A Landlord’s Guide to Renting Property
Choosing a tenant is one of the most difficult decisions a landlord makes. The landlord wants a responsible tenant who will pay the rent and take care of the rental property, just as a tenant wants a responsible landlord who will make repairs and respond to other problems in the rental unit. The process of finding a responsible tenant takes effort and consideration. The landlord must weigh the need for information and the ability to discern among different tenants against the laws that govern the type of questions he has the right to ask and what criteria can legally be used to make these decisions.
Housing discrimination is often very subtle and sometimes done unwittingly by a landlord. The Austin Tenants’ Council has developed this brochure to assist landlords in the selection process and help them not discriminate. However, this information is not a substitute for legal advice. Using it does not guarantee a landlord is protected from violating a fair housing law, and it is not a guarantee that a landlord will not be sued. The purpose of this brochure is to provide general guidelines for leasing a property that will help a landlord stay within the limits of the law.
How to Find a Responsible Tenant
The first step to finding a tenant is to advertise the availability of the vacancy. Depending on the nature of the housing market and the area in which the property is located, this can be accomplished in several ways.
- Local newspapers have long been the primary source of advertisement for vacant housing and remain a valuable resource. However, this type of advertisement can be expensive.
- Many neighborhood grocery stores and laundromats have bulletin boards that allow advertisement free of charge.
- In cities with large university populations such as Austin, advertising on campus can often be effective. This may include a housing office, the student union, libraries, dormitory billboards, campus newspapers, or other sources of information directed at students.
- Online rental services have become more popular in recent years. Some are national in scope; others are regional. To find one in your area, use your search engine to look for residential renting.
As the landlord, you must make sure the advertisement contains nothing that restricts or implies restrictions on people protected by fair housing laws. Federal law prohibits discrimination based on race, color, disability, religion, sex, familial status, or national origin. In addition, a City of Austin Ordinance, No. 820218-D, prohibits discrimination based on status as a student, marital status, sexual orientation, age, or creed. Violation of these laws can result in substantial financial awards to tenants who have suffered from discrimination. For clarification on whether an advertisement is discriminatory, seek legal counsel or contact the Austin Tenants’ Council’s Fair Housing Program.
Showing the Property
Hopefully, your advertisement will result in several applications from persons who are interested in the property. At this time, the landlord becomes a salesperson, pointing out the amenities of the rental unit and benefits of the neighborhood. Care in the way the property is presented will prevent misunderstandings, liability, and an uncomfortable tenant-landlord relationship.
According to the Texas Property Code, the rental unit must be in a good, working, and livable condition when a tenant moves in. This concept is known as warranty of habitability. The property should be free of any defect that threatens the tenant’s health or safety. It should have all required security devices including proper locks and smoke detectors. All fixtures and appliances should be present and working upon move-in unless agreed to otherwise in writing. For example, if the dishwasher is broken, the landlord should state that writing that it will not be repaired if the landlord does not intend to fix it. Failure to include such written provisions may entitle the tenant to a service that the landlord did not intend to provide.
A landlord should take caution if supplying different amenities to different tenants. It may be considered discrimination if the landlord supplies an amenity or service to one tenant but not to all tenants. But, it may be okay if the rental amounts are different. For instance, if the landlord agrees to provide a Jacuzzi to a tenant but the rent will be an additional $100, the landlord would not have to provide the same amenity to someone paying less rent.
Making a written list of all the amenities that exist or will be provided helps ensure that the property is presented equally and fairly to all prospective tenants. If a skylight will be added, the apartment will be painted, or the carpet replaced, all prospective tenants should be notified. A detailed list of amenities will not only ensure that all of the best aspects of a property are used to attract tenants, but such written documentation also helps protect a landlord from committing a fair housing violation.
Selecting a Tenant
Some applicants may be responsible tenants and able to pay the rent on time, and others may not be. Screening the applicants to select the one who will best fulfill the lease and provide a mutually beneficial tenant-landlord relationship is the next step. The following suggestions may help ensure the selection process is fair and legal.
Provide applicants with selection criteria. As of January 1, 2008, landlords are required to provide applicants with their tenant selection criteria and an acknowledgement form. At the time a prospective tenant is given a rental application, the landlord must also provide written notice of the tenant selection criteria and the grounds for which a rental application may be denied, including an applicant�s:
- Criminal history;
- Previous rental history;
- Current income;
- Credit history; or
- Failure to provide accurate or complete information on the application form.
The landlord should ask the applicant to sign an acknowledgment indicating that notice of the tenant selection criteria was provided. The acknowledgment must include a statement such as �Signing this acknowledgment indicates that you have had the opportunity to review the landlord�s tenant selection criteria. The tenant selection criteria may include factors such as criminal history, credit history, current income, and rental history. If you do not meet the selection criteria, or if you provide inaccurate or incomplete information, your application may be rejected and your application fee will not be refunded.� The acknowledgment may be part of the rental application if the notice is underlined or in bold print. ATC has a tenant selection criteria and acknowledgement form as apart of its lease packet.
Be consistent. The selection process must be consistent for all residents. If information is asked of one tenant, it must be asked of all tenants. Failure to be consistent could result in inadvertent discrimination and unnecessary liability. Using the same application for all applicants is one of the best ways to be consistent. ATC has an application form as part of its lease packet.
Get all of the information. Make sure that all of the information on the application is filled out completely. Any applicant who does not provide the requested information should be instructed to complete the application before it can be evaluated.
Make a final decision. To make a good and fair decision, devise a selection method that is detailed and consistent. This will make the selection process easier and more effective. The following suggestions provide an outline that may help:
- Number the applications in order of submission. The order the applications are submitted should be the order in which they are screened. When deciding among otherwise equal applications, the order of submission is the only fair way to choose between them.
- Set clear, defined criteria and apply these standards for all applicants. This is absolutely essential to avoid fair housing violations.
Occupancy limits may be set to prevent overcrowding, providing they do not violate fair housing laws. The federal Fair Housing Act specifies no minimum requirements for occupancy, but does state that a landlord is not prevented from enforcing … any reasonable local, state, or federal restrictions regarding the maximum number of occupants permitted to occupy a dwelling. The City of Austin has adopted the Uniform Housing Code which specifies occupancy standards in Sec. 503 (b) as follows:
Dwelling units and congregate residences shall have at least one room which shall have not less than 120 square feet of floor area. Other habitable rooms, except kitchens, shall not have less than 70 square feet. Where more than two persons occupy a room used for sleeping purposes, the required floor area shall be increased at the rate of 50 square feet for each occupant in excess of two. Nothing in this section shall prohibit the use of an efficiency living unit within an apartment house … having a living room of not less than 220 square feet of superficial floor area. An additional 100 square feet of superficial floor area shall be provided for each occupant of such unit in excess of two. (1994 Uniform Housing Code, page 7)
Being more restrictive than the Uniform Building Code, for example limiting occupancy to one person per bedroom, may result in a violation of the Fair Housing Act.
- Check the tenant’s references. Contacting the previous landlord will often give a good idea of what kind of tenant the applicant has been. Keep in mind, though, many tenants move out of a property because of personality conflicts with the landlord. This conflict may be the fault of neither party, but undoubtedly each will blame the other. Therefore, the previous landlord may not give an objective evaluation of the former tenant. Consulting more than one previous landlord is a good way to avoid getting a biased opinion. The right questions will also help in keeping the landlord focused on the appropriate information. Here are some samples:
- How many times was the rent late? How late?
- Did the tenant damage the property? Was the deposit returned?
- Did the tenant disturb the neighbors? If so, were the tenants ever notified of the complaints?
- Why did the tenants leave? Would you rent to them again?
Past behavior is one of the best indicators of future behavior. A tenant who has repeatedly failed to pay the rent on time in the past will likely do the same again, and someone who has paid the rent on time will likely continue to do so. However, there are often extenuating circumstances, such as temporary loss of income which may cause a tenant to struggle for several months to get back on their feet. Consider the effort the applicant put forth to pay the rent, and whether the applicant moved out owing any money.
The landlord can also review the applicant’s credit record. Checking the applicant’s payment history may show an ability to budget money and make necessary payments. However, a credit report does not always give an accurate representation of the financial stability of a tenant. Again, temporary loss of income, perhaps because of unemployment, illness, or divorce may result in bad debts turned in to credit reporting agencies without the person intentionally defaulting on these debts.
Although using other credit information is allowed, the most important indicator of whether a tenant will pay rent and take care of the property is not whether a car payment or credit card payment was made on time, but whether the applicant considered housing to be the top priority and made rent or house payments on time. Many otherwise valuable tenants are denied decent housing because of overly stringent credit criteria.
Match the applicant’s information against the criteria that have been established. The first applicant who meets them should be offered the unit, thus making the process complete! It may be helpful to make a list of second and third choice applicants in case the first applicant does not accept the unit.
Specific questions about a rental practice may be answered by contacting the Austin Tenants’ Council. Careful consideration and sensitivity in advertising and selection will prevent subtle forms of discrimination and protect both the landlord and the tenant. The landlord benefits from getting a responsible tenant, and everybody benefits by having the right to safe, decent housing regardless of race, color, religion, sex, disability, familial status, or national origin. This is the true meaning of fair housing.
The information in this brochure is a summary of the subject and other pertinent matters. It should not be considered conclusive or a substitute for legal advice. Unique facts can render broad statements inapplicable. Anyone needing legal assistance should contact an attorney.