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Best practices for screening tenants - know the law

Every landlord wants to protect their property and ensure that they select the most responsible tenant for their lease. A background check, reference checks, and income verification are pivotal in performing due diligence to avoid risk.

Keeping in mind that the vast majority of tenants are amazing, it only takes one bad experience to have a drastic impact financially and your mental well-being.

The recommended practice is to screen a tenant prior to offering them the lease to your property.  However; there are laws around screening and info collection that some landlords are unaware of. Here are the big three you should know about:

  1. Charging a viewing fee to a prospective tenant prior to showing them the property is against code in many states and/or provinces. Fee-based tenant screening (background check/credit pull) should be done after the prospective tenant has either been shown the property or when they agree to apply for the lease. If they want to see the property before applying, they should be able to do so. Many landlords have added 3-D tours to their listings if showing in-person isn't a viable option. 
  2. Be mindful of your data collection processes. If you are asking for Social Security/SIN over non-secure email or text, you could be liable if your device is hacked or a data leak occurs. The best protection on this liability is to not ask for that sensitive info -OR- only collect data in a secure, encrypted system. (Like Naborly!)
  3. You should not be storing prospective tenants’ application data for more than 30 days if they do not become your tenant or withdraw their application prior to your decision. It is your legal obligation to ensure that you do not store sensitive data indefinitely on individuals you don’t do business with. If you have personal data on applicants from a year ago, we suggest you clean up your laptop and purge the data you don’t have a legitimate interest in! (or just sign up for Naborly, where access to data is controlled and secure)

All of the above are why it is such a good idea to leverage a digital application and screening service like Naborly. With our service, you get the peace-of-mind of data encryption, storage, and deletion ON TOP OF the tenant risk report we provide to you,.

We want to partner with Landlords to find the best tenant, while also ensuring that you don’t have to worry about complying with data collection and protection laws in your day-to-day.

If you want to learn more about what you need to know when using credit and background checks and collecting/storing personal information, visit the FTC site (US Landlords) and the FCAC and Consumer Reporting Act (Canadian Landlords) to learn about all of your obligations.

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