Discrimination is a bad word in today's society, but landlord's need to discriminate as much as they legally can in order to get the best tenants possible into their property.
What a landlord can and cannot do is government by local landlord/tenant laws, so before starting any vetting process, make sure to check local statutes for specific ways you may need to be in compliance.
When Is Rental Discrimination Illegal?
In general, tenants are protected from certain types of discrimination wherever the rental home might be located.
The Federal Fair Housing Act and Fair Housing Amendments Act specifically prohibits a landlord from rejecting an application from a tenant for the following reasons.
- Race or religion.
- The ethnic background of the prospect or their national origin.
- The status of the family, including children.
- Physical or mental disabilities.
Some laws also specifically prohibit discrimination due to sexual orientation, the age of the applicant, or the prospect's marital status.
Even subtle differences in the application process, such as setting a higher income standard for certain households or setting different terms in a lease for different demographics could be considered illegal rental discrimination.
When Is Rental Discrimination Legal?
As a landlord, you need to be able to screen dangerous tenants away from your property as much as possible.
This means that the #1 method of legal discrimination that you can implement is a consistent policy of not accepting tenants that have committed certain crimes.
For homes that are near schools, this is especially critical to do because you could be held legally responsible for a tenant who reoffends.
If you're concerned about how certain households may treat your property, then you may also wish to set a high income standard that applies to every applicant.
Requiring a minimum income is a valid business reason to reject a tenant because you have a certain level of profitability that is required.
Performing a credit check or implementing credit score minimums is another way to help prevent problem tenants from sneaking into your property on you.
If a tenant does not have a positive reference from a previous landlord, then this can also become the cause of a rejection.
Not having a positive reference from an employer, however, is not necessarily something that you can use to reject a tenant.
Not having a job or evidence that a rental lease can be met over a specific amount of time may be a valid reason to discriminate.
Having a poor reputation, but the ability to pay rent consistently, may not be a valid reason to discriminate.
As long as you have valid business reasons to reject a tenant that are not based in any way on the illegal rental discrimination areas that are in place, then you can do so.
This will allow you to be able to effectively screen out potentially problematic tenants so that you can have a long-term investment with your rental property.
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