In this conversational video, Jason Hartman and Janet discuss the critical role of tenant screening for landlords, especially amid a tough economic climate that has led to more rent defaults. They emphasize that the most vital part of a landlord’s business is selecting the right tenant, which hinges on understanding fair housing laws. Janet explains that landlords must know which questions are legally permissible—such as inquiries about current income, contact information for current landlords and employers, and requests for credit or investigative background reports—because these have legitimate business purposes. She also outlines prohibited inquiries and practices, including asking about marital status, the ages or gender of children, preferences for adults‑only communities, and any form of steering that suggests a unit based on family composition. The conversation highlights the legal risks of violating fair housing, including complaints from housing groups or lawsuits, and underscores the need for landlords to invest time in learning these regulations to avoid costly mistakes that could jeopardize their rental business.
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So let's talk a little bit about what landlords need to know, especially in today's somewhat treacherous economic climate. I'm sure we have seen more tenant defaults and problems with people paying the rent nowadays, because these are just tough times out there. And my statement there is somewhat anecdotal. I don't have any specific stats on it, but I just know it from experience. What are some of the things that landlords really need to know about when screening tenants? Maybe we'll start there.
Okay, that's a good place to start, because that is actually the most important part of any landlord's business, is choosing the tenant. If you make a mistake, then you're setting yourself up for all sorts of problems down the line which can not only harm, but actually destroy your rental business. So it pays to spend a lot of time screening carefully. And that begins by knowing what questions you can ask and what questions you can't ask. What I'm talking about here is fair housing. You talk to any landlord who's been in the business for any length of time, he or she will tell you that fair housing is the elephant in the corner. If you make a mistake with a fair housing issue, you are likely to either face a complaint from a fair housing group or a lawsuit from a disappointed applicant. On the other hand, if you don't know which questions you can ask without fear of legal problems, you won't get the information you need to choose the right tenant. So the most important thing is knowing what you can ask in the fair housing context.
Right? Right. Janet. I think the fair housing laws are very easy to obey and comply with, and this should not be an area that a landlord ever has a problem with, in my opinion. And believe me, they don't want a problem with this one because it's rather serious. So what are some of the things landlords can and can't do as far as fair housing?
Well, they can certainly ask any question that has a legitimate business motivation behind it, such as, what is your current income? Will you give me the names and contact information of your current landlord and your employer? Landlords can ask for credit reports. They can even ask for more detailed reports called investigative background reports. What they can't do actually, though, Jason, and sometimes this isn't. This is pretty surprising to many people, and it's not that easy to know. They can't ask questions like, are you two married? In many states, they can't ask questions like, what are the ages of the children who will live here? And what is their gender? They can't ask questions like, this is an adults only community. Are you comfortable with that? They can't even do things that they might think are actually well intended, such as, I see that you have children. I think you would be more comfortable in this particular area of my property. That's called steering. And even though the landlord might think that it would be better for the kids to be on the ground floor, for example, they can't do that. So some of the questions in a fair housing context, you're right, are obviously ones that are easy to learn and avoid. Others are surprisingly not intuitive. And that's why landlords need to start a little bit of time learning what the law is.
I have to confess, I have never heard that you can't. I've never done it myself, I don't think, but I've never heard that you can't ask the ages of the kids. That's sort of an interesting one.
You wouldn't want to do that because you wouldn't want to suggest to your applicant that that is a factor in your decision making. If it becomes a factor in your decision making, it gives the applicant perhaps reason to think that you may be discriminating on the basis of their family. Now, in fact, in this example, suppose you turn them down because they simply don't earn enough to just to pay the rent. They may think that once they answered your questions about their family, that your real reason had to do with the age and sex of their kids. The fact that it didn't is not going to prevent them from complaining and maybe resulting in an investigation of why you turned them down. In other words, you never want to give anybody a reason to think that your decisions are based on anything but sound and legal business reasons. That's why you don't ask about the kids. You simply want to make sure that the rental is big enough for the number of people. But the age and sex of the kids is none of your business. And you don't want to give anybody an opening to claim that you use that as a basis for a rejection.
