in a specific city.  Referring applicants in and out of Seattle rentals could cause problems.  For example: if I ran a background on a tenant for a Kent property but in conversation they wanted a property I owned in Seattle.  I would be breaking the rules if I allowed them to qualify for the unit in Seattle and accessed their criminal records.   Or a criminal applicant on a Kent property asks you if you own any properties in Seattle that they would qualify for and you deny them the ability to qualify in Seattle could be a HUD violation because the argument could be you denied them for race, religion, familial status, etc. since you could not deny for criminal history. “

Here’s what I would do if I had rentals in Seattle

What is a landlord to do now in Seattle? blog by David Pickron

David Pickron

I would be buying rental property like crazy just outside of Seattle city limits.  I think those properties will go up in value and be desirable for landlords and tenants.   

On the other hand , you are going to see property values go down in Seattle because there are going to be vacancies and higher crime rates.

It will take years before this will all happen and then the City Council  will ask, ‘How did this happen?”

I think some people will hope for a change in future city councils…. I would not count on it. “Seattle will attract people who will vote to keep the current political leaders and policy in place. So things will not change.

He said he read an article where a city council person said there had been no study done to say that a criminal would be a bad tenant. “There might not of been a study conducted with that exact title but I can tell you …All you have to do it look at recidivism rates, which are in the 60 percentile after three years from release from prison. What report do you need just look at the rate people return to jail or prison?  As a landlord do you feel safe?  Do you need any other study?” He said.

A Bureau of Justice Statistics study finding shows inmates released from state prisons have a five-year recidivism rate of 76.6%, the U.S. Sentencing Commission study calculated comparable federal prisoners released have a 44.7% re-arrest rate after five years.

Within three years of release, about two-thirds (67.8 percent) of released prisoners were rearrested, according to the National Institute of Justice.

“When people get out of prison they have great intentions and feel  they have changed their ways, and some do survive for a while – until something bad happens in their life  Recidivism rates show us that the majority go back to what they used to do – that escape or survival mechanism.  We have seen plenty of people survive for a year, a year and a half or two years, and then go back to their criminal ways.

“Life coming out of prison with a criminal history is tough. And I get why the city council is not looking at the whole picture but just at the lives of the criminals. It’s hard to get a job. And if you can’t get a job or housing to support your family how are you supposed to be rehabilitated.   It is a tough road that the City of Seattle is now putting on Landlords to figure out.

“One solution:  We need to be going into the junior highs and high schools and teaching our kids about credit and criminal consequences – to save future generations.   But is Seattle worried about education like that? I don’t think so,” Pickron said.

So to landlords who need to cope with the new Seattle ordinance, he says go back to the old way of doing background checks in the 70s and 80s before we had the internet to check records.

Options for landlords who have to deal with new Seattle ordinance

  1. Call the prior landlords. Even though some of them won’t tell you anything, some will, and make sure you go back and call the prior landlords but stay away from any conversation about criminal activity.
  2. Make sure you verify employment by getting a paycheck stub. A guy whose committing serious crimes probably isn’t going to have a solid full-time job let alone a career.
  3. Heighten that credit score up just a touch based on your property and who you can attract.
  4. Check the Sex Offender Registry at  https://www.nsopw.gov/
  5. Try to get the highest dollar out of your property right now , sell it and buy in the suburbs.

About David Pickron

For 25+ years, David Pickron has been working to make the process of finding and managing tenants easier. Drawing on his own experiences as a real estate investor, and thousands of interactions with his clients, he developed a series of custom solutions to help rental owners protect themselves, their properties, and the health of their ongoing investments. A world-class creator and technology junkie, David brings two decades of experience as a licensed private investigator to Rent Perfect. During that phase of his career, he learned that prevention is the best medicine when it comes to dealing with dangerous or unreliable individuals. As a self-professed control freak and active investor, David often found himself re-imagining the tenant/landlord relationship. He started to envision a mobile-friendly renter screen program that would entail no more cords, no more paperwork, and no more problems. To that end, he has developed numerous products that help landlords navigate the tenant screening, property management, and eviction process seamlessly.

 

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