How Private Are Tenant Screenings? (Part 1)

Posted in Blog  
  on Feb 09, 2016

When you are performing a tenant screening, you're going to come across plenty of sensitive information. This includes full names, dates of birth, previous addresses, employers, social security numbers, financial histories, and other information that is considered private and protected. This can end up being a concerning ethical and legal problem if handled incorrectly.

When a tenant hasn't authorized information to be handled by a third party (such as an office manager or another landlord working with the same company), what can be shared? How does this vary from place to place? We'll be answering these and other questions in this two-part series.

As usual, privacy laws vary from place to place, and can change quickly. Always corroborate any information you read online elsewhere, and if you have any questions it's always a good idea to hire a lawyer.

Best Practices

Matters of the law aside, there are certain ethical best practices to take into account when collecting and using an applicant's personal information to run a tenant screening.

First, don't take any information you don't need to conduct the screening. This may seem obvious, but many companies use applications from other rental companies, or that they find online. They may not actually need all of the information they're requesting.

If you're disseminating information through your office, consider what's actually needed. If someone is performing an employer verification, for instance, they don't need the individual's social security number, so you can remove that from the application before passing it on to the employee.

Finally, always make sure any files containing confidential information are locked away securely, or encrypted if they're digital. This will help protect you from prying eyes, burglars and hackers.

Use the Need to Know Rule

In the healthcare industry, medical files are made available on a need to know basis. If you don't need the information, you shouldn't have access to it. Applying that same rule to your tenant screenings is a good idea. If a file contains information not needed to make a rental determination, remove it from the file. The Federal Housing Administration has guidelines that protect certain classes. Any discriminatory rental practices could have you facing serious financial penalties. That makes it important to reduce the associated risks by eliminating access to information that could be considered prejudicial.

In addition to using unverified sources, some companies have an application process that could expose them to liability. If you ask one applicant a few questions and ask a second applicant different questions, that could be problematic. Before you start background checks, be sure you collect the same information from every person applying. Then, keep the different documentation separate. The person handling the credit check will need an applicant's social security number, but the person doing a reference check will not. Unless you are handling everything personally, you will want to put strict controls in place regarding the spread of personal information.

Handling personal information is a necessary part of the property management business — you need to conduct thorough tenant screenings - but you're engaging in an act of trust. To handle this information irresponsibly is to do your tenants a grave disservice. Always make sure that you take all the necessary steps to protect your applicants' sensitive information. Not only is it the law, but it's what you'd want them to do for you. Read Part 2 for more information about certain state-specific legal issues.


The Landlord Tenant Board: What it is and When it is Needed

Many times, there are issues between a landlord and a tenant that need to be resolved but are failed to do so, because both parties have gone too far with their actions, and have retaliated in the... More

How to Review a Rental Application

When it comes to reviewing a rental application, all of it may seem daunting; you will find it overwhelming because there is so much information that you yourself have to go through before the tenant... More

How to Create a Residential Lease Agreement

Where there is a landlord, there will also be a tenant, and it is no surprise that these two parties can only work together once there is some sort of agreement, contract or a binding deal in place.... More

The Best Sites for Rental and Lease Agreement Templates

Many landlords find it difficult to write and draft a lease agreement. Since every State has its own general template, it can also be difficult to make sure your lease agreement meets all the criteria... More

5 Landlord Forms that Every Landlord Should Have

When it comes to being a landlord, one should know that it is not for the unprepared individual. This should be clear that being a landlord does not simply mean that you will be taking the rent and... More

Landlord Obligations: The Responsibilities of a Landlord

Becoming a landlord is a major deal and no one can simply get up and think, “well, yes I think I should be a landlord and rent out my flat.” If you are thinking that you would like to be a landlord,... More

The Best Landlord Associations for Landlords to Join

If you’re a landlord and want to manage your business in a better way, you should endeavor to get in touch with those industry experts who have the experience and the skills to help you do it. This is... More

The Best Landlord Forums

Landlords and aspiring landlords, do not become as such, without guidance and advice. There is a lot that goes into being a landlord nowadays; in fact, there is so much to learn that it often confuses... More

The Biggest Landlord Problems and How to Fix Them

Renting out an apartment or a house can become a constant revenue source for landlords, but at the same time, it gives rise to several problems. It is a fact that high standards, a strict lease... More

Landlord Tenant Disputes

If you are currently thinking of becoming a landlord only because it helps you have a constant stream of income, you should think twice. It’s not that you should not consider offering your property... More