5 Most Common Issues Landlords Run Into During Tenant Screenings – Motley Fool

The tenant screening process is an essential component of turning a rental property into a cash-producing machine. A landlord’s earning potential could very well rest on whether a thorough screening has been conducted. For this reason, it is important to avoid these five mistakes when screening a potential tenant.

1. Not screening tenants at all

One of the biggest mistakes landlords can make is to forgo screening potential tenants. Since every new lease agreement carries a certain level of risk, skipping out on this process could deal a major blow. Not screening applicants potentially exposes the landlord to certain risks such as decreased cash flow, a short-term vacancy period, reletting costs, and court costs — not to mention some unnecessary emotional toll.

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For this reason, not screening a tenant is an absolute no-no! According to Princeton University’s Eviction Lab, landlords file 3.7 million eviction cases each year, with the average judgment amounting to $600. While screening a tenant cannot always prevent a potential eviction, it is a safeguard that landlords can use to limit exposure to financial loss and a whole lot of drama.

The safest bet for any landlord is to always screen potential tenants. Doing so can make them more confident in their investment decisions.

2. Neglecting to screen co-tenants

Much like with tenants, not screening co-tenants can cause a great deal of trouble. Co-tenants can be spouses, domestic partners, siblings, cousins, or unrelated persons. Whatever the relationship, when it comes to co-tenants, there is an additional layer of risks, including (but certainly not limited to) the relationship dissolving or the co-tenant simply wanting to end the living arrangement. In any case, landlords should also vet potential co-tenants to mitigate the risk of any potential loss.

3. Failing to comply with state and federal laws

Another major issue that could arise during the screening process is a failure to comply with federal and state laws. Landlords are bound by the Fair Housing Act of 1968, a federal law prohibiting landlords from discriminating against tenants based on race, color, national origin, religion, sex, marital status, or disability. States may have additional protections, which can be found by visiting the website for each state’s department of housing.

Additionally, if a screening company is used, landlords should also ensure that it complies with the Fair Housing Act. Some screening companies have come under fire in recent years for creating biased assessments for landlords to use.

When it comes to complying with federal and state laws, landlords must always cross their T’s and dot their I’s. If a landlord is unsure whether they or the screening company are in compliance, their safest bet is to consult an attorney.