tenant screening and lease basics

In short

A friend of mine once handed over a deposit and a signature after a ten minute walk through an apartment, and he regretted it for a year. If you are about to rent or to lease out a home, an afternoon of care is a fair trade for a year of peace. A lease is a promise written on paper, and both sides are bound by it. A landlord screens an applicant to learn whether the rent will arrive and the home will be kept well. A renter reads the lease to learn what is owed, when, and what happens if plans change. Reading the lease before any money changes hands is a sound habit. Each side keeps copies of what both have signed. Dated photos of the home on move in day cost almost nothing.

The whole of it

What it is

I once watched a landlord and a young couple sit at a kitchen table, nervous in the very same way. Each side was about to trust the other with something valuable. The landlord was trusting them with a home. The couple was trusting him to keep the place safe and fixed up.

Tenant screening is how a landlord checks an applicant before agreeing to rent. It often looks at income, credit history, past rental history, and sometimes criminal records. A lease is the written contract that sets the rent, the length of the stay, and the rules both sides must follow. Many leases run for a set term, such as twelve months. Others run month to month.

Screening is not an insult. It is a way for a landlord to protect a big investment, and for a good renter it can be a chance to show how dependable they are. Fair people on both sides tend to want the same thing, which is a quiet year without surprises.

How it works

If you have ever filled out a rental application, you know it asks a lot. It asks for your name, your job, your income, and your past addresses. The landlord often asks for a fee to run the checks, and state or local rules may cap that fee. An applicant is wise to ask what the fee covers before paying it.

Many landlords order a credit report and a background check from a screening company. Under the Fair Credit Reporting Act, a landlord who turns someone down because of what is in such a report must tell the applicant. The landlord must also name the company that supplied it. The applicant can then get a free copy of the report and dispute anything wrong. The Consumer Financial Protection Bureau explains these rights on its website.

Fair housing law sets firm limits. The Fair Housing Act, which the Department of Housing and Urban Development enforces, bars a landlord from refusing to rent because of race, color, national origin, religion, sex, familial status, or disability. A state or city may add more protected groups. A landlord must apply the same standards to every applicant. That is a good rule for the landlord too, because a written, even handed standard is hard to challenge.

Once the landlord approves an applicant, the lease comes next. A sound lease names the parties and the address. It states the rent and the due date, the late fee, the term, and the security deposit. It also says who pays for utilities, who handles repairs, and how much notice the tenant must give before leaving. The tenant must follow those terms. The landlord must follow them as well, and must also meet the duty to keep the home fit to live in, which state law spells out.

The numbers, and where to find yours

A friend of mine thought the deposit was a free for all until he learned it was not. Some numbers in a lease are set by the two sides, and some are set by law. It helps to know which are which.

The rent, the late fee, and the lease length are set by the parties. Still, many states cap the late fee, and some cap the deposit. The most a landlord may hold as a deposit is the current figure, which the official source publishes each year, and the state sets that number. The time a landlord has to return a deposit after move out is the current figure, which the official source publishes each year, and that also comes from state law. The notice period to end a month to month tenancy is the current figure, which the official source publishes each year, and again the state decides.

A number is not safe just because someone said it aloud. A state attorney general, a state housing agency, or a local court often posts the landlord and tenant rules for free. A search for the state name and the words landlord tenant law is a good start. Then the figure in the lease can be checked against the figure in the law.

A worked example

If you are holding a lease that says one thing and the law says another, this story may help. Maria Alvarez rents a one bedroom apartment. Her rent is $1,350 a month. Her lease asks for a security deposit equal to one month of rent. She also pays a $45 application fee and a $200 pet deposit for her cat. Her rent is $1,350 a month, and the deposit is $1,350.

Her move in cost adds up like this. The first month of rent is $1,350. The security deposit is $1,350. The pet deposit is $200. The application fee is $45. Add them together, and $1,350 plus $1,350 plus $200 plus $45 is $2,945. That is the cash she has to bring before she gets the keys.

On move in day, Maria and the landlord walk the unit together. She takes dated photos of a scratch on the floor and a stain on the carpet. She writes them on the condition form, and both sign it. Now there is a record.

A year later, she moves out. The landlord finds the carpet stain and the scratch. He also finds a cracked window that Maria did not cause but never reported. Suppose he charges $120 to clean the carpet and $180 to fix the window. Her deposits total $1,350 plus $200, which is $1,550. His charges total $120 plus $180, which is $300. The refund would be $1,550 minus $300, which is $1,250.

Here is where the photos matter. The stain and scratch were there from day one, so Maria has a record to point to when she questions the carpet charge. Suppose the landlord agrees and drops the $120. Then the charges fall to $180, and her refund is $1,550 minus $180, which is $1,370. In that case the paper trail saved her $120. The window is a harder call, because a written report when she first saw it would have helped her.

Where it goes wrong

I have seen good people get burned by small things. The first trap is a verbal promise. A landlord says the fence will be fixed, or a tenant says the roommate is leaving, and nothing gets written down. If it is not in the lease or in a signed note, it is hard to prove later.

The second trap is skipping the move in inspection. Without a record, the landlord and the tenant simply disagree, and the tenant often loses the deposit fight. Dated photos and a signed condition form fix that.

The third trap is rushing to sign. A tenant who signs a twelve month lease is bound for the full twelve months. Breaking it early can leave the tenant owing money under the lease, and the rules differ from state to state, so a state landlord tenant page is the place to check. The lease may also have an auto renewal clause that locks in another term unless notice is given on time. It pays to read for that.

For landlords, the biggest trap is uneven screening. If one applicant is held to a stricter standard than another, a fair housing complaint can follow. A written checklist applied to everyone is the plain cure. Another trap is ignoring the notice rules before raising rent or ending a tenancy. Courts tend to look hard at whether the paperwork was followed.

Questions to answer before you leave this page

Have you read every page of the lease, including the small print about fees, repairs, and renewal? Do you know what the application fee covers and whether your state limits it? Have you looked up your state rules for the deposit cap, the refund deadline, and the notice period to end a tenancy? Do you have a plan to photograph the home and sign a condition form on move in day? If you are the landlord, do you have one written screening standard that you apply the same way to every applicant? And if you are the renter, can you afford the full move in cost, which in Maria's case came to $2,945, before you hand over a dollar?