- Webinar 2022-06-02
- Statewide 2022-05-04
- Statewide 2021-06-09
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- Worcester 2020-03-11
- Cambridge 2020-02-18
- Longmeadow 2019-04-11
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Video: Tenant Screening Overview
Tenant Screening Overview
Richard Merlino - Rich
Rich: This is a refresher on tenant screening. I just said this I am not an attorney and I am certainly not in an attorney-client relationship with you. These slides may need improvement, speak up.
If you could do me a favor though and just make your notes, yes, you can write them on the feedback card if they’re about the presentation, but if you have questions about this presentation, just give me a couple of minutes to get through it and I will take those questions at the end and we can have a discussion if needed.
The goal is to have zero vacancy year-after-year. Zero vacancy is absolutely possible to have zero unpaid days at market rent with no headaches. I haven’t gotten to the no headaches part, so hopefully this has some good news for some of us who like to reduce our headaches. We want long-term residents. We want plenty of income or subsidies. I don’t care where the money comes from and a courteous professional relationship. Some people make it a little tough to have a courteous and professional relationship from their side, but we can always control what we do.
Our basic process is to start off with advertising. I need to remember some of the suggestions. I’ve used Zillow. We’ve learned about Open Houses, and the other one was—
Audience: [crosstalk 0:01:18]
Rich: TurboTenant. It’s like TurboTax but it’s like TurboTenant. We’re going to do a phone screen like we’ve actually touched on that, too, with some prequalifying questions. We’re going to tour the apartment or have an application screen, and we’re going to offer them the opportunity to live in the apartment and what the bottom process is it eliminates a step. It eliminates the phone screen because some people don’t do that, but you still have to advertise and take an application, tour the apartment, and put together a rental agreement with them.
Credit scores describe a percentage risk of default, which is failure to pay. This is on the exam, by the way, for those of you who beta tested. This is one of them.
I’m not giving you an exam at the end of this meeting. I’m just saying on the certification. Some of the information that’s in here is helpful for you on the exam, so you can always review these things online afterwards as well if you felt like you wanted to take notes but you missed the opportunity.
The data comes primarily from credit cards and car loans. Thirty-five percent of the credit score is total debt relative to the ability to borrow; 35 percent is payment history. The score correlates strongly with age. There are a lot of different scoring models. These are rough numbers. There are three credit bureaus and they use so different formulas and they’re secret. Your credit score that impacts like where you live and what kind of car you drive and all of these things are important aspects of your life, you don’t get to know how that gets calculated. That’s awesome, right? Ironically, the word fair is in the name of the scoring model, Fair Isaac. It’s what the F in FICO stands for.
Incidentally, FICO 9 when it comes out, it may have already come out, but that’s the most recent credit scoring model, takes into account rent payments into the actual FICO score, which is different. I’ve always reported residents’ payments to credit bureau and it shows up, but it doesn’t impact the score. It just shows the payment history. Does that make sense? Now it’s actually going to bring their score down or up, which is going to help us because people want their scores to go up, don’t they? Sure. When that becomes prevalent, that will be good for our business.
More on credit. We want to look for reputable scores, FICO. Experian, TransUnion, Equifax, not some of these other things that like VantageScores. Like I said, there are so many different scoring models. You just have to pick one that you’re unfamiliar with and you understand how it works because the numbers are not all relatable. Somebody could have an 800 VantageScore, which is really like a 560 FICO score or something like that because the scales are different. Does that make sense? It’s like measuring your weight in pounds and kilograms. If you want to feel like you lost a lot of weight, you just tell people how much you weigh in kilograms. Do you know what I mean? You are not actually losing weight.
Audience: [unintelligible 0:04:20]
Rich: Hold onto that please. You want to be careful with the red, yellow, green systems. Make sure that you’re actually looking into the data when you get the reports and not just going by what the report is trying to flag. You want to look for account histories and recency is important. If someone is late on their car loan last month, I would consider that to be a red flag when they’re trying to move into my apartment on April 1st, right? If they were late for their car payment four years ago and they’ve been on time since then, I feel like that’s a different story. There’s a difference between a past issue and something that’s going to indicate a future issue.
ClearScreening.com, SmartScreen is linked from MassLandlords.net. That is another great tool. Zumper makes tenants pay, so free for us to post an ad, but they have to pay to use it, so you get a different type of prospective tenant through there than you might get through Craigslist or [unintelligible 0:05:15] grass or something like that. A full review, search for “which tenant screening service is best,” you can look for that on MassLandlords.net. There is all kinds of resources on the stuff. This is just the basic overview. I’m going to go quickly through it because again this is just a refresher for most of us.
Criminal CORI is not the same as county records. County records, there are four states in the US that are not included in national criminal search when you get a CORI done. You have to get those four states by county, so buyer beware. Fine print on third-party reseller websites usually excludes MA CORI in the other three states.
Since 2011, landlords can get more Massachusetts CORI data on their own. Here are a couple of ways to do that. One, you have to complete a CORI authorization from each tenant. A generic authorization for background check is inadequate. It has to have specific language in there that says that you understand that you’re going to be running on these types of reports. You can register at iCORI.
This is fantastic. The fewer units you have, the more financially beneficial iCORI is. If you have 100 units, you’re going to be doing something else than if you have eight units, and it’s $25 a report. There is the link. You can take a picture of it. This presentation is going to be uploaded to our website, MassLandlords.net, and of course you can go on the site and get these materials anyway. You can just do a search for CORI on the website and go right through that.
Sex offense, covered under criminal except there are no protections for the offender. Sex offenders are not a protected class yet. Who knows? Nothing will surprise me, so there is the link for Mass.gov to go directly to the sex offender registry board. You can scroll down search for sex offenders. You can look for specific municipalities by going to CrimeReports.org and you can filter to show registered sex offenders.
You can actually see what’s going on around your building that you manage. You can see if the like the next-door neighbors are all sex offenders and always double check your data before making a decision. You definitely do not want to turn down somebody—I’m going to pick a random name, somebody like John Smith. You might have the wrong John Smith, so before turning somebody down accusing him of being a sex offender, just make you have the right person.
Eviction, you can check for this stuff currently for free at MassCourts.org. It takes seconds. It’s very thorough. You can see everything. When you’re doing a search on there, as general, less is more. If you’re doing a search for Jonathan Velasquez, you don't have to type in Jonathan all the way. You don't type in Velasquez all the way. I think you might have to put in three characters into each box. The reason for that is that the data has been entered by human beings, so there are typos.
If you type in Velasquez. I don't know anybody named Jonathan Velasquez. I just picked a name that has a bunch of letters in it. If somebody typed in Velasquez wrong and they spell it with an S at the end or something, it’s not going to come up in your search. Does that make sense? But if you only put the V-E-L-A, then you’ll get everybody whose name starts with V-E-L-A and you can add letters if it’s a match.
Make sure to check court type, each region, each region, and each prior address. This is something that’s probably overlooked. If they lived in Grafton for the last two years, but they lived in Falmouth for the 10 years before that, go to that, whatever county Falmouth is in. Make sure you check that court history, too. Makes sense. It’s free. You’re right there. You can’t look at the whole state at one time. It breaks it down by court.
If, for example, if you’re doing a search for, it says up here if you search for “D Qua,” I don’t think you can do a search for just a single letter. I think you have to put in at least three letters, but you obviously want to search for whichever housing court is applicable. You want to check that the address of the eviction matches. If it doesn’t match, they’re just closed list of addresses and it doesn’t match what’s on their credit report, it might not be the right person. It doesn’t mean it isn’t. It just means you need to do some investigation.
Communicate with the prospective tenant and the previous landlord, so you will get a ton of information from them.
Discrimination for federal. These are the groups you’re supposed to discriminate against—
Audience: [unintelligible 0:09:50]
Rich: These are the groups you’re not supposed to discriminate against: race, color, religion, sex, national origin, family status, which just means kids, and disability. A very short list.
It gets a lot longer in Massachusetts. Sexual orientation, marital status, age, ancestry, genetic information. Has anybody ever declined somebody based on genetic information? [laughter] I don't know. If we’re having a debate on whether application fees are legal or not, how are they going to require somebody to get like a 23andMe and include it with their application. That’s not going to work out.
Veteran status, membership in the armed forces, whether or not they receive public assistance, gender identity. It doesn’t matter where the money comes from, it’s all green, food stamps, a whole lot to offer, all that stuff counts. You can’t discriminate against these groups in Massachusetts. By the way, that stuff s is heavily on the test, so you definitely want to know which groups to not discriminate against.
Hopefully, it’s kind of common sense. Hopefully, we’re making our decisions based upon things that are relevant to our business like ability to pay, are there 17 of them trying to move into a 500-square foot apartment. That’s probably not going to work, stuff like that.
Age, it’s okay to ask for an ID with a date of birth for background check. It’s okay to ask on the application who is less than 6 years old for lead. It’s okay to ask on the application who is over 18 years old for signing. The obvious caveat to that is it’s better to not have lead paint if you’re going to have apartments that you’re going to be renting potentially to children. Children, I don't think it’s a fad. I think people are going to keep having them. If you have apartments for a while, that probably just makes them to get done at some point. It’s never been cheaper than it is now, so you can just take yourself out of that whole problem.
For the federal and state, age means over 40. We make it okay to turn away college students, for example. You can’t turn down somebody because they’re over 40, but you can turn down somebody because they’re under 40 years old. Under 40 years old is not protected. Exemptions, you can ask for the age over 40 years old. If it’s a retirement community over 55 years old or over 62 years old if registered as a federal low-income housing tax credit or project housing. it’s a pretty narrow scope. It doesn’t affect most of us.
Service and assistance animals. This is what the upcoming webinar is on. This is always a hot topic. Renters with a physical or intellectual disability are entitled to reasonable accommodations. Reasonable accommodations does not mean you pay thousands of dollars. It means that a no-pets rental must permit a seeing-eye dog or pony. That pony is not a joke. For those of you who have been around for a while, you know that’s actually included in the law, and service animals are trained for service. There’s something that they do.
By contrast, assistance animals are becoming more and more common. Their comfort, emotional support must also be permitted. They don't have any training, but we can’t turn them down. That’s what it comes down to. This is considered to be a group. If they have assistance animals, we have to put up with it. You have to ask for verification of, you don't have to, but you can ask for verification of disability signed by a doctor, social worker, etc., and signed under the pains and penalties of perjury. If somebody says, “This is Fifi, my emotional support python,” you can ask for a letter from their doctor that says that this is what they need.
If you’re going to advertise no pets in your advertisement, the best practice is to specify that these are accepted and verified. If you put in your ad that you’re going to verify it, maybe it will deter some of the people that are just trying to make stuff up for their emotional support shark.
Examples of citable offenses.
Your intent is a friendly one. It goes like this. “The building is full of Norwegian people. I’m Norwegian also. Do you speak Norwegian?” Somebody could interpret that as you’re trying to exclude them if they’re not Norwegian. They might think that you’re trying to send them a message or read between the lines.
You have a righteous standpoint. “You’re Russian. I’m Ukrainian. I will never forgive what the Russians did to my country and family.” That’s not a good one.
You could try to come off as a caring person. “This apartment is not de-leaded. It’s not safe for children. Look somewhere else.” No good.
Fed up, “No Section 8. You get that it’s a federal program.
Okay, moving right along. Even though these things do not directly say except for the last one that this apartment is not, you can’t move in here, if you ever express to somebody this might not be a good fit for you,” those words are best left unsaid. We should be making our decisions based upon ability to pay, credit, and things like that.
Testing, federal or state employees test for discrimination. It’s diabolical. They will take two economically similar people but different in their protected classes and they will have them call you or they’ll send them to see an apartment. They take meticulous notes on how you treated them. If you treated them differently, it might be because one was friendlier than the other. It might be because on one day, you’re having a really bad day and one day, you’re really having a good day. But if you treat these two people differently, you’re going to get in trouble.
It’s really important to settle that stuff aside and if you act like somebody’s got a camera on you at all times, you don’t smoke weed in the hallway. This is an example of not smoking weed in the hallway. Just assume that you’re being tested all the time and you will always do well.
They take a tour, they take notes, they look for differences. Don’t post discriminatory ads. Robert mentioned some examples of other things you don’t want to put in ads and do treat all tours the same.
Equal housing opportunity. The only color that matters is green. Race and many other factors are protected classes. Renters are your customers, not your friends. You don’t have to like them or the emotional support horse they rode in on. Decide based on the numbers.
The rental application may consider landlords references. Which is more important—the current landlord or the previous landlord?
Brian: Previous, previous landlords.
Rich: Previous landlords. This is the pros. Google Maps, verification of addresses, pay stubs or subsidy letters, animal licensure, government-issued IDs, courtesy communicativeness. By the way, has somebody ever rented an apartment to somebody who didn’t have an ID and that person turned out to be awesome? No. Like it somebody doesn’t have an ID, there’s something wrong unless their wallet got stolen from them 10 minutes before the apartment showing. I just ran into this recently. I’m like, “How do you not have an ID and why are you trying to sell me on why that’s okay.”
Courtesy, communicativeness, people, and pets taking tours, etc. etc. because these things are not protected.
Smoking is not a protected class. Even if they have a medical marijuana license, it doesn’t mean they’re allowed to smoke within 10 feet of your building if that’s what your rental agreement says. It just means they can’t be arrested for it.
That brings us to the end of the tenant screening slides, so now it will be a great time for questions or probably tips to share with each other. All right, you’re close enough. I can hand this to you.
Brian: Did I read it right on that slide that it was okay to ask if there was anyone under the age of six for lead, you can do that?
Rich: That slide was very recently updated based upon attorney review because the practice prior to that was to just ask are these people over 18 or not, and if they’re over 18 and you collect a background check, there’s really no business-related reason to know the ages of the other people. That was the philosophy to accommodate for those who have lead paint in their apartment and they need to know do I need to de-lead before these people move in, then for those people only, would you have a legitimate business reason to ask about the age of the children.
Now timing is important. The best practice is going to be to not ask for the ages of the children until after you’ve approved them. At this point, you’re going to rent to them. You’re willing to de-lead if the kids are under the age of 6. By the way, under the age of 6 does not mean 6. If they’re 6, they’re good. You’re only looking for 0 through 5. This is not part of the meeting, but if the kids turn 6 in a month, maybe you’ll just start their lease later, I don't know.
Yes, that is a new attorney-recommended practice for people who have lead paint. Best practice is to ask that question after you’ve approved them and you suspect you need to verify that.
Yes, Rich. I will repeat your question from here.
Rich (Audience): On the emotional support animals, if they ask you if you have a pony, who’s responsible for the accommodation of the pony?
Rich: Okay, great question. Again, I’m not an attorney. These are the answers as I understand them. Rich’s question is this, if somebody has a service pony or an emotional support pony, as landlords, we’re required to approve this pony if they have proper documentation from a medical professional or counselor. The federal law requires that we make reasonable accommodation.
Rich’s question, if I understand it is who’s in charge of paying for reasonable accommodations to accommodate the pony?
Rich (Audience): For the pony.
Rich: For the pony, okay.
Rich (Audience): Just go through the [unintelligible 0:20:18] pony and duck.
Rich: Big difference between a pony and a duck, sure.
Rich (Audience): [unintelligible 0:20:22]
Rich: Sure. I mean [crosstalk 0:20:26] where’s the barn. Okay, and I’m not speaking from a vast knowledge of pony management, but it’s a perfectly legitimate question and the answer, as I understand it, is that reasonable accommodation means that we have to permit things that are reasonable, but we never have to pay for it, meaning if somebody needs a barn for a pony, then you have to allow the barn if there’s room for it on the property, it doesn’t reasonably impede other people’s parking spaces. It doesn’t interfere with the city’s setbacks. The city has to approve it, zoning-wise and all that stuff because those things are all outside our control. The keyword is reasonable.
If you add a one-acre lot, let’s say and there’s all kinds of rooms and there’s no problem, the tenants will pay to have the trees cleared and have the barn erected and all that stuff. You just can’t say no. Does that answer the pony question?
Rich (Audience): Yes.
Rich: Okay, so that’s the answer, as I understand it. Again, I’m not an attorney in this, but I’ve been coming to these meetings for a long time, that’s what come out of my head. Yes?
Female Audience 1: Does anyone know where to look up housing court evictions from out of state?
Rich: Housing court evictions from out of state? I have done that. I don’t remember how. I’m definitely going to put this out to the group in a second. What’s that?
Brian: National Tenant Network online.
Rich: National Tenant Network online, so when you run certain criminal reports, they will bring back an eviction history that I have gotten some reliable information from. iCORI doesn’t include that, but the one that I get from MrLandlord.com does. It includes the national eviction history, so that’s show I get it. I know at one point I ended up in the State of Florida’s public records or something. I was looking something up. Some states may have similar sites to MassCourts.org so that you can figure stuff out. Some states also have similar sites to MassLandRecords.com where you can actually figure out if the person that they told you is a landlord ever owned the property. Who has ever heard of that trick? Yes, always verify that the person that we are talking to actually owns the property or owned it at the time that they lived there. Yes, a lot of states you can Google them, but NationalTenantNetwork.com, Brian?
Rich: NTNonline.com. That’s another great resource. Who else has a resource or comment on that? Robert?
Robert: I just use SmartMove, which is part of TransUnion.
Rich: SmartMove, it’s part of TransUnion and what’s that?
Robert: When I do screening, I don’t call it entirely, but I’m pretty sure they have some—
Rich: They have different screening options? Worth checking out. Is it free? It’s not free. I was hoping. Forty dollars. It’s right in the ballpark.
Female Audience 2: I have used SmartMove in the past [unintelligible 0:23:28] Puerto Rico.
Rich: You’ve used SmartMove. That’s another vote for SmartMove and you found data from Puerto Rico. Okay, perfect. Anybody else on that one before we move on? That’s a great question. Okay, other questions, comments, tips? Yes?
Male Audience 1: [unintelligible 0:23:45] is it one link to all the three or just separate?
Rich: When we look at a credit report? Yes, you get all three.
Male Audience 1: [unintelligible 0:23:53]
Rich: When I report the rent and you use Rent Helper. It reports to TransUnion. It only goes to TransUnion. Yes, I don’t remember why that is. I know at one point I was reporting to Experian, but I’ve never reported to two at a time and I don’t remember why. Most of it wasn’t free because we like free [laughter]. I bet you experienced stuff being free and TransUnion started. That’s probably what happened, but yes, good question.