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How to Perform Tenant Screening and Respect Data Privacy

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Investing in rental property also means investing in your tenants. Quality tenants keep your property clean, submit timely requests for any repairs, and leave less wear-and-tear on the house. They also pay on-time rent every month. But how do you know which applicants will become your best tenants? That is what the tenant screening process is for, and the laws associated.

Fair housing laws determine the questions you can ask. Local data privacy laws determine what you can do with an applicant’s personal information. Even their name and current address can be the seeds of identity theft, which is why data privacy has become such an important issue. So how does a responsible landlord handle tenant screening, wisely choosing the right tenants while protecting their data in the necessary ways?

As landlord pros, we have a few pointers.

The Fair Housing Act and Tenant Screening

The Fair Housing Act prohibits landlords from asking questions that may lead to discrimination. Unfortunately, this can include questions you might otherwise ask about family, background, and personal plans. You cannot ask questions or make decisions on housing regarding a tenant’s:

  • Race
  • Color
  • Religion
  • National origin
  • Sex
  • Disability
  • Familial status

You can ask about the number of household members, but not about spouses or children. You can ask about the number of vehicles, but not if one is a handicap van. It is even tricky to ask where your tenants are moving from, in case this reveals their national origin.

Data Privacy Laws for Landlords

Data privacy laws vary by state and can vary by city. California has the strictest personal data laws, but many other states include laws regarding how customer data (tenants, in your case) is handled and must be deleted on request. You will want to look up your state’s data privacy laws.

Best practices, however, suggest avoiding possessing any private data. If you can’t avoid, the second best option is to delete any private data you acquire as soon as its use is completed.

Do You Need Sensitive Information to Screen Tenants?

Yes. Part of tenant screening includes a credit, criminal, and eviction check. You will also want to verify each applicant’s employment and income. All of this requires very personal information, like an applicant’s social security number, current address, date of birth, and more. Knowing some of this information can even lead to a conflict of interest between fair housing and landlord decision-making.

Fortunately, you don’t need to personally have this kind of private information on your future tenants. Only your background check and credit check team do. LandlordStation allows landlords to run tenant screenings with just the tenant’s name and email address. The tenant can then – privately – enter sensitive information that goes straight to the credit bureau for the report – but is never seen or stored by the landlord. This is the best way to fulfill all your goals; getting a  detailed tenant screening report, respecting fair housing laws, and protecting tenant data privacy.

How Should Sensitive Tenant Data be Kept?

If you find yourself in possession of private tenant data, perhaps in the form of applications, keep this data under lock and key or delete it to protect the tenant’s data security.

If you store tenant data, keep papers in a locked filing cabinet. Keep digital files in encrypted storage or a data vault with a brand that you trust. In most states with data security laws, you are required to make a reasonable business-class effort to protect your customer/tenant’s data.

What to Do If You Have a Data Breach

What happens if a server or service where you are storing tenant data is breached by a hacking incident or exposed by accident? You will need to follow the data protection laws of your region but, most likely, your requirements include alerting tenants that their risk of identity theft has risen and possibly providing an identity protection monitoring subscription-like Norton LifeLock or Experian IdentityWorks.

LandlordStation Protects Tenants and Landlords from Data Privacy Concerns

Being a landlord is standing halfway between a host and a business owner. On one hand, you need to carefully screen tenants to find reliable and responsible people. On the other hand, you need to handle and hold as little sensitive information about your tenants as possible, especially during the critical decision-making process. LandlordStation offers the perfect solution that creates the shortest, most secure path between the tenant’s information and the credit check reports you need to make a strong decision.

To begin tenant screening with LandlordStation or to explore more of our handy landlord resources, contact us today.

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