Tenant screening services for landlords are not all the same writes veteran investigator and rental property owner David Pickron who offers several cautions to landlords.
By David Pickron
When you’re shopping for a shirt, it’s easy to compare the quality of two options by looking at them side by side. You ask yourself questions like: Do I like the style? How is the stitching? Is the material going to last after one wash? How does it fit my build? This physical, tactile data gives you the necessary information to purchase the right shirt for your particular need.
Unfortunately, when it comes to backgrounds and screening your prospective tenants, you don’t have the same luxury.
As a landlord, the tenant-background research process and results are invisible, seeming like smoke and mirrors. You’ve probably asked yourself, “How do I quickly get a reliable background on an applicant that allows me to make an intelligent and informed decision, and protects my investment?” This is THE essential question for you, because the wrong background will cost you time, money, headache, and heartache.
Deterioration of tenant screening services for landlords
As a licensed private investigator, I’ve had a front-row seat to the deterioration of reliable information generated through tenant screening/background check processes, and the resulting misguided decisions by landlords over the years.
In the past, investigators went to the courts in the jurisdictions where rental applicants lived and worked to obtain current and accurate data, at the source. Contrast that with today’s “high-speed” approach to everything, where quickly delivered results are king, regardless of whether they are backed by inferior and useless data.
A New York Times article titled, “How Automated Background Checks Freeze Out Renters” does a fantastic job explaining how the growth in data-mining in relation to tenant screening has become such a lucrative market over the last 10 years; all to the detriment of the tenant. Most of the biggest players in the industry are sourcing their tenant applications through these well-known, large data providers. As noted in the article, these large companies often employ rogue screening techniques that saddle landlords with maintaining their investment while also trying to sort through a list of applicants with limited, often inaccurate data as their source material.
To add to all of this, the government requires landlords and screening companies to have systems in place to report accurate Fair Credit Reporting Act (FCRA)-compliant records. In other words, false or misleading records can result in a FCRA violation, which can lead to lawsuits. Denny Dobbins, attorney for Rent Perfect, reminds us that the top three pitfalls to look out for with screening-company instant results are:
No. 1 – Records are those of my applicant
Do the records on the report represent the right applicant, and how does the screening company know?
Being correct about the data you are using to determine an applicant’s status is critical. Recent case law shows evidence that many background companies simply do not have good or adequate processes in place to ensure that a criminal history really belongs to the applicant. Consider all the information that is needed to make sure your screening company is reporting accurate results for your applicant: date of birth, Social Security number (if it can be found), full address history of the applicant since age 18, maiden names, alias names, etc. Most screening companies that provide instant products do not obtain all this vital information, or lack the experienced personnel to analyze it properly for clues and anomalies.
No. 2 – Records match exactly with the court
Are the records reported to the landlord identical to what is in court records?
Landlords are expected to make informed, professional decisions and, without court-verified and matched records, you may be subjected to making unskilled interpretations and conclusions. Every time data is transferred from one source to another, it loses its original integrity, similar to a copy machine. The more copies of copies you make, the less quality you have versus the original. So, a case in an instant database might show as dismissed – as if they never created the crime – but the actual court file will show a guilty plea that was dismissed two years later because of good behavior. One says the person was guilty, the other infers he or she was not.
No. 3 – Records are complete and updated
Are all the records complete and up to date? As a landlord, you deserve to see the case in its entirety. Things to look for are (a) do the records show the actual final disposition of the case, i.e. did the record start as a felony but was later reduced to a misdemeanor; (b) was the case dismissed after the applicant successfully completed probation, or did the matter go through some kind of a diversion process as opposed to ending in a conviction? Keep in mind that criminal records are constantly being updated at the court, and it is critical to the have most recently updated records in your report. Also, of note, states deal with these issues differently and there is no standard by which they all report or update records. Please note, information typically found in instant-database searches is not always complete and/or updated.
Instant searches often provide faulty data, which, when used by a landlord, can result in getting sued by applicants.
Use a licensed private investigator for tenant screening services for landlords
There is both greater safety and protection for you and your investments using a licensed private investigator to perform your tenant screening.
Although this sounds expensive and possibly time-consuming, the exact opposite is true.
Over the years, court data has become more accessible, and trained private investigators have paid-subscription access that allows them to quickly gather court data at a minimal cost to you. When an investigator accesses court records at their original source, whether it is for evictions or criminal history, they get current, accurate, and complete results, which protects all parties involved in the transaction.
Customer service is key for tenant screening services for landlords
Having the correct data is the first step in finding the right person, but you should also look to lean on your screening company for additional policies, procedures, and simple answers to questions you might have.
Large companies who want to get into the screening business might offer an online application or background check, but when you pick up the phone to call them, the line keeps ringing. Technology can only get us so far, but it cannot replace a human being on the other end of the line.
An application and background check are nice and convenient, but there is so much more to providing you the service and protection you deserve from tenant screening services for landlords.
“Landlords get in trouble when they do not follow the Fair Credit Reporting Act,” Denny Dobbins continues. “One of the biggest, and most easily corrected, mistakes landlords seem to make is the complying with sending the required Adverse Action letter to the applicant. This letter is required if the applicant does not qualify for or meet the landlord’s rental criteria. It is very easy to do, but landlords must make it a habit. A good screening company should have a procedure/process in place to help you meet your obligations for this requirement and consult you through this process, but the landlord has to send the actual letter.”
Another area many landlords do not realize they have to comply with is to perform a HUD-type of “individualized assessment” for any report that comes back with negative information resulting in the landlord deciding not to rent to the applicant, based in part or in whole on information found in the background report.
Dobbins indicates that the way to perform this individualized assessment is to ask yourself these questions:
- Looking at the nature and gravity of the criminal history, does the particular criminal history in the report constitute a risk that I am not willing to take based on my substantial, legitimate, and non-discriminatory interests to protect my property, my staff and other residents? In other words, what kind of criminal history is it and how bad was it? Is it an unacceptable risk to take?
- How long has it been since the applicant was involved with the criminal activity?
- How long has it been since the applicant has been released from prison or parole for that criminal activity?
- Have I analyzed all information that the applicant has provided me about mitigating factors regarding the criminal activity and rehabilitation for the criminal activity?
To help guide the analysis above, Fair Housing suggests investigating back o more than seven years, and determining if any prior crimes cause a threat to your property or other people. However, some felonies may create enough risk that you may want to include a longer research period, such as sex crimes, crimes against children, and violent crimes. These should be discussed with your attorney.
Landlords have a duty to properly screen tenants as outlined above, and may be held liable for the criminal acts of a bad tenant upon others. What might seem like a “no-win” situation can easily be remedied by having a legally sound rental criteria that is strictly enforced, fair and respectful treatment of tenant applicants, employing a quality background-check company that ensures they are delivering accurate and complete results, and giving you the proper tools and resources to manage applicants that do not meet your criteria.
So, compare your current tenant applicant background process with the actions that are prescribed above. If you find them lacking in one or more areas, you owe it to yourself and your investments to find a screening company that understands your needs for quick (less than 6 hours), accurate, and up-to-date information on your applicants while supporting you every step of the way. With the right questions and diligent comparisons, you will soon find out that not all screening services for landlords and companies are the same.
About the author:
David Pickron is a private investigator licensed in Arizona. He owns and manages residential and commercial properties and is the founder and president of Rent Perfect, an investigative screening company. He wants landlords to find the right renter the first time.