Tenant screening without violating fair housing law

Fair-housing rules are not complicated, but they are absolute. The Fair Housing Act doesn't allow exceptions based on what a particular applicant said or did. The way to stay compliant — and not lose a $50,000 settlement to a tester — is to write down your screening criteria in advance, apply them the same way to every applicant, and document everything.

The seven federally protected classes

Under the federal Fair Housing Act, you cannot deny housing, treat applicants differently, or steer them toward or away from units based on:

1. Race
2. Color
3. National origin
4. Religion
5. Sex (which courts and HUD have interpreted to include sexual orientation and gender identity)
6. Familial status (having children under 18, being pregnant, or being in the process of obtaining custody)
7. Disability (physical or mental)

State and local protected classes

Many states and most large cities add to the federal list. Common additions include:

• Source of income (including Section 8 vouchers and Social Security benefits)
• Marital status
• Age
• Military or veteran status
• Citizenship or immigration status
• Arrest record (without conviction)
• Criminal history beyond a certain age

Source of income is the one that catches the most landlords off guard. In a growing number of jurisdictions, refusing to consider an applicant because they pay with a Housing Choice Voucher is illegal even though it's legal in the next county over. Check your specific city and state list before drafting any screening criteria.

Criteria you can apply

The legitimate screening criteria are:

• Income. A common standard is gross monthly income equal to two-and-a-half to three times the rent. Apply the same multiplier to everyone.
• Credit score. A defined minimum (such as 600 or 650). Apply the same minimum to everyone.
• Rental history. Verifiable previous tenancies without a record of nonpayment, eviction, or significant lease violations.
• Employment. Stable employment for a defined period, or sufficient verifiable income from another source for self-employed applicants.
• Criminal history. Conviction-only screening with limits on look-back period and on the relevance of the conviction to tenancy. Blanket bans on anyone with a record have been ruled discriminatory by HUD.

How to apply criteria consistently

Write the criteria into a one-page document before you start advertising the unit. Then apply them in order of receipt, not in order of preference. The two practices that produce evidence of discrimination are:

• Asking different questions of different applicants.
• Reviewing later applications before deciding on earlier ones.

If you receive twenty applications in three days, process them in the order they came in. The first qualified applicant gets the unit. If you skip past the first qualified applicant to consider a later one, you've created the appearance of discrimination, regardless of your actual reason.

Reasonable accommodation and reasonable modification

For applicants or tenants with disabilities, you have two affirmative obligations beyond non-discrimination:

• Reasonable accommodation: a change in your rules or policies that allows the tenant equal use of the unit. The textbook example is allowing a service animal in a no-pets building. You cannot charge a pet fee, pet rent, or pet deposit for a service animal or assistance animal.
• Reasonable modification: a physical change to the unit, paid for by the tenant, that the tenant needs to use the unit. Examples: grab bars, a wheelchair ramp, lever handles. You can require the tenant to restore the unit at move-out.

What you cannot ask

The questions that draw fair-housing complaints fastest:

• "How many children do you have?"
• "Where are you originally from?"
• "Are you married?"
• "Do you have a disability?" (You can ask whether the applicant qualifies for the unit's stated occupancy and use criteria. You cannot ask whether they have a specific disability.)
• "What church do you attend?"
• "Are you a US citizen?" (In jurisdictions where citizenship is protected.)

This is true even if the questions are casual small talk. Testers — applicants sent specifically to check for discrimination — record the conversation.

Documenting the decision

For every application, keep:

• The application itself, with the date and time received.
• The screening report.
• A short written note of the decision and the reason, citing your written criteria. ("Denied: gross monthly income $4,200, rent $1,800, ratio 2.33, below 2.5 minimum.")
• If denied, the adverse action notice required under the Fair Credit Reporting Act when a credit report contributed to the decision.

Keep all of this for at least three years. Many fair-housing complaints are filed long after the decision was made.

The single behavior that prevents most fair-housing problems is to write the criteria down before you list the unit, and to never deviate from them. The cases landlords lose are almost always the ones where the criteria were applied inconsistently — strictly to one applicant, leniently to another. Decide your standards in calm and apply them in the heat.