How Private Are Tenant Screenings? (Part 2)

Posted in Blog  
  on Feb 09, 2016

In the first installment of this series, we started examining the laws and ethics surrounding the information contained in tenant screenings. In the course of a tenant screening, you and your employees will handle sensitive information. Handling and relaying that information in an ethical, responsible way can be very difficult.

State-by-State Privacy Laws

As we discuss the legal aspects of handling sensitive information, keep in mind that privacy laws can be different from place to place, and may change as laws are passed and repealed. If you ever have any questions, it's always best to do your own research and check with a lawyer. Federal regulations apply in most states, but some have a more strict legal stance on privacy. California, Texas, and New York all have added protections under the law.


California Privacy Laws

As a landlord, you need to comply with the Fair Credit Reporting Act and any state laws that govern the collection, usem and dissemination of nonpublic personal information (NPI) when you run a tenant screening. NPI includes social security numbers, employment history, and any financial information collected. If you make a rental decision based on a credit report or a tenant report, you have an obligation to disclose the fact that the rejection was based on these reports and offer the applicant an opportunity to obtain a copy of the report used in the decision. In California, you can not ask about citizenship status. This is a hot issue in California, so be sure to leave off all questions related to immigration.

Texas Privacy Laws

As another state that prioritizes privacy for their citizens, Texas has also taken a more strict stance on privacy than the federal government. In Texas, you have the right to know about a company's privacy policy before they collect your NPI. As a landlord, you have the right to use the collected information for the specified purpose, but you don't have the right to resell, reuse, or disseminate the information to third parties. Essentially, you and in-house employees can use the information to complete the tenant screening, but it should not be shared with affiliates or marketing partners. Once your use for the information is complete, it should be destroyed. In this case, complete would refer to the end of a lease term and after the return of the security deposit to the tenant. If you have an ongoing business relationship, you should always maintain the tenant file for reference.

New York Privacy Laws

New York treats the information collected on a rental application similarly to California and Texas. NPI collected for an application is single use only. Tenants sign a document allowing you to use their social security number and other information to collect financial information related to making a rental decision. You may not use or sell the information for any other purpose.

The laws protecting the use of NPI are fairly clear. Make sure to only provide NPI on a need to know basis, store it in a secure location, destroy data as it becomes unnecessary and stay up to date on changing privacy laws. With increasing concerns about privacy and the growth of identity theft, states are starting to enact more and more legislation to protect consumer financial information. Keep track of changes as they occur, so you are always compliant. If you have any questions about legal issues involved in running a tenant screening, find a local legal professional to help.



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