Workshop 1 - Renter Criteria Tips & Fair Tenant Screening Act

Transcript

1. Blue Mountain Rentals Helping Landlords & Renters Click! Fair Tenant

   Screening Act and Renter Criteria Information Presented by: Lori Hartjoy, Owner Wednesday, October 16, 2013 DISCLAIMER: Any information presented or that you choose to use is at your own risk. All details and facts are informational only. You are strongly encouraged to seek legal or financial counsel before making decisions regarding your investment rental properties.

2. Old School Method 1 Beater car or smooth ride…

3. Old School Method 1 • What does their car look

   like? – Is the outside clean – Damage free – Kept in good condition – Evidence of trash inside – Upholstery torn – Stains or food on seats Premise is – if the car is nice, clean and well taken care of then the owner must be a responsible person.

4. Old School Method 2 The first impression…

5. Old School Method 2 • What is the appearance of

   your renter prospects? – Clean? – Clothing torn? – Too many kids? – Family is extended (grandma & grandpa) – Are they prepared (responsible) – Well mannered Premise – – Large families make too much noise, have a lot of traffic and create more damage. – Those with tattered clothing or do not appear clean will not care for my rental properly. – If they are unprepared, they are disorganized and the home will not be kept neat and clean. – If the children are not well behaved, they will destroy my rental.

6. Fair Housing Laws • Old School Methods – Discrimination •

   Familial Status • Race, Color, National Origin • Screenings not based on fact • Fair Tenant Screening Act – Consistency – Base decision upon facts – Even field for applicants

7. June 7, 2012 Fair Tenant Screening Act Part 1 of

   the Fair Tenant Screening Act for the State of WA is already in place. REQUIREMENTS FOR LANDLORDS: • Written requirements for Rental Criteria – Reference Checks – Background Check – Screening – Any application you verify information on • Adverse Actions in Writing – Additional requirements – Denial The provisions of the Washington Fair Tenant Screening Act only apply when landlords accept application payments for screening services from the prospective tenant.

8. Err on the side of caution!

9. Renter Criteria Prior to obtaining any screening information on tenants,

   landlord must first notify the prospective tenant in writing (or by posting) what types of information will be accessed, and selection criteria requirements 1. What type of information will be accessed to conduct the tenant screening; and 2. What criteria will be used that may result in denial of the application. If these conditions are not met, landlord cannot charge a screening fee. Failure to comply with these regulations (as adopted) is $100 plus attorney costs.

10. Adverse Actions – Additional Deposit – Require extra month rent

    up front – Request a co-signer – DENIAL. If an adverse action (rejection) follows, the landlord must provide a written response to the applicant that states the reasons for the adverse action as per any of the following conclusions: 1. Information contained in a consumer report; 2. The consumer credit report did not contain sufficient information; 3. Information received from previous rental history or reference; 4. Information received in a criminal record; 5. Information received from an employment verification.

11. Process of Verification SAMPLE TENANT SELECTION POLICY The first qualified

    applicant will be offered the rental property first. When reviewing a Rental Application and Tenant Screening Report, Extenuating circumstances (temporary loss of job, medical reasons, family emergencies, etc.) will be considered Applicant’s screening report will be reviewed for the following adverse (negative) information: • CREDIT – Civil Judgments and/or collections for rentals and/or utilities – Bankruptcy, foreclosures, negative credit – Lack of credit history • COURT RECORDS – History of criminal behavior that may negatively affect tenancy – drugs, sex offense, theft, robbery, assault, active warrants, etc… • REFERENCES – Lack of 12 months of continuous, positive, objective rental history – Negative and/or incomplete rental references • EMPLOYMENT/INCOME – Lack of proper documentation proving adequate income to pay rent (earnings need to be 3 times rent amount) • Screening Report will also be reviewed for: – 1. False information and/or omission of material fact listed on Rental Application – 2. Lack of information provided on Rental Application • Applicants need to provide: – 1. Copy of Social Security Card or equivalent proof of identity (Visa, Passport, etc) – 2. Government issued photo ID • You have the right to obtain a FREE copy of your credit report each year from every credit bureau (Equifax, Experian, Trans Union). – For a FREE copy log onto: www.annualcreditreport.com

12. Run your own screening anytime • Walla Walla Rental Property

    Owner Association recommends www.myscreeningreport.com – Office locations in Seattle & Spokane – Portable screening reports. • Report belongs to the applicant. • Applicant has an opportunity to review the results and dispute any errors – Applicant must still provide credit report to landlord in person • Applicant credit information is safe, secure and in compliance with Fair Credit Reporting Act – Results may be shared with any landlord who will accept them for 30 days. – The fee is paid only once for that 30 day time period • Local Property Management Companies typically will not accept the results – Proprietary (in-house) screening process • The parent company www.moco-inc.com also offers free forms, including a sample renter criteria with explanation for each section and recommendations as well as Adverse Action forms, lease agreements and many addendums and notices.

13. Be Consistent & Maintain Records  Follow the same procedure

    for every applicant  Protect yourself from a fair housing violation. If an applicant comes to you with the greatest story ever, don’t make exception! If you decide to change your process  Start at the next vacancy.  Check with your attorney Keep accurate records of your process for how you fill each vacancy on file.  Maintain records for the term you and your attorney determine to be in compliance with local, state & federal requirements.  Keep your risk low.

14. Continued legislation for the future Continued legislation is in progress

    for Part 2 of this Act. Portability - Allow tenants to pay for the screening report once. - If the landlord doesn’t like that report, they can simply purchase their own. Accuracy Tenant Screening Companies report when a tenant was named in an eviction, but did the renter win? - Landlords usually refuse to rent to any tenant who has been named in an eviction lawsuit. • A tenant with a disability requests a reasonable accommodation, but sued for eviction. • A domestic violence survivor breaks a lease in accordance with the law, but an eviction is awarded to the landlord for failure to fulfil the terms of the lease. • A tenant asserts the right to "repair and deduct" to fix a serious problem in the rental. The tenant is sued for eviction & wins. Foreclosure Impacts If a current landlord is foreclosed upon, a new owner may come in and evict the current tenant. It is estimated that many tenants have an unfair eviction on their record, through no fault of their own.

15. Blue Mountain Rentals Helping Landlords & Renters Click UPCOMING WORKSHOPS:

    2. Screening & Reference Check Tips (Oct. 23) 3. Curb appeal & Turnover 4. Periodic inspections 5. Roommates & Occupancy 6. Advertising, How & Where 7. Scam Listings 8. Service/Companion Pets 9. ROI—Incentives/Concessions - Are they good? 10. 3rd Party Resources—WWRPA, WW Crime Free Housing 11. Plan your move—Must have vs. wants—Budget 12. Renter/Landlord Nightmares & Landlord Tenant Act with Guest Speaker 13. Search tips—Scams 14. Prepare for the landlord meeting 15. Make your pet landlord friendly– Service/Companion pets Visit our website at: www.bluemtnrentals.com Or call us at: (509) 240-3325 For personalized assistance

16. Handout 1 – Sample Renter Criteria. This may be found

    at www.moco-inc.com Sample Criteria Positive Identification: Requirement: Valid government issued photo identification is required of all applicants. Rental History Criteria Example: Requirement: 12 months valid, verifiable rental (mortgage or military housing) history Valid rental history is a written lease or month-to-month agreement. If rental history is less than 12 months then an increased deposit or cosigner will be required. However, military housing is considered valid rental history. Paid (disclosed) eviction will result in Increased Deposit or Cosigner requirement. Final decision is also dependant on credit history, income and length of employment. Deniable Factors: 3 or more late payments, NSF checks and/or noise complaints within a 12 month rental period. Unfulfilled lease obligations. Balance owing to a landlord (for rent or damages). Unpaid (and/or non disclosed) eviction. Falsification of the rental application. Credit History Criteria Example: Requirement: At least 2 accounts established for 1 year and in good standing Derogatory credit history (past due accounts, collections, judgments, tax liens, charge off - excluding medical debt) in excess of $500 will result in an increased deposit or cosigner requirement. Past due or foreclosed mortgage will result in an increased deposit or cosigner requirement. Discharged bankruptcy will result in an increased deposit or cosigner requirement. Paid rental collection and/or judgment will result in increased deposit or cosigner requirement. Final recommendation will also be dependant on income, rental & employment history. Deniable Factors: Open Bankruptcy. Unverifiable (and/or falsified) social security number. Unpaid rental collection or judgment. Employment History Criteria Example: Requirement: 6 months of employment with current employer or in same field of work Employment that is less than 6 months will require an increased deposit or cosigner. Employment requirements will be waived for retired and self employment applicants. However, most recent tax returns will be required for verification of income. Employment requirement will be waived for international students. An I20 will be required for verification. Military personnel will be required to provide L.E.S. for proof employment. Final recommendation will also be dependant on rental, credit history and income. Income Requirement Criteria Example: Requirement: Verifiable monthly (garnishable and non garnishable) income equal to or greater than 3 times the rental amount. Income that is 2.5 – 2.99 times the rental amount will require an increased deposit Income that is less than 2.5 times the rental amount will require a cosigner. Proof of income required prior to move in. Valid proof includes but is not limited to current paystubs, tax returns, W2's, I20's (International Students), Leave and Earning Statements (military) or bank statements. Deniable Factors: Lack of proof of income (or falsification of income information). Public Records Criteria Example: Requirement: Eviction and criminal records searches will be conducted. Criminal search includes felony and misdemeanor offenses. Deniable Factors: Verified (unpaid) eviction. Failure to disclose eviction or criminal records. Verified name and date of birth match on criminal conviction for the following offenses (disclosed or not): Murder (1st and 2nd degree) Kidnapping (All counts) Manslaughter (1st degree) Theft (1st & 2nd degree) Assault 1st, 2nd & 3rd degree) Burglary (1st, 2nd degree & vehicle prowling 1st degree) Robbery (1st & 2nd degree) Malicious Mischief (1st degree) Rape (All counts) Arson (1st, 2nd degree & Reckless Burning 1st degree) Child molestation (All counts) Delivery or Sale (All counts) Rape of a child (All counts) Possession with intent to Deliver (All counts) Cosigner Criteria Example: Rental History: Same as applicant. Credit: At least 4 accounts established for 1 year and in good standing. Deniable Factors: Derogatory credit history is in excess of $100. Open or discharged bankruptcy. Employment History: Same as applicant. Income: Verifiable monthly income equal to or greater than 4 times the rental amount. Deniable Factors: Monthly income less than 4 times the rental amount

17. Handout 2 – Adverse Action Notice. This may be found

    at www.moco-inc.com

18. Handout 3 – My Screening Report. This may be found

    at www.myscreeningreport.com