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How to Choose Qualified Tenants for Your Property (Without Getting Sued)

Evictions are complicated and California law, generally, favors residents over building owners. The best way to avoid the headaches associated with eviction proceedings is to carefully screen potential residents. However, due to Fair Housing, you must be careful in how you screen potential residents.

Having a property management company in San Diego or elsewhere in Southern California as a buffer between you and your residents is a great idea for most property owners. Management companies are experienced at complying with Fair Housing regulations and effectively screening potential residents.

Discrimination is Dangerous

Fair Housing laws are designed only to prevent illegal discrimination, not all discrimination. Everyone discriminates; it is in human nature to recognize differences and prioritize one over the other. Conservatives generally prefer Republican candidates, people prefer Coke over Pepsi and the Red Sox over the Yankees. Everyone discriminates; however, you as a property owner run into problems when you discriminate against someone, especially when that someone is a rental applicant.

The question is, how do you know what you may or may not rely upon when you screen and select potential residents? How do you avoid getting sued for discrimination? Here is your answer…

Fair Housing Protected Classes

The Fair Housing Act prohibits discrimination based on seven different criteria: race, skin color, religion, national origin, sex, disability and familial status (married, not married, has children, etc.). These criteria are referred to as “protected classes” or protected classifications of people. You may not advertise favoring one of these criteria over the other. You cannot even ask questions that implicate any of these protected classes or risk a discrimination lawsuit.

You may think that your rental property would be perfect for a family because you are close to some great schools. While that may be true, Fair Housing regulations prohibit you from advertising for families specifically or even from selecting a family over a more qualified applicant. That’s discrimination, and that can get you in lots of trouble.

fair-housing-laws-california

Selecting or rejecting a resident upon the basis of national origin is also against Fair Housing. National origin refers to a person’s nationality, not their race or skin color – though that is also definitely not okay.

Fair Housing regulations also protect against discriminating based on sex or disability. Sex, so far, specifically refers to biological sex, not gender-identification. Keep in mind that disability refers to both mental and physical impairments. There is a specific exception for retirement communities.

There are some instances in which you can restrict certain applicants. For example, you may refuse to lease to someone because they have a dog – pet owners are not a protected class. You can also refuse to extend a lease because someone is a smoker. None of those are protected classes.

California Protected Classes

In addition to the federal protections, many states have their own set of protected classes. California extends fair housing protections to an additional ten classes: arbitrary discrimination, gender identity, gender expression, medical condition, marital status, age, genetic information, ancestry and source of income.

Techniques to Avoid Discrimination Lawsuits

Property management companies are well versed in screening applicants in a compliant manner. Here are some of our best tips to keep you out of court:

  1. Come up with a standard set of questions for every potential resident. You must treat everyone the same, which means every person must get the same set of questions and be held to the same standards. You must provide the same information and give out the same application. Ideally, you should use a script when screening applicants.
  2. Do not ever ask anyone about those seven protected classes. You cannot ask if someone is married, if they have children or about their nationality. Even a hint of discrimination could be sufficient to land you in a lawsuit. It is best to steer clear of these questions and focus on the facts regarding the property.
  3. Keep the application and questionnaire neutral. You can ask about job, income sources, previous addresses, references, education, favorite movies and if they like loud music. You can ask potential residents almost anything, just do not discuss those seven protected classes. Stick to questions and request information that will tell you whether the applicant is likely to be a good tenant (Were you ever evicted? Do you currently have a job? Etc.) and help you find the applicant if they leave town owing you money (personal references, for example).

Questions to ask a property management company

  1. Do not steer people toward particular properties or areas in town. That could be construed as you offering some options to some potential residents and withholding offers to others. If you have multiple properties and the potential resident asks about specific areas or buildings, then you may narrow your response to their question. However, if they do not, you must give them the same information as you would any other potential resident.
  2. Develop a common set of standards that every single resident must meet before they can obtain a lease. Generally, these include things like completed applications, credit reports, personal references and an interview. Stick to those standards. Do not deviate because, like above, it could be interpreted as you favoring one applicant over another.

Undercover Federal Applicants

You may be wondering about the likelihood of an applicant filing a lawsuit against you. But every now and then, testers employed by the federal government will submit fake applications to owners. If a federal tester catches you discriminating based on a protected class, you could be subject to a federal lawsuit brought by the government. Be wary of every applicant.

You want to appear as neutral as possible. Don’t try to anticipate an applicant’s desires or needs. Let them tell you. Just remember to treat everyone the same.

Have questions? Talk to a property management company like PropertyADVANTAGE. They handle thousands of leases every year and have developed techniques to avoid discrimination while finding qualified residents.

Topics: property management

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