Rental Application Process
The rental application process is a progressive series of business practices that collectively assess an applicant’s potential risk of lease default. The process provides opportunity for discussion and disclosure of important rental policies and rental standards that may affect a potential tenant’s decision to submit an application, subsequent qualification to standards, and potentially an offer of tenancy.
Many landlords include the various business practices leading up to an offer of tenancy as part of their rental application process. These practices can include the application, applicant interview, tenant screenings, verification practices, analysis and evaluation of applicant qualifications, and tenant selection. Each of these business practices is a detailed, specific set of procedures according to subject matter and the landlord’s business requirements. The following discussion is part of a series of articles addressing each business practice within a rental application process.
Application Packet
To aid an informed decision by the interested prospect on whether to apply for tenancy, some landlords provide an application packet containing information about the property, important rental policies, qualification criteria, the application form, and instructions for completing the form. Understanding what is required by terms of the lease agreement, and what deposits and fees are due at lease signing may be a determining factor in a prospect’s decision to apply for tenancy at the rental community of his choice.
Information regarding rental policies and practices as provided in the packet must be compliant with applicable laws and in agreement with clauses contained in the lease agreement. Providing a detailed application packet to prospective applicants has numerous benefits, including:
- Allowing prospects to self-evaluate their ability to qualify to rental standards in order to move forward in the application process or choose to continue their search elsewhere for rental properties. This can reduce the number of unqualified applicants.
- Providing notice and disclosures required for legal compliances.
- Providing notice and disclosure to prospects of important rental policies and procedures.
- Hard copy documentation helps to reduce a prospect’s misunderstanding policies and practices.
As an example, information in the application packet may include:
General information
- Welcome letter to greet prospective applicants and set the tone for tenancy
- Contact information for the rental office (manager name, telephone number, email address, website address)
- List of property amenities and rental services available to residents
- Fair Housing Compliance Statement
Terms and Conditions:
- Important rental policies and practices
- Lease Agreement
- Lease Terms
- Deposits and Fees
- Rents
- Occupancy
- Use of premises
- Guest Policy
- Pets
- Utilities
- Renters Insurance
Qualification Criteria*
- A non-refundable application fee of $XX is due at application submission.
- Every adult who will live in the rental unit must complete an application and consent to tenant screening.
- A current photo identification document is required from each adult applicant, such as a driver’s license, passport, military identification card, state identification card, or acceptable equivalent document.
- Social Security number or Individual Taxpayer’s ID number as required for consumer background reports.
- Employment verification(s) will be conducted.
- Income must be sufficient to meet gross monthly income to rent ratio.
- Credit Check will be conducted.
- Background Check will be conducted.
- Rental Housing history from the previous three years is required, including rental address, landlord name and contact information.
- Landlord References will be contacted for verifications of rental history.
- Financial accounts information may be verified.
- Signed Consent for Authorization and Use of Personal Information for tenant screenings and verifications.
Note: The following rents, deposits, and fees are due at lease signing:
- First month rent,
- Security deposit and any fees or deposits allowed by state law and required by lease terms and conditions, and
- Pet deposit, pet fee and monthly pet rent surcharge if applicable.
Tenant is required to execute the lease agreement within XX hours after being notified of selection and offer of tenancy.
*As applicable by laws, statutes, and ordinances regarding landlord-tenant matters, consumer reports, fair housing, and consumer protections.
Instructions for completing Application Form
Only complete applications will be accepted, Failure to provide requested information and/or providing false and misleading information will be grounds for rejection of the application. If information cannot be verified for any reason, the application will be rejected.
If the form asks for information that is not applicable, the applicant should mark the line item as N/A before moving on to the next field. Applications will be processed in a timely manner in the order they are received.
By signing the application form, the applicant attests that all information provided by the applicant on the application form is truthful to the best of the applicant’s knowledge. Applicant further acknowledges that discovery of materially false information at any time during the tenancy will result in termination of tenancy.
Landlord Use of Application Form
The application form is the document that begins the rental application process. It is the primary data collection document to obtain a variety of relevant information to adequately screen applicants for tenancy. The application form is the most efficient way to collect and organize applicant information in a standardized, consistent format.
A prospect’s decision to submit an application is a voluntary action expressing his interest in becoming a tenant. An application is not a lease contract and therefore is non-binding on a landlord and an applicant. A landlord is not obligated to offer tenancy to an applicant upon submission of application nor is an applicant obligated to accept a landlord’s offer of tenancy during the application process.
A landlord’s arbitrary decisions to accept or refuse to accept an application could result in claims of discrimination. Accordingly, a best business practice is to accept all applications submitted and process the applications according to the landlord’s stated rental policies and practices.
The information requested on the application form must be business related to the qualification of an applicant for rental housing. As a general rule, a landlord can request any information that would objectively point to the applicant’s ability to pay timely rent and comply with lease terms and conditions. A standard application collects information such as the applicant’s legal name, current address, contact information, email address, Social Security number, state driver’s license information, employment history, income, rental history, and rental references. Applicant information is used to conduct employment verifications, income verifications, credit checks, background checks, verifications of previous rental housing, and landlord references interviews. A landlord should research applicable laws regarding the disclosure of Social Security or other personally identifying tax identification numbers for tenant screening use.
The same information should be required of all applicants by utilizing a standardized form. A landlord uses this information to conduct the same screenings and verifications of all applicants which prevents selectivity and preferential treatment of one applicant over another.
The application or an attachment to the application may contain required landlord notifications and disclosures by applicable laws, statutes and local ordinances. Disclosures could include the landlord’s policy and practices for tenant screening and qualification criteria, standard rental policies, fees and deposits, utility responsibilities, or other property disclosures required by law.
There are state statutes and local ordinances that may limit, restrict, or prohibit certain tenant screenings at time of application or during the screening and selection process. A landlord will need to research current laws applicable to the state or city/county governing his rental property location to develop legally compliant screening practices and, accordingly, associated rental documents for qualification and screening.
A landlord has the obligation and duty to safeguard the information collected on the application form and the screening reports and to use the information for permissible purposes. If the applicant declines to provide his personal information, a landlord may reject the application on the basis that the applicant did not meet rental criteria.
For liability protections and to further manage risk, a landlord should reserve a section on the application for management use only. This section can contain the date and time the application was received, the property address, the rent amount quoted, deposits and fees quoted, receipt of deposits and fees paid at time of application, unit availability date, and requested move-in date. With the applicant’s signature on the application, the document serves as confirmation of oral discussions of rental issues at time of application or during a prior meeting. A landlord should not leave himself vulnerable to a misunderstanding of terms and conditions of tenancy or rely upon the memory of either party as to details of any discussion of move-in requirements.
In a few jurisdictions a landlord is required to accept the first qualified applicant following a specified notification period. It is considered a better business practice for a landlord to select the first qualified applicant rather than the most qualified applicant in order to reduce the risk of a discrimination claim. Showing proof of date and time of application is a first in time practice that provides some protection from claims of discriminatory treatment.
The application form is a risk assessment tool to collect relevant information about an applicant within the parameters of permissible purpose, business necessity, and legal rights. The application process properly conducted and documented can reduce the risk of claims of discrimination in screening and selection of applicants.