The rental application is one of many tenant screening tools to assess potential risk of lease default by an applicant. Risk assessment is an essential management practice in making an informed business decision to offer tenancy. A rental application is the most efficient means to gather preliminary information about a prospective tenant to begin the process of qualifying the applicant to rental standards.

Information requested on the application form should be relevant to business necessity. In screening an applicant for rental housing, with permissible purpose and under legal compliances, 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.

While the submitted application is an expression of the applicant’s interest in becoming a tenant, the application is non-binding on either landlord or applicant. A landlord is not obligated to offer tenancy to an applicant upon receipt of application nor is an applicant obligated to accept a landlord’s offer of tenancy during the application process. The application form is a source document to begin the process of filling a vacancy by qualifying rental applicants.

A well-developed application form makes it easier for the applicant to furnish information in an organized manner which in turn makes it easier for a landlord to analyze and evaluate applicant information for potential business risk.

The application form, customized to the landlord’s business operations, and vetted for legal compliance, must be used for every applicant. An application form provides a format to gather information and build an applicant profile. Whatever questions are asked on an application must be the questions asked of every applicant. There can be no selectivity or preferential treatment of one applicant over another applicant. The tenant screening process should be conducted in a non-discriminatory manner and in accordance with applicable laws.

There have been recent legislative actions by some states, cities and counties that have impacted tenant screening policies and practices. In those jurisdictions there are now 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.

Noting the above disclaimer for compliance with applicable regulations and requirements, most rental applications have a standardized format to capture and organize applicant information into categories.

An application requests basic information about the applicant, such as legal name, current address, cell phone number, email address, and identification verification information such as Social Security number and/or state driver’s license information. A landlord should research applicable laws regarding the disclosure of identification numbers and their use for tenant screening. A tenant screening services provider can provide information on what type of applicant information is required for submission to process tenant screening reports.

Other requested information on an application can include categories such as: rental history over the past 3-5 years with landlord name, contact information, and dates of tenancy; employment history including name of employer, contact information and verification of employment document; proof of income; financial accounts and balances; loan and installment contract obligations; rental references; personal references, designated emergency contact name and contact information; and applicant authorization and consent to obtain consumer reports, such as credit reports and background checks.

Note that when landlords use consumer reports to aid in tenant decisions such as applicant screenings, the federal Fair Credit Reporting Act (FCRA) obligates the landlord to certain regulated practices to ensure FCRA compliance for the protection, privacy, and accuracy of consumer personal information. This may include a separate notice and disclosure requirement for applicant authorization and consent per FCRA requirements. Due diligence by a landlord is required to determine what is needed to ensure compliance.

As the landlord conducts the review and analysis of application information, there is often the need to ask the applicant for additional information or to clarify information supplied on his application form. A landlord must be knowledgeable of fair housing laws to understand what questions are permissible and what questions are not. Questions that violate the rights of protected classes are illegal. Questions, even those asked in friendly conversation, may not stray into issues that are legally protected rights of applicants and tenants. Federal Fair Housing laws prohibit discrimination against the protected classes of race, religion, national origin, sex, color, familial status, or disability. State and local fair housing laws may have additional protected classes and thus be more stringent than federal law.

The application or an attachment to the application may also contain required landlord disclosures by state statute or local ordinance. Disclosures could be 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.

The application form should also state that failure to provide all items of information requested or providing incomplete or inaccurate information are in themselves grounds for rejecting the application.

An important item on the application form is the signature line.The applicant’s signature on the application attests that all information provided by the applicant on the application form is truthful to the best of the applicant’s knowledge.

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 regarding issues discussed 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. Additionally 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 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 information collected from an applicant imposes responsibility on the landlord not only to use the information in accordance with all laws, but to also safeguard that information throughout the term of the tenancy and the required retention period following tenancy. At expiration of the required retention period or other applicable statutory requirements, the landlord must properly dispose of tenant records containing personally identifying information in a compliant manner as addressed by statute.

The value of the application form as a risk assessment tool may be overlooked in the filling vacancy process. Rather than rush through this initial screening, a landlord should carefully analyze the applicant’s information and as required, investigate further if red flag issues are discovered. The value of the application is also dependent upon the landlord’s due diligence and incorporation of laws into compliant rental policies, and practices. The application process properly conducted and documented can reduce the risk of claims of discrimination in the screening and selection of applicants. The signed rental application and the tenant screening results support the landlord’s decision to offer tenancy to the selected applicant.

You should first understand the issue before taking an action. Can you verify by independent means or firsthand observation that the tenant has moved in a permanent guest? As example, has the guest conducted himself as a tenant, i.e., receiving mail at the rental address, moved personal property into the unit, or keep a regular schedule of daily activity at the property? Do the neighboring tenants consider the guest a tenant?

A landlord has an obligation to protect the safety and privacy of all tenants. A guest policy helps to protect the rights of the other tenants and prevent unwelcome or unwanted stays by guests. Accordingly, a landlord has the right to set rules on guest visits to the rental property and set limits on overnight stays.

Tenants have the right to quiet enjoyment of the rental property including the right to have guests stay overnight or for short periods of time. However, a landlord should require a tenant to obtain prior approval of an extended stay by a guest as part of lease terms and conditions.

By asking the tenant for his explanation of the current situation, and reviewing information obtained from the investigation, you can determine the appropriate action to take. It is possible that the tenant misunderstood the terms and conditions of the lease agreement regarding guest stay.

Your discussion with the tenant should include a restatement of lease terms and conditions for occupancy use and limits, guest stay policy, and the legal remedies to cure a lease violation. As appropriate to the circumstances, your discussion of the issue could serve as a warning to the tenant to correct the situation. Follow-up will be necessary to confirm that the tenant has complied with warning/request to remove the guest from permanent stay at the rental unit.

You could require the guest who has exceeded guest policy stay to submit an application for tenancy if the tenant and guest both want to continue occupancy of the unit. You will follow your standard rental policies for tenant screenings to qualify the guest for approval for tenancy.

With the current declared public health emergency, it is also possible the guest is there temporarily to provide help to the tenant for health and safety reasons. If there are extenuating circumstances, the tenant may request a reasonable accommodation of your policy for extended guest stay. You must comply with applicable fair housing laws regarding reasonable accommodation requests.

Alternatively, and as appropriate to the situation, you could serve the tenant with a notice to cure or quit. If the problem is not cured by compliance with the lease agreement (i.e., removing unauthorized occupants) or vacating within the number of days specified in the notice, you could terminate the lease agreement and file an unlawful detainer action. If the tenancy is a month-to-month agreement, you could serve the tenant with the appropriate written notice for termination of tenancy.

If a tenant stays past the lease expiration date, the tenant has held over. Your state or city may address the issue of a tenant holding over by statute or ordinance. If so, you will be governed by what the statute or ordinance says. Your lease may have a clause that addresses holdover and appropriate measures that can be taken to remedy the situation and if not add such a clause. If the lease clause is compliant with applicable laws, the lease is the defining document that governs the issue. You should review your lease for what you and the tenant signed for terms and conditions.

In general, for most states, if a tenant stays past lease expiration date but pays rent which the landlord accepts, the offer and acceptance of rent creates a new oral month-to-month lease between landlord and tenant on the terms set out in the expired lease agreement. You will not be able to change rental terms and conditions without giving the tenant proper notice as required by law, usually 30 days. You could belatedly draw a new lease to present to the tenant. If the tenant does not choose to accept the offer, the month-to-month agreement will continue under the old lease terms until you deliver a notice of termination to the tenant according to the requirements of your state.

However in some states it may be that you and the tenant have created a new lease with the same terms and conditions that were in the old lease. In that case you have automatically renewed the lease. You and the tenant will be bound to the new lease for the duration of the lease term.

A risk mitigation fee is a fee paid by a rental applicant to the landlord as a requirement for conditional approval for tenancy. The risk management fee is nonrefundable and is in addition to the landlord’s required security deposit fee.

A landlord may be willing to rent with conditions to an applicant who does not fully qualify to rental standards. There could be many reasons that a landlord might require the applicant to pay an additional fee in order to be approved for a rental unit. Some of these reasons could include: the applicant is a first time renter; has a low credit score; has a negative rent payment history; owes back rent to a previous landlord; has a record of missed, late, or past due utility payments; has filed bankruptcy; has provided information on the application that cannot be fully verified; or has some other negative public report that has potential to cause financial harm to the landlord if the applicant/tenant would default on his lease. With the provision of a risk mitigation fee as guarantee, the landlord is willing to take the risk of a future default.

A risk management fee may apply to an individual applicant or could be assessed as household fee for all occupants. The fee amount can vary per landlord to landlord according to stated rental policies, terms and conditions. The fee is usually based upon the nature of a negative event and the potential financial risk to the landlord, and typically could range from less than one hundred dollars to several hundred dollars. The use of this fee should be carefully researched regarding applicable state laws and local ordinances to determine if it is allowed by law and the applicable requirements for its administration and disclosure.

Landlords set their rents, fees and deposits in accordance with applicable state statutes, local ordinances and business necessity. In jurisdictions not governed by rent control or rent stabilization regulations, landlords may set any rent amount they choose taking into account what the local rental market will bear. In practice, landlords are advised to set rents that are market competitive. While landlord operating costs influence rent rates, the local rental market determines competitive rents.

Market Rent

Market rent refers to the amount of rent a comparable unit in the same local area would rent for. Market rent is a factor of supply and demand conditions in the neighborhood area for similar properties for location, size, physical condition, amenities and services. Rent amounts are influenced by how much tenants are willing and able to pay for comparable units.

Setting the correct rent for a property can mean the difference between an extended vacancy and a rapid installation of a good tenant. Conducting a market survey to determine current rental rates under existing conditions can help a landlord determine if his rents are competitive. Market research will help determine what rate of increase will keep good tenants and provide satisfactory cash flow for business operations.

Setting the rent much above the market rent has a number of implications. There may be fewer applicants that respond to advertising efforts. For many tenants, a rent that is a small percentage above market rent will eliminate that unit from their consideration. Fewer applicants mean a reduced pool of screened prospects from which to select a tenant. To fill the vacancy a landlord may need to modify his rental standards or accept the possibility of an extended vacancy period.

Lower than market rent could mean reduced cash flow, perhaps a negative cash flow. However a slightly lower than market rent could also result in filling a vacancy sooner, which can offset reduced monthly revenue over the term  of the lease.

Rent Control/Rent Stabilization

Rents may be controlled by governmental regulations, such as rent control or rent stabilization. Briefly, rent control limits a landlord’s ability to freely set and increase rents for his properties. Rent stabilization regulates the rental amount by only allowing rents to increase by a maximum specified percentage annually.

Fees and Deposits

The following list of fees and deposits is representative of some of the more common fees and deposits charged by landlords. Landlords should thoroughly research applicable state statutes and local ordinances regarding fees and deposits before setting rental policies. It may be a good idea to seek legal consultation regarding rental policies if unsure about whether or not your lease agreement is in compliance with all current legal requirements at all levels of government.

Application Fees

Application fees are required by many landlords to cover the cost of tenant screenings for credit and background checks. Landlord-tenant statutes of each state may address the issue of application fees differently. Some states set a maximum fee amount while other states limit the fee amount to actual out of pocket costs as charged by the tenant screening services provider with a provision for a reasonable amount for landlord labor to evaluate and verify applicant data. In a few states there is no stated limit regarding application fees. Application fees are paid at the time of application submission and are generally nonrefundable.

Some landlords may require an application deposit in addition to an application fee.

Administrative Fees

In some states administrative fees are illegal. If not prohibited by law, administrative fees may be charged in addition to an application fee. The administrative fee is usually associated with large rental communities managed by a professional property management company.

Application Deposit

An application deposit is also known as a holding deposit. An application deposit is a deposit paid to the landlord by the applicant at time of application to request the landlord hold the rental unit for the applicant until the processing of his application has been completed. The prospective tenant is giving his good faith assurance to the landlord that he, the tenant, is serious in his interest in the unit and intends to sign the lease upon his approval as a tenant. When the landlord holds the rental unit for an applicant, the unit is taken off the market and unavailable to other qualified prospective tenants who may have to be turned away. The holding deposit is meant to compensate the landlord for damages suffered as a result of withholding the unit from the rental market in the event that the applicant fails to meet screening qualifications or rescinds his agreement to rent the unit.

An application deposit is not a security deposit. At the time of application there is no signed lease agreement between a landlord and prospective tenant. Since the applicant is not a tenant the state’s security deposit rules are not applicable.

Security Deposit

All states allow a landlord to collect a security deposit when the tenant moves in and to hold the deposit until the tenant moves out. Security deposits are funds that legally belong to the tenant and remain a credit of the tenant during the tenancy. A landlord is legally accountable to the tenant for use of the security deposit funds.

State landlord-tenant statutes regulate security deposit limits, deadlines for itemization and return of security deposits, and disclosure requirements regarding certain issues. The statutes provide clear protections to tenants for the use of their security deposit funds and the return of deposits upon tenant move-out.

Deposit disclosure requirements must usually be in writing. Common disclosures require the landlord to disclose the conditions under which part or all of the security deposit may be withheld and how the deposit is refundable. A landlord may be required to provide a written list of preexisting damage to the rental unit, a copy of inspection orders for the unit or a list of habitability defects before collecting a security deposit. In most states landlords that require a security deposit must utilize a move-in/move-out property inspection checklist to document the condition of the rental unit at time of tenant move-in and upon tenant move-out.

In states that require a separate account for holding a security deposit, a landlord is required to disclose the account number, amount on deposit, interest rate, and name and address of the financial institution.

The purpose of a security deposit is to protect the landlord from damage caused by a tenant. Specifically a landlord may only recover funds from a tenant’s security deposit if the tenant has defaulted on his obligation to pay rent (tenant owes past due rents) and/or the tenant has caused physical damage to the property that is beyond normal wear and tear allowed by statute.

Move-in Fees

A landlord may choose to collect a move-in fee for necessary services to prepare the rental unit for a new tenant. A move-in fee is a specified dollar amount that is not refundable to the tenant. A move-in fee is money that is paid directly to the landlord and is immediately available to the landlord to administer the funds as the landlord chooses.

Pet Fees, Deposits, Rents

A landlord may require that tenants with pets to pay a pet deposit, and a one-time nonrefundable pet fee at lease signing. Some landlords may require a monthly pet rent which is added to the tenant’s monthly rental amount.

Late Rent Fees

Late fees for past due rent are charged by a landlord to provide incentive to tenants to pay timely rents. The issues of late fees and related statutory grace period for rent payments are addressed by many state statutes. The landlord’s lease agreement must provide the details for late fee amounts, when the late fee applies, and any other applicable terms and conditions.

Utilities Fees

For rental units that do not have separately metered utilities, a landlord may charge a monthly fee to the tenant for utility use, such as water, sewer, trash, or cable service.

Amenity Fees

Some landlords may charge an amenity fee for tenant use of property amenities such as laundry facilities, gym/fitness center, or swimming pool. In some states a landlord is prohibited from charging an amenity fee. If applicable, the landlord’s lease agreement should clearly disclose terms and conditions for use of property amenities.

Miscellaneous Fees

There can be a variety of add-on fees that may be charged to a tenant for optional services or as additional requested services outside of landlord provided services. Add-on fees could include parking registrations, permits and monthly fees, storage units or lockers for tenant personal use, lock-out charges, key replacements or additional keys, replacement of lost gate or pool keys or openers, carpet cleaning fee, or bulk trash removal.

There are many other fees and deposits that landlords may use in their property management operations that are specific to their unique properties and the local rental market.

Note that the information discussed above is not nor intended to constitute legal advice. Information presented is deemed current as of this writing but is not all inclusive of all rents, fees and deposit requirements or regulations by state or local laws. Landlords should conduct their own due diligence to research applicable laws and implement fully compliant policies and practices.

Traditional property management practices screen rental applicants to evaluate potential financial risk to business operations. Of primary importance is an applicant’s potential risk of rent default, evaluated on a history of the applicant’s management of financial obligations and a current, stable source of income. If there is potential business risk of rent default, but the landlord is willing and able to accept such a risk with conditions, a landlord may extend a conditional acceptance and offer of tenancy to the applicant. The conditional offer requires the applicant to provide a qualified cosigner.

With a conditional offer, approval of the applicant as the new tenant is contingent upon the cosigner being financially qualified and fully screened to the landlord’s rental standards. If the potential cosigner cannot qualify to required standards, the conditional offer of acceptance would be withdrawn since the contingency could not be met.

While landlord and applicant may agree that a cosigner will be used as security for the tenancy, the applicant has the responsibility to provide the qualified cosigner. The landlord’s decision to accept the cosigner satisfies the contingency requirements and the offer is complete.

A qualified cosigner must be willing to serve as the financial guarantor for the prospective tenant. Most importantly, a cosigner must have a thorough understanding of the legal responsibilities that are required of a cosigner before signing the cosigner agreement.

The proposed cosigner should carefully consider and thoroughly evaluate certain issues before agreeing to act as a cosigner for the prospective tenant. A cosigner is usually a family member or friend with a close personal relationship to the applicant who is willing to help the applicant get approved for tenancy. The personal relationship of trust between cosigner and applicant can be a motivator for the applicant to act responsibly in fulfilling rent obligations and lease terms and conditions so as not to take advantage of his friend or relative.

Lease default by the applicant once installed as a tenant has serious consequences for the tenant and his cosigner. When the lease agreement is signed by the new tenant, the cosigner is likewise committed to fulfill his cosigner obligations for the length of the lease term. A cosigner remains financially responsible for the entire term of the tenant’s lease agreement and is not released from his financial obligation until all lease terms and conditions have been met.

It is possible the cosigner will never have to fulfill his financial commitment if everything goes according to plan. However, if the tenant defaults, e.g., pays rent late, fails to pay rent, or defaults on any material condition of the lease, the landlord can go directly to the cosigner to collect what is due according to terms of the lease agreement. If both tenant and cosigner default on their obligations, the landlord can file a lawsuit against both parties to collect unpaid rents and damages.

The cosigner agreement should designate the tenant as the cosigner’s “agent for service of process” and also state that the cosigner or guarantor is not entitled to service of any notices that might be served on the tenant or have any other rights of a tenant. By doing this, the landlord need only serve notices or lawsuit complaints on the tenant and does not have to personally serve notices or complaints on the cosigner. It will be easier to serve the tenant and have the tenant notify the cosigner about notices and complaints filed on the tenant. Failure of the tenant to notify his cosigner will allow the landlord to obtain a default judgment against the cosigner.

Subject to state law, lease agreements should always contain clauses prohibiting subletting or assignment of the rental premises without the landlord’s written permission. Cosigners should always be held responsible by the lease agreement and the cosigner agreement if the tenant is permitted to sublet or assign his leased premises during the term of the guaranty.

When there are multiple tenants, cosigners should, when possible, be made jointly and severally liable for the lease rather than only for obligations of the co-tenant who was required to provide a cosigner. A landlord is most likely to collect from the tenant who is best financially qualified and/or the one who is easiest to serve with a lawsuit if some of the co-tenants cannot be located.

An adequate cosigner agreement is most often a separate document that is attached to the lease agreement. The cosigner agreement should reference the named lease agreement, including identification of the rental premises, all parties to the agreement, and date of execution. It is best to require a cosigner who lives in the same state as the rental property in order to avoid having to collect a judgment in another state.

Having a formal, written cosigner agreement is important to emphasize the legal obligations of both cosigner and tenant and what the consequences will be if the tenant defaults. A cosigner should be sure to read and understand the lease agreement and the cosigner agreement before signing the documents. By his signature the cosigner acknowledges his understanding of the lease agreement, the lease terms and conditions, and accepts responsibility for fulfillment of the lease including payment of rents, fees, deposits, other related charges and damages.

If the lease agreement is amended, renewed, or otherwise modified, it is advisable to require the cosigner to sign a new cosigner agreement containing lease modifications.

The language in the cosigner agreement should make it clear that:

• The cosigner will not reside in the rental unit. The cosigner is only providing a financial guarantee and has no rights to tenancy or other type of occupancy.
• The cosigner agrees to the landlord’s standard rental lease terms and conditions. In addition the cosigner agrees to submit a rental application, submit to the standard tenant screenings, and qualify to rental standards. Standard application and processing fees are required at time of application.
• The cosigner is jointly and severally responsible with the tenant for any and all financial obligations of the tenant under the lease agreement including but not limited to rent, late charges, deposits, fees, or other charges as a result of damage to the rental property, and the full amount of any reasonable legal fees and other fee as applicable by statute and lease agreement for enforcement of any lease terms and conditions as required due to tenant’s default.
• The cosigner acknowledges that the landlord has no obligation to give notice to the cosigner if tenant defaults.
• The cosigner agrees to appoint the tenant as the cosigner’s agent for service of process in the event of any lawsuit that might arise from the lease agreement, releasing the landlord from any obligation to separately serve the cosigner directly.
• The cosigner acknowledges the landlord may demand that the cosigner perform per the cosigner agreement in the event of tenant default without first using any of tenant’s security or other deposits.
• The cosigner shall remain liable for the performance of any assignee or sub-lessee of the tenant unless expressly relieved by written termination of this condition by the landlord.
• The prevailing party of any legal action brought by either party to enforce any part of the agreement will recover reasonable attorney fees, court costs, and other expenses associated with collection of a judgment.

While the use of a cosigner is a reasonable and adequate risk management tool in appropriate circumstances, the acceptance of financial responsibility by the cosigner may not guarantee the tenant will actually perform to his obligations. The threat of eviction is often a stronger motivation for the tenant to pay the rent and otherwise abide by the lease agreement. A tenant may be likely to default on his lease when he knows someone else will be made responsible for it. The tenant may be willing to risk the disapproval of the cosigner, even if the cosigner is a parent, rather than meet his rental obligations.

However, there can be significant psychological benefits to having a cosigner. The cosigner is most often a close relative and the tenant will usually wish to avoid having the cosigner notified about defaults, let alone be sued because of the tenant’s failure to pay the rent or other lease defaults. If the agreement is properly written, the landlord can go directly to the cosigner for unpaid rents or reimbursement for damages without having previously notified the cosigner that there were problems. The cosigner, despite his disappointment with the tenant’s default, will almost certainly pressure the tenant to perform as required under the lease.

With one major exception, a landlord has no obligation to offer conditional approval for tenancy contingent upon acceptance of a qualified cosigner. Under federal fair housing law, landlords must consider cosigners when an otherwise qualified disabled applicant having insufficient income to qualify on his/her own requests the use of a cosigner who is willing to pay the rent if needed. If the proposed cosigner is solvent and stable, federal law requires landlords to accept the applicant regardless of the landlord’s policy regarding cosigner qualifications.

As of this writing, source of income is not a protected class under the federal Fair Housing Act. However, in some states, cities, and counties, source of income is a protected class. In these jurisdictions housing providers cannot reject an applicant based on where his income comes from as long as the income is from a lawful source. Housing providers covered by fair housing laws need to research state, city, and county regulations applicable to property location to determine fair housing compliance.

State, city, and county laws prohibit housing discrimination against lawful sources of income such as:

• Section 8 Housing Choice Vouchers
• Supplemental Security Income
• Social Security benefits
• Veterans benefits
• Alimony
• Child support payments

• Temporary Assistance for Needy Families

Housing providers should research applicable laws for their property locations. A housing provider should review his rental policies for potentially discriminatory policies that: require a job; require pay stubs for employment verifications; express restrictions or limitations on source of income in advertising a vacancy; or set different terms and conditions for tenancy based upon source of income or benefits.

Depending upon the circumstances it may be advisable to seek legal advice on how to proceed. You may wish to also research HUD guidance FHEO-2020-01, the “Assistance Animal Notice” that clarifies how housing providers can comply with the Fair Housing Act (FHA) when assessing a person’s request to have an animal in housing to provide assistance because of disability. The guidance provides best practices for housing providers regarding analysis and assessment of reasonable accommodations.

Part II of the guidance is the analysis of reasonable accommodation requests under the Fair Housing Act (FHA) for assistance animals. A resident may request a reasonable accommodation, oral or written, either before or after acquiring the assistance animal. An accommodation also may be requested after a housing provider seeks to terminate the resident’s lease or tenancy because of the animal’s presence, although such timing may create an inference against good faith on the part of the person seeking a reasonable accommodation. However, under the FHA, a person with a disability may make a reasonable accommodation request at any time, and the housing provider must consider the reasonable accommodation request even if the resident made the request after bringing the animal into the housing.

Best practices include this analysis: “Has the individual requested a reasonable accommodation — that is, asked to get or keep an animal in connection with a physical or mental impairment or disability?” If there has been no request for reasonable accommodation, the housing provider is not required to grant a reasonable accommodation that has not been requested. If a reasonable accommodation has been requested, the guidance provides best practice questions to assess whether to grant the requested accommodation such as:

• Does the person have an observable disability or does the housing provider already have information giving them reason to believe that the person has a disability?
• Has the person requesting the accommodation provided information which reasonably supports that the animal does work, performs tasks, provides assistance, and/or provides therapeutic emotional support with respect to the individual’s disability?
• Is the animal commonly kept in households?

If these questions can be answered “yes”, the reasonable accommodation should be provided under the FHA.

A housing provider, at its discretion, may make the truth and accuracy of information provided during the process part of the representations made by the tenant under a lease or similar housing agreement to the extent that the lease or agreement requires the truth and accuracy of other material information.

Before denying a reasonable accommodation request due to lack of information confirming an individual’s disability or disability-related need for an animal, the housing provider is encouraged to engage in an inter-active, good-faith dialogue with the requestor. The housing provider may not insist on specific types of evidence if the information which is provided or actually known to the housing provider meets the requirements of this guidance. Disclosure of details about the diagnosis or severity of a disability or medical records or a medical examination cannot be required.

Utilizing a property management company can be advantageous for an owner particularly in managing the everyday details in property operations. Keep in mind however that the use of a property management company does not eliminate owner liabilities related to business ownership and operation. The property management company will be the owner’s legal agent who essentially controls the rental investment through their representation with tenants and regulatory agencies, enforcement of rental policies, and handling of rents and deposits. The owner is liable for all acts performed by the owner’s agent in exercise of the authority given the agent by the owner.

You may want start your search by asking other investors/owners who use property management companies if they are satisfied with their current management company and would provide a referral. You could also ask them if their tenants have been satisfied with the customer service provided by the management company.

Before conducting interviews with prospective management companies, you may want to make a list of property management duties important to your business operations. Effective property management must address many issues through compliances, policies and practices in areas such as:

• Legal requirements – up-to-date knowledge of applicable federal, state, and local laws including landlord-tenant statutes and fair housing laws; compliant rental forms, policies, and practices; and laws related to classification of workers
• Market research – analysis of local rental market data, trends, and rents; comparison of property features, rents, and amenities to market competition; setting an optimal rent range for the property.
• Marketing – marketing the property in local rental markets to increase exposure and branding opportunities and tracking advertising results to determine the most effective methods to attract applicant pools.
• Filling vacancies – maintaining rent ready condition of vacant units; prompt response to prospective applicants’ inquiries; open house showings, accepting rent applications; collection of application deposits; screening of applicants including background checks on applicant credit history, rental history, public records, and criminal conviction history as allowed by state statutes; verifications of applicant identity, income, and employment status; analysis and evaluation of screened applicants; recommendation for tenancy; required legal disclosures to an applicant before the move-in date.
• Tenant move-in – new tenant orientation session; collection of security deposit and other fees; lease signing, unit inspection and move-in checklist, delivery of keys.
• Tenant move-out – unit inspection and move-out checklist documenting condition of unit, security deposit accounting and return, return of keys from tenant.
• Tenant customer service – prompt response to tenant inquiries, requests, complaints, problems and maintenance issues.
• Rents – rent roll, collection of rents, assessment of late fees, pay or quit notices as required.
• Property inspections – annual property inspection; periodic health and safety issues inspections for lease/ code violations or repairs.
• Repair and Maintenance – routine and preventative maintenance for units; maintenance of property buildings, grounds, and common areas.
• Evictions – tenant notification to cure or quit, filing of unlawful detainer action; follow through with court procedures for tenant removal from unit and return of possession of rental unit to owner.
• Business Reports – management and financial reports for business analysis and planning; accounting and bookkeeping reports; management reports for vacancy rates; cash flow statements with itemized income and expense data; tax reporting documents; tenant files; property files, and ownership records.

You may want to ask questions regarding the company brand and reputation, their area of expertise, markets served, services, costs, owner reports, and management contract terms and conditions. You should ask the management company to explain their policy and procedures for:

• Authority, duties, and responsibilities of the management company;
• Duties and responsibilities of the property owner;
• Handling of tenant and owner funds;
• Handling of expense issues, including authorization for large non-routine expenditures;
• Types of reports provided to the owner;
• Schedule of disbursements;
• Insurance issues;
• Management compensation;
• Maintenance duties; and
• Renewal and termination of the management contract.

Lease agreements protect the interests of landlord and tenant by defining duties and responsibilities required during the term of tenancy. Changes, additions, and deletions can be made to the lease agreement as warranted by business necessity and legal compliances. The type of document required to effect the change, addition, or deletion may depend upon its applicability to the need for modification or clarification.

Lease Amendment

When modifications to the lease agreement are needed, a landlord could rewrite the lease agreement or, as an easier and a more efficient way to change certain provisions in the lease, a landlord could execute a lease amendment. Utilizing a lease amendment to make changes to the lease is a more common practice than issuing separate additional documents as lease addenda. However if multiple significant changes are necessary, a landlord may want to consider substituting a new lease agreement for the old lease. If this is done, a landlord should mark the old lease as cancelled by mutual agreement. All parties to the original lease must acknowledge the cancellation and sign and date the replacement lease. The new lease is effective on the date the old lease is cancelled.

However, by utilizing a lease amendment, landlord and tenant can change lease provisions by adding, deleting, or changing existing clauses in the lease without having to execute a new lease agreement. All parties to the lease agreement must signify their consent by their signature to changes documented in the lease amendment in order for the modifications to become valid and effective. A landlord cannot change a lease agreement without the knowledge and consent of the tenant. Any lease terms and conditions in the original lease that are not modified remain in effect.

It is preferable to use a written lease amendment to document lease changes. While an oral agreement could be reached regarding acceptance of changes, to prevent future problems by either party misunderstanding or disputing changes, a written amendment should be prepared for signature. Be aware of the applicable Statute of Fraud requirements by law that may necessitate a written amendment to the lease agreement.

A lease amendment may be used to change lease clauses such as:

• Term of lease,
• Options for lease renewal,
• Termination of lease,
• Rents,
• Material lease defaults,
• Adding a cosigner,
• Assignment of maintenance duties,
• Subletting or assignment,
• Roommates policies,
• Guests policies.

As long as all parties to the original lease agreement consent to the changes, almost any lease provision may be modified by utilizing a lease amendment. Many states do not address how lease amendments should be drawn; place limitations on the number of modifications that can be made to a lease; or restrict what content can be changed. A landlord will need to research applicable laws to determine legal compliances. In general a lease amendment will need to follow applicable laws that govern the original lease agreement. It is advisable to seek legal counsel for guidance as required for business necessity to ensure compliances.

A lease agreement when signed by landlord and tenant is a legally binding contract. The lease cannot be altered except by written agreement acknowledged and signed by all parties to the original lease agreement. The lease amendment becomes a part of the original lease and remains in effect until the lease is terminated or the lease is otherwise renegotiated.

A landlord in creating a lease amendment should ensure the language in the amendment is clear in scope and intent and specific in detail to describe the change, addition, or deletion of lease provisions necessary for business purpose. The format of the lease agreement is not as important as the content of the amendment. As long as the amendment is legally compliant, and clearly understood by the parties to the lease, it could be drafted in letter format or follow the format of the lease agreement.

Lease Addendum

While an amendment makes changes to an original lease agreement, a lease addendum adds additional documents to the original lease agreement.

Lease addenda are utilized by landlords to add additional documents as separate, referenced attachments to the original lease agreement. The purpose of lease addenda is to provide additional, supplemental information that either the original lease was silent on the issue, did not cover failed to provide clarity needed on the issue, or as required for legal compliances, such as disclosures under state statutes or environmental disclosures by federal, state laws.

An addendum becomes legally binding as part of the original lease agreement only after it has been accepted by all parties. The addendum does not replace the original lease agreement.

Many landlords have learned from rental experiences to include as much detail and instruction as possible. Therefore those landlords have drafted a lease agreement adequate in detail and scope to cover most common rental issues, identify potential rental issues, remedies for lease violations and specific information relevant to their individual properties and property management. If a lease agreement is inadequate in its protections for the current circumstances or the lease must now comply with external requirements outside of the landlord’s control, a landlord can add the necessary protections for his business interests by drafting lease addenda as attachments to his lease agreement.

Lease addenda may follow the format of the lease agreement with the basic elements of date, property address, named parties to the lease, and descriptive information regarding the reason for the document to be attached to the lease. The addendum should be specific to a single rental issue, usually with the topic noted in the document title, and referenced as an attachment to the original lease agreement.

Common lease addenda include landlord policies for move-in inspection and checklist, pets, guest stays, use of rental premises, lock and key practices, parking, card/access code to property amenities (e.g., pool and fitness center), extended tenant absence from rental unit, landscaping duties, and other landlord rules and regulations detailed for tenant instruction and compliance.

Some addenda must be made part of a lease agreement for disclosure requirements by applicable federal, state, and local laws. Disclosure may be for purposes of environmental, health, and safety reasons such as lead hazard information, mold, asbestos, radon, or bedbugs.

If a landlord has incorporated required disclosures and notice requirements, in the manner specified by law into the original lease agreement, an addendum would not be needed.

However to provide clarity and detail to the tenant for important disclosures and regulations, it may be the better practice to present that information as single topic lease addendum.

A lease addendum becomes effective only after all parties to the lease agreement have signed their acceptance. If a landlord presents a lease addendum to a tenant already in residence (after original lease is in effect) a tenant is not obligated to accept the lease addendum. If the issue as presented in the addendum is deemed a business necessity, landlord and tenant may need to resolve the issue through appropriate measures for remediation.

It is somewhat likely that during the current public health pandemic that a landlord may need to modify his lease provisions for certain issues as the public health and safety guidelines and directives change in response to the impact of COVID-19. Landlords may need to reexamine current rental policies and adapt to changing conditions and requirements. It may require changing policy and practices for issues such as rents, particularly past due rents and repayment plans, use and return of security deposits, guest stays, landlord right of entry, maintenance, lease termination and renewals, and other lease terms and conditions applicable to tenant health and safety and community health guidelines.