Setting the right rent can attract and retain quality tenants. The right rent can make a positive difference in the property’s cash flow, tenant satisfaction, and stable occupancy.

For business viability, setting the right rent is not a one-time pricing event. A landlord must routinely check market conditions to evaluate and adjust his rents based on his local area.

Market Survey/Market Rent

A market survey is a snapshot of the current market conditions. A survey gathers information on local market projections, rental trends, and changes in market demographics. Conducting a market survey to determine current rental rates under existing conditions can help a landlord determine if his rents are competitive. Market research may determine the feasibility and timing of rent increases and what rate of increase would keep good tenants yet provide satisfactory cash flow for business operations.

Market rent is a factor of supply and demand conditions in the neighborhood area for similar properties by location, size, physical condition, amenities and services. Rents 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 quality tenant. Business operations analysis may point to the need to raise rents to keep current with expenses such as property insurance, taxes, maintenance costs, and property management.

Setting the rent much above the market rent can mean fewer applicants. Potential tenants searching rental listings can quickly eliminate a rental unit from consideration if the rent is even a small percentage above market rents for that area. With fewer applicants a landlord may need to consider his business options – adjust his rental standards to fill a vacancy or experience 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 to offset reduced monthly revenue.

Fair Market Rent

The U.S. Department of Housing and Urban Development (HUD) conducts a study each year using census data and renter surveys to help determine rents for metropolitan and non-metropolitan counties. Fair Market Rents (FMR) is defined by HUD as the amount of money a tenant would be expected to pay for rent for a property with a certain number of bedrooms in a certain area of the country The gross rent estimate includes base rent and essential utilities that the tenant would be responsible to pay, such as electricity, gas service, or water/sewer services.

A primary purpose of FMR is to determine standard rental payment voucher amounts for the Section 8 Housing Choice Voucher Program and other government housing assistance programs.

Setting the Right Rent

Setting the right rent for a property may require adjustment as leases expire, ongoing market surveys are conducted, and new leases are written. While some trial and error pricing could be necessary to find the right range of rents, generally if a comparable market survey is done, a landlord can identify a range of rents for his properties. For comparison purposes at least three properties in the area of the subject property that are similar in size, features, and amenities should be used to determine a market rate. Comparison rent pricing could be obtained from:

• Meeting with property managers of comparable properties
• Networking with investors and fellow landlords in the local area
• Contacting local real estate brokers
• Viewing classified advertising online or other media
• Calling on neighborhood “For Rent” signs
• Attending Open Houses or Property Marketing Events

Market factors that influence rent

There are many factors that influence market conditions and, accordingly, rent rates. Rent rates vary from area to area and location to location within an area. Influences can be exerted from external events – legal, social, economic, demographic, and environmental issues – and internal conditions arising from business management, ownership issues, and financial resources. The following influences usually condition market rents:

• Location: The location of the rental unit/property is always a factor in all phases of property management. Location can influence marketing and advertising, the applicant pool, rental standards, market rent, tenant selection, and tenant retention. If a property is located in a desirable neighborhood comparable in features and services to similar properties, supply and demand conditions could be favorable to set rents that meet or exceed market rents. Proximity to local goods and services such as medical offices, schools, retail stores, grocery stores, and restaurants could provide leverage to justify a higher rent.
• Type of Property: The type of property, whether single family residential or multi-family housing is a factor in setting market rents. Single family housing typically can command a higher rent.
• Property Construction: Tenants may be more willing to accept a higher rent for new construction properties or recently renovated units.
• Demand: Supply and demand conditions may necessitate a downward adjustment in rents if the supply of units exceeds the demand for rentals. Market surveys will alert a landlord to changing conditions and the need to make changes in rental terms and conditions.
• Bedrooms and Bathrooms: The number and size of bedrooms and bathrooms are decisioning items for a number of potential tenants. A larger unit with more square footage in comparison to other rental units in the area may justify a higher rent.
• Amenities: Unit upgrades, open floor plans, and outdoor living spaces can differentiate one rental property from a similar one in the same neighborhood. Certain amenities allow a landlord to set a higher rent as substantiated by a market survey of other units in the area similar in size and amenities.

Market rent pricing is usually adjusted according to unit size and property amenities. However a different strategy could be considered to price rental units. Accordingly, unless rental units are exactly the same size (bedroom, bath, square footage, floor plan) and can be said to have same features and access to same amenities, a landlord may be missing the opportunity to price his units according to beneficial differences in amenities. Amenities that value to the property and are attractive to tenants are selling points that can translate into setting market differential higher rents yet within the range of market rents. Tenants make a financial decision on the base rents but place value on interior features such as units with large windows, a garden view, an extra closet, a balcony, ground floor units, updated kitchens, and new floor coverings. Curb appeal of the exterior building and grounds is important as well. Well maintained units with appropriate landscaping, green spaces and recreational facilities/areas can be decisioning factors for potential tenants willing to pay a little extra rent.

Business factors that influence rents

Business policies and practices can influence rent pricing and, accordingly, occupancy and vacancy rates. Some landlords have sufficient reserve to withstand vacancies while others depend upon full occupancy and timely rent payments to meet their financial obligations.

Property management costs must be factored into the setting of rents. Some properties are more expensive to maintain than others. Adequate reserves for emergency repairs, insurance, and taxes also are a factor in planning and setting rent policies. Seasonal demands for rental units can influence rents, for example, setting a lower rent in winter months due to reduced market demand.

Rental policies such as lease terms, furnished or unfurnished units, pet policy, and assignment of utilities responsibility can be a factor in setting rents and a decisioning factor by tenants in choosing a rental unit.

The types of amenities available at a rental property can have different effects on rental value. Many tenants place high value on assigned parking spaces and garages and are willing to pay an additional fee for such amenities. Recreational amenities such as fitness centers, walking trails, tennis courts, basketball courts, and swimming pools are attractive to renters but may increase management costs for maintenance, repair, and facilities management. Interior unit upgrades are desirable amenities by most tenants when searching rental listings. While there are costs associated with upkeep for upgrades such as appliances, in-unit washers and dryers, the value of such items for tenant satisfaction with potentially higher rent can make a positive contribution to the business bottom line.

Interviewing an applicant for an open job position is an important part of the hiring process. Information gained from applicant interviews contribute to a more informed hiring decision.

There are several interviewing techniques that can help the employer determine whether an applicant’s skills, knowledge, abilities and work experience meet job requirements.

Interviews should always be conducted in a legally compliant business manner with questions relevant to job requirements and specific industry requirements while recognizing the organization’s culture and mission.

To avoid claims of discrimination, hiring managers should receive training and education on how to conduct legally compliant employment interviews. Discrimination can occur during pre-employment interviews as a result of direct, purposeful disparate treatment between applicants, i.e., applicants are treated differently because of their race, color, religion, national origin, sex, disability, or age. For example, disparate treatment occurs when employers do not ask the same questions of all applicants. Discrimination also occurs when employers engage in hiring practices that have the effect of excluding members of protected classes. While it may not have been the employer’s intent to discriminate, the employment practice has an adverse impact on members of a protected group with the effect of a disproportionally higher percentage of applicants being rejected from employment consideration.

Employment Laws

Federal Laws

The United States Equal Employment Opportunity Commission (EEOC) is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person’s race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability or genetic information. Most employers with at least 15 employees are covered by EEOC laws and employers with 20 employees are covered in age discrimination cases.

The most familiar federal laws that protect rights of applicants in the hiring process are:

• Title VII of the Civil Rights Act of 1964 as amended prohibits discrimination based on race, color, sex, race, religion or national origin.
• The Age Discrimination in Employment Act (ADEA) prohibits questions about a person’s age.
• The Americans with Disabilities Act (ADA) protects qualified individuals with disabilities from discrimination in employment.

Employers are prohibited under ADA from asking applicants during pre-employment interviews about a disability, including its nature or its severity. ADA requires the employer to isolate an employer’s consideration of an applicant’s non-medical qualifications from any consideration of the applicant’s medical condition. An employer may ask only if there is anything that precludes the applicant from performing, with or without a reasonable accommodation, the essential functions of the position for which the applicant is applying.

Title VII and ADEA specifically prohibit discrimination because of race, color, religion, sex, national origin, and age. Pre-employment inquiries that express, directly or indirectly, any limitation or discrimination on the basis of race, color, religion, national origin, sex, disability, or age unless based on a bona fide occupational qualification are therefore prohibited. Accordingly, the employer must not ask any questions of the applicant whose answers would identify the applicant as having protected class characteristics.

Bona Fide Occupational Qualification (BFOQ)

In certain narrow circumstances, employment practices that would constitute discrimination against individuals with protected characteristics of religion, national origin, sex, or age are allowed when reasonably necessary for the normal performance of duties in the normal operation of that particular business. This bona fide occupational qualification exception is an employer’s defense to acknowledged discrimination. It is the employer’s responsibility to prove that the qualification required for the job is necessary for job performance and that there is no reasonable alternative with a lesser impact on the protected classes. There is no bona fide occupational qualification for race or color discrimination.

State Laws

State laws can provide broader protections than federal laws. An employer’s due diligence will determine requirements for the employment laws of the state in which his company operates.

Interview Techniques

While traditional interviews are conducted face-to-face or by telephone, today’s various technologies allow interview practices to include virtual interviews, web-based interviews, or applications on mobile devices.

The most commonly used interviewing technique is a structured interview that asks a specific set of questions of all applicants for the open job position. This is the most straight forward approach to interviewing applicants. The format of a structured interview provides a consistent practice of asking all applicants the same questions in the same manner. By keeping the focus on job requirements and the applicant’s work history, the structured interview aids in defending the employer against claims of discrimination in hiring.

Interview Questions

When preparing for the interview, the interviewer should format a series of interview questions based upon the job description of the open position. Developing questions in this manner keeps the focus on the qualifications required to do the job. With the focus on job appropriate questions, the interviewer can evaluate the applicant’s skills and experience and avoid topics of discussion that could be interpreted as inappropriate or discriminatory.

How the interviewer asks for information may determine what information is returned or how much information is returned. The language used in formulation of the question, that is, the word choices and phrasing, contribute to how the applicant understands what is being asked and how he formulates his response.

As example, asking open-ended questions encourages the applicant to expand upon on his work experiences, skills, and abilities in his reply. Questions that begin with “How” or “What “or “When” are illustrative of the types of open-ended questions that facilitate a detailed response.

A close-ended question on the other hand calls for a short answer response, generally a “Yes” or a “No”. This type of question is in direct response to a specific question and does not require an applicant to provide additional information. Questions that begin with “Do” or “Have” are examples of closed-ended questions that require only confirmation of the posed question.

At no time should an interviewer phrase a question to lead an applicant towards a response that could be construed as discriminatory or biased.

The operating guideline behind any questions asked of an applicant during a pre-employment interview is whether there is a legitimate business necessity for asking such questions. Employers should ask themselves:

• Will the answer to the question have a disparate effect in screening out members in a protected class?
• Is the information being asked for necessary to evaluate the applicant’s qualification to perform the job?
• Is this question permissible on the basis of bona fide occupational qualification?
• Would this question screen out a qualified candidate because of a disability before he/she can demonstrate ability to perform the job?

The intent behind the questions and how the information is used by the employer are important criteria in determining whether the questions are appropriate legal compliances.

To help avoid claims of discrimination, employers should consult with appropriate professional counsel to formulate appropriate and legal pre-employment inquiries or to review and revise existing interview practices.

Other Considerations

Interviewers must not make statements during an interview that could be construed as creating a contract of employment. Information that is provided for the open position should be limited to the job specifications and the job description. An interviewer should avoid using terms that imply or could be interpreted as offering long-term employment, or a career opportunity.

If an interviewer should ask a question that is inappropriate or illegal, the applicant is not required to answer that question. If the applicant does feel obligated to reply, the applicant’s answer cannot be used in discriminatory treatment of the applicant as an individual or in discriminatory evaluation and qualification of the applicant for the job position.

If an applicant volunteers information that is inappropriate or illegal, the interviewer should not pursue the topic, and redirect the interview to appropriate discussion issues in qualifying an applicant to job duties. The interviewer must disregard any volunteered information. Such information cannot be used in the applicant qualification and selection process for the open job position.

Whether the landlord’s decision is to collect the last month’s rent or not, the landlord’s lease agreement should address how the security deposit cannot be used. For example, a lease clause may state “Tenant may not without Landlord’s prior written consent apply the security deposit to the last month’s rent or to any other amounts due by this Agreement. In addition to the issue being in the lease agreement, he landlord should clearly communicate this term and condition to the tenant during orientation.

Despite the restriction of the lease clause, a tenant may ask the landlord to use the tenant’s security deposit as the last month’s rent. The landlord must decide whether he can afford to take a risk and allow the tenant to use the security deposit for the last month’s rent. The risk to the landlord is that there may be property damage when the tenant moves out and the landlord will not have any deposit to apply to repairs or cleaning. In such a case, the landlord would have to absorb the costs or take legal action against the tenant to recover the costs.

The landlord could decide to grant the tenant’s request conditionally. If the tenant has been a good tenant and there is reason to believe the tenant will leave the rental unit clean and in good condition, the landlord may, after a property inspection, allow the tenant to use the security deposit for the last month’s rent.

Despite having options, most landlords choose not to collect a last month’s rent. To those landlords, a better business practice is to collect the maximum security deposit allowed by state statute. If the statute allows collecting more than one month’s rent as the security deposit, the landlord would be covered if the tenant skips paying the last month rent. The landlord could apply excess funds to cover any property damage or cleaning. The landlord would need to file legal action against the tenant if the damages exceeded available funds.

In general, tenants cannot escape liability under their leases due to economic hardship, a job transfer, family matters, safety and security concerns, or health issues. In most jurisdictions, even death does not terminate a lease and the deceased’s estate remains liable for the lease.

The lease agreement is a binding legal contract between landlord and tenant detailing specific responsibilities for each party during the lease term. By signing the lease agreement, the tenant incurs the obligation to pay rent to the landlord for the entire term. When a tenant leaves before the expiration of his lease, without paying the rent due under the lease terms, the tenant breaks the lease.

In some states however, the landlord-tenant statutes allow a tenant to terminate a tenancy before the end of term without landlord permission in limited circumstances for reasons such as:

• A tenant who is a member of the armed forces, or that tenant’s spouse or dependent, who delivers copies of reassignment or deployment orders to the landlord within the required number of days of receipt of orders.
• As a remedy to the landlord’s failure to maintain fit and habitable housing resulting in constructive eviction of the tenant.
• A tenant who is a victim of domestic violence, sexual assault, unlawful harassment or stalking, and who has a legal protection order or has reported the incident to the authorities.
• A tenant who is threatened by a neighbor with a deadly weapon resulting in an arrest, and landlord fails to file an eviction action.
• A tenant is threatened by the landlord with a deadly weapon resulting in arrest.
• State specific laws allowing early termination for reasons such as a tenant job relocation, health problems, or moves to assisted living facilities, or housing for the elderly.
• The rental property is significantly damaged or destroyed by natural disaster or other reasons beyond the tenant’s control.
• A landlord or landlord’s agent violates the tenant’s right to privacy and quiet enjoyment of the property by stalking, sexual assault or unlawful harassment of the tenant.

A landlord must decide the appropriate course of action by statute and lease agreement when a tenant breaks his lease. In many states a landlord must make a reasonable attempt to re-rent the unit as soon as possible to mitigate damages. A landlord has the option to release a tenant from his lease obligations through a negotiated buyout settlement with the tenant. As another option, the landlord could choose to accept a tenant’s offer of a substitute replacement tenant for the remainder of the lease term. In this case, the landlord should do all normal screening usually performed.

There are many issues to consider when setting adequate pet policies. A landlord should clearly disclose in writing his pet policies to applicants and tenants regarding information and notification requirements for pet ownership during a tenancy. Most pet owners have a domestic cat or dog as a pet. A landlord’s pet policies can specify the type, species of animal, size, and weight limit of a pet, as well as restrict the number of pets per tenant household. Landlords should always prohibit any animals that are excluded from the liability coverage under their landlord insurance policy, for example, dog breeds that are considered dangerous.

Pet policies should clearly state that pets must be approved by the landlord’s written authorization before being allowed to move into the tenant household. Only approved pets of tenants will be allowed on the rental property. A pet policy can prohibit tenants from pet sitting for friends or family and prohibit guests from bringing their pets onto the property.

A landlord can set pet qualification and approval standards. As examples, a landlord can require all pets to wear identification tags or collars; require proof of required vaccinations, licenses, and registrations per local ordinances; require pets to be spayed or neutered; and require pets to be house trained. Landlord approval of pets is conditional upon the tenant’s compliance with the terms and conditions of the pet agreement. Material violations of pet policies and rules and regulations detailed in the pet agreement may result in landlord action to request removal of the pet from the rental property or legal action to terminate the tenancy.

A landlord’s pet policies should make tenants responsible for their pets. Tenant duties, pet rules and regulations should be clearly detailed in the pet agreement. Some of the common tenant responsibilities include:

• Tenant has read, understood, and agrees to comply with landlord’s rental policies regarding pets.
• Tenant shall be responsible for the pet at all times.
• Tenant agrees to keep the pet under full control at all times.
• Tenant agrees to keep the pet restrained by hand-held lease or in a pet carrier at all times on or off the rental property.
• Tenant agrees to take all reasonable measures to prevent/prohibit pet from creating a nuisance, disturbance, or annoyance to neighboring tenants.
• Tenant agrees to not leave pet unattended for an unreasonable period of time.
• Tenant agrees to clean up after pet and properly and promptly dispose of pet waste inside and outside the rental premises including any and all common areas.
• Tenant agrees to not leave pet food or water outside rental unit where it may attract pests or other animals.
• Tenant has disclosed any and all pets in the tenant household. Tenant agrees to request prior landlord written approval of any additional pet or substitute pet.
• Tenant acknowledges financial responsibility for damage, loss or expense caused by pet.

In general, a landlord can hold a tenant responsible for any damages caused by the tenant, by members of the tenant’s family, by guests of the tenant, by agents of the tenant, and by animals brought on to the leased premises. This includes damages to property of the landlord inside and outside the tenant’s rental unit, damages to common areas, damages to property of other tenants, and damages to property of visitors to the property. Also included are injuries caused by any of the listed persons or by their animals.

Pet policies can include requirements for additional deposits, rents, or other fees related to pets but must comply with state statutes and local ordinances. As allowed by statute and lease agreement, a landlord may require a pet deposit to cover costs of pet damages or additional cleaning required to return the rental unit to good condition upon the tenant’s move-out. Accounting and return of pet deposit funds are handled in a similar manner as tenant security deposits. Some landlords charge a non-refundable pet fee payable at tenant move-in as an administrative cost to permit the tenant to have a pet in the rental unit. In addition to the tenant’s monthly rent amount, some landlords may charge an additional amount for monthly pet rent.

For additional risk protections, a landlord, as allowed by state statute, should require tenants to carry rental insurance that includes adequate liability coverages including coverage for damage caused by pet accidents. Policy coverages should be reviewed to make sure the policy does not contain a dog bite exclusion or other animal-related limitation.

A judgment is a final ruling by the court of jurisdiction determining the rights and obligations of the parties to an action. . A money judgment is the sum of money awarded by the court to the judgment creditor (plaintiff) that the judgment debtor (defendant) must pay.

In landlord tenant matters, a landlord may have a cause of action to file a lawsuit against a tenant for failure to pay rent or to remove a tenant from the rental unit due to a material breach of the lease. As legal remedies, a court may order a judgment of possession in favor of the landlord to return possession of the rental unit to the landlord and/or award a money judgment to the landlord to collect money owed by the tenant for unpaid rents, physical damage to the rental property, and costs of eviction.

In awarding the money judgment, the landlord (plaintiff) becomes the judgment creditor and the former tenant (defendant) becomes the judgment debtor.

A judgment creditor has the right to legally demand and take certain steps to recover his money from the judgment debtor and to require debtor performance of any legal obligations. The landlord can collect the amount awarded in the money judgment plus any interest that accrues from the entry date of the judgment until the tenant debtor satisfies the judgment. Certain expenses incurred in collection efforts can also be collected from the debtor.

However, the fact that a money judgment has been awarded does not ensure payment of the judgment. While the money judgment gives the landlord the legal right to collect his money, the responsibility for collection is on the landlord to do so. The landlord will need to determine his collection strategies and take appropriate action to enforce the judgment.

Many states allow the debtor a 30 day right of appeal from the date the judgment was entered. During this time, the debtor could voluntarily pay the judgment, file an appeal of the judgment or ask the court to establish an installment payment schedule. If an appeal hearing is held, the judgment can be enforced after the appeal decision is returned, usually within 10 days. The appeal period must have expired before collection efforts by the landlord can begin. In the case of a default judgment being awarded, a landlord could begin execution of the judgment immediately after the judgment was entered.

Some debtors will pay once the judgment has been entered into the court records. However, many debtors do not pay without some type of encouragement from the judgment creditor. Accordingly, as a first step in the collection process, a landlord should make a written request to the debtor asking for full payment of the judgment. The request can include the reminder to the debtor that an unpaid judgment will appear on the debtor’s credit record.

A landlord should keep in mind that not all judgments can be collected immediately and that not all judgments are ever collectible. While a landlord has the legal right to collect the full judgment, the landlord also has the right to propose a settlement for a lesser amount. This could be beneficial if the debtor is unemployed or has few assets with no real expectations to acquire assets in the near future.

There are some debtors who do not have enough reachable assets to satisfy a judgment. There are some debtors who will likely never have enough reachable assets to satisfy a judgment, even a relatively small judgment. These debtors are said to be “judgment proof.” A judgment awarded against a judgment proof debtor could be difficult to collect. For this reason, some landlords hesitate to file a lawsuit against a tenant considered to be judgment proof. Landlords should keep in mind that in most states judgments are typically good for 5 to 10 years and can be renewed for additional periods. In most states, a renewal of judgment extends the period for collection to the same period of time as the original judgment. Accordingly, a landlord could have 10 years or more in which to collect the judgment. A judgment proof debtor’s circumstances could change for the better in some way during this period that would result in eventual payment of the money judgment including interest and collection expenses.

A landlord must collect his money judgment before the judgment expires under the statute of limitations for the state that recorded the judgment. If the judgment is paid in installments, the statute of limitations is tolled, or stopped, during that time.

There can be ways in which the statute of limitations can be waived, extended, or revived. This is usually as a result of an explicit prior arrangement between creditor and debtor or an implied prior arrangement. A waiver could extend the statute of limitations as a result of a mutual agreement. The parties could agree to a formal extension of the time to pay or a revival could occur because of new promises, oral or written, made by the debtor. In some states, a partial payment would extend the statute of limitations and in others, a partial payment revives the limitations.

When a judgment is renewed, the accrued interest will be added to the principal amount owing. From then on the creditor is entitled to interest on the accrued interest. Any liens placed on the debtor’s real property must also be renewed at the time the judgment is renewed. Without renewal of the judgment, the liens would not be enforceable since the judgment upon which the liens were based was not enforceable.

A basic collection process is to locate the debtor; locate the debtor’s assets; lien those assets; and/or seize those assets. Collection strategies will depend upon a number of factors such as: the amount of judgment, the debtor’s assets and income, the cost of collection, the amount of time and energy a creditor is willing to commit to the task, and extenuating factors such as the debtor filing bankruptcy.

A landlord as judgment creditor cannot and should not harass, humiliate, or intimidate the judgment debtor. However, a landlord can and should remain in contact with the debtor during the period of time that the judgment remains unpaid. A brief call or letter can remind the debtor of his obligation to satisfy the judgment. As applicable and in compliance with statutory requirements, a landlord can monitor relevant sources periodically to determine the debtor’s financial condition, physical address, and employment status to evaluate the debtor’s current ability to satisfy the judgment. New information regarding the debtor’s status can be incorporated into future collection strategies in efforts to collect the judgment.

The fact that the debtor relocates to another state does not usually prevent collection of the judgment. If the landlord as judgment creditor determines the debtor’s assets are located in a state other than the original judgment issue state, the landlord will need to transfer the judgment to the debtor’s new state in order to enforce the judgment there. The process to register the judgment in another state as a foreign sister-state judgment is known as domesticating the judgment. Once the foreign judgment has been domesticated in the sister-state, the judgment has the same effect as any other judgment in that jurisdiction.

The landlord has the obligation, after the debtor has satisfied the judgment, to file a document of satisfaction of judgment with the court of jurisdiction and to release all liens and garnishments or property belonging to the debtor in accordance with the satisfaction of judgment.

Many landlords cite the convenience of online rental applications as being beneficial in the collection and organization of applicant information for qualification and screening. Additionally an online application accessed through a landlord’s rental portal can be attractive to many potential tenants. Studies show that many renters expect the application process to be available online and accessible to a variety of devices at any time. Renters want a secure, safe, easy application to research available rentals, apply, qualify, and conduct the majority of rental transactions through online portals.

Most renters prefer to start their search for a new rental online. Since the online application process can be initiated at the applicant’s time of choosing from a phone, tablet, or computer, once a rental has been selected, it is a simple and easy process for the applicant to apply online.

The issue of incomplete or missing fields of data as often found on paper applications is remedied by the application program requiring all critical fields be completed before submission for processing. In combination with tenant screening online process, the process of qualification can begin immediately and the results returned in a shorter time period for decisioning.

With potentially quicker turnarounds on screening reports, rental decisioning can be faster and vacancy downtime reduced. Applications are processed according to date and time submitted reducing potential claims of discriminatory treatment of submissions.

A landlord will still be responsible for legal compliances, safeguarding of applicant information, and retrieval and handling of electronic files as required for business compliances.

Other benefits of online applications include:

• Attracting potentially larger, more qualified tenant pool,
• More efficient collection and handling of applicant information,
• Organization of applicant information in readily available format allows greater overall productivity,
• Faster process with fewer steps and less hassle, is time-efficient, reducing the need for multiple landlord-tenant meetings,
• Ability for applicants to pay application/screening fees and deposits online,
• Customization of form to landlord standards and specifications,
• Ability to update application content to comply with current legislative landlord-tenant statutes/ordinances,
• Authentication process for security and safety of information,
• Ability to upload files as attachments required for screenings and verifications.

Prospective tenants and tenants wishing to renew their lease may ask for rent considerations from a landlord.

There are several factors that landlords may want to consider before entering into negotiation with an applicant or tenant for a rent concession.

Supply and demand of rental housing in the local market, the rental property location and its amenities, and the landlord’s rental policies greatly influence the landlord’s ability to fill a vacancy. The ability to fill a vacancy in a timely manner may be the decisioning factor for a rent concession.

In local markets where renters may have many rental housing choices, landlords may be challenged to fill vacancies. As a result, market conditions may encourage a climate of rental negotiation, compromise, or incentives.

Market research of the local area is helpful in general to evaluate a rental property’s competitive position in the market for rents, amenities, move-in incentives, unit size, and floor plans to gauge the attractiveness and desirability of the property in comparison to others in the area. By analyzing the market data a landlord can determine if a rent adjustment should be considered.

The season of the year and the geographic location of a rental property may also play a part in how quickly a vacancy might be filled. The winter season in many localities may be a factor in reducing the number of potential rental applicants. With the prospect of an extended vacancy due to low demand, a landlord in cold weather climates may be willing to consider a rental concession.

The number of current vacancies and timing of future lease expirations can also be factors in considering rental concessions. Analysis of business operations is always a consideration in a decision to modify or change any rental policy. The question to be answered is whether it is financially worth it to negotiate rents. There could be other alternatives that can be offered to an applicant/tenant besides a reduction in rent. Incentives in the form of new paint, carpeting, a dishwasher, or covered parking may be equally attractive to a potential tenant or a renewing tenant. Many times it comes down to market conditions and business necessity that determines the feasibility of rental modification or waiver. If it is truly an issue that the landlord will not negotiate, a firm restatement of policy should end the discussion.

As a checklist, before responding to any requests for rental modifications, waivers, or special incentives, a landlord should consider the following issues to determine cause and effect of his decision:

• Legal – There are certain legal landlord-tenant rights and obligations that cannot be waived or negotiated. Most aspects of landlord tenant relationships are regulated by state and local laws, and by federal statutory laws such as anti-discrimination (e.g., fair housing laws), and certain health or safety issues (e.g., lead-based paint).
• Market Condition – Does the current market condition warrant incentives or concessions? Does the rental property compare favorably with others in the same market?
• Business Condition – Is the business in good shape? How would changes impact business operations and bottom line?
• Cost of the proposal – What are the hard dollar costs of the request?
• Alternative options – What other options might produce a satisfactory compromise or relief?
• Tenant Relations – If the negotiated issue is approved or denied, would other tenants have cause for concern, or potential claims of discrimination?
• Reputation –Would this action be perceived as unfavorable to the rental community? Does the action create an impression of lax rental standards and policies? How would the action affect the landlord’s brand and market standing?
• Consequences of Approval/ Denial – Could this action ripple through to an unintended consequence now or later?

Due diligence is a first line of defense in protecting the business from intentional harm from tenant fraud. You should never be in a hurry to fill a vacancy without conducting adequate tenant screening and independent verification of applicant information. An applicant intent on committing fraud is counting on a landlord being too busy or desperate to fill the vacancy to notice inconsistencies in his story.

The most direct fraud control practice to reduce financial loss, property damage, or other harm to the business is vigilance. You must be alert to the possibility of fraud and take adequate precautions for business protection. You need to identify red flag issues, recognize fraudulent acts and thoroughly vet applicants throughout the rental process. Advancing an applicant to consideration for tenancy without adequate screening safeguards can be a costly mistake. Once a tenant has moved in, a landlord must use the legal system to restore possession of the property to the landlord and recover damages caused by the tenant.

You should always follow your stated policies and practices of tenant screening. Tenant screenings are valuable alerts to red flag issues and possible tenant fraud. You must be vigilant to recognize discrepancies, ready to question omissions or inconsistencies in information in the application itself, as discovered during applicant interviews, or through reference verifications. If things seem a little too good to be true, you certainly should check it out. A little skepticism on your part may be the best thing to prevent fraud.

Vigilance includes making sure you stay current with applicable laws and landlord-tenant statutes. Rental fraud can occur because a landlord is unfamiliar or unsure of applicable laws and legal processes. Hesitancy or perceived weakness by the landlord to enforce his standards can allow an applicant with the intent to defraud a landlord to talk his way into tenancy.

Red flags can pop up any time during the interview/application/screening process. A landlord should be prepared to handle inquiries from an applicant who wants the landlord to make a deal which deviates from qualification standards and business practices. Making a deal is rarely a good business practice. An applicant moving on short notice could be a red flag issue indicative of a pending eviction, past due rents, or a cure or quit notice for lease violation.

An applicant’s reason for moving could also indicate a red flag issue. Evasive answers or vague reasons that suggest eviction, past due rents, lease violations, trouble with neighbors, problems with the landlord, or domestic problems could signal potential future problems. If the applicant has a long list of complaints about his current landlord and neighbors, his response should be considered a red flag issue requiring further investigation and discussion.

Tenant fraud can take the form of altered and falsified documents, identity theft, and fictitious identity, as well as intentional omission of data, incomplete data, or misleading data on required application documents.

As a short checklist to help protect your business from tenant fraud, you should always:

• Conduct tenant screening, including background check, credit report, and criminal background check as applicable by statute/ordinance,
• Verify current employment,
• Require proof of income,
• Contact references for previous rental history,
• Inspect all documents supplied for rental qualification for signs of alteration,
• Cross-check application information against the information on screening reports, credit and background reports, and independent verifications,
• Require payment of all fees and deposits per rental policy,
• Conduct all rental practices in compliance with fair housing laws.

During the course of a rental transaction, a landlord may process many pieces of personally identifiable information (PII) from applicants and tenants.

Personally identifiable information can be defined as information that directly identifies an individual such as name, address, Social Security number, telephone number, email address, etc., or indirectly identifies specific individuals through a combination of data elements such as birth date, gender, race, personal characteristics, biometric data, geolocation data, or other descriptors.

Information permitting the physical or online contacting of a specific individual is the same as personally identifiable information. This information can be maintained in either paper, electronic or other media. Personal information does not include publicly available information that is from federal, state, or local government records and consumer information that is de-identified or aggregate consumer information.

Some states have consumer privacy laws that protect privacy rights of their residents. As example, the California Consumer Privacy Act (CCPA) defines personal information as “information that identifies, relates to, describes, is reasonably capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household.” Under the CCPA, personal information includes, but is not limited to:

• Name: full name, maiden name, mother’s maiden name, or alias;
• Personal identification numbers: social security number (SSN), passport number, driver’s license number, taxpayer identification number, patient identification number, financial account number, or credit card number;
• Personal address information: street address, or email address;
• Personal telephone numbers;
• Personal characteristics: photographic images (particularly of face or other identifying characteristics), fingerprints, or handwriting;
• Biometric data: retina scans, voice signatures, or facial geometry; and
• Information identifying personally owned property: VIN number or title number.

Nevada Revised Statutes Chapter 603A is a privacy law that defines personal information as a “natural person’s first name or first initial and last name in combination with any one or more of the following data elements, when the name and data elements are not encrypted” such as:

• Social security number;
• Driver’s license number or identification card number; and
• Account number, credit card number or debit card number, in combination with any required security code, access code or password that would permit access to the person’s financial account.

The application process and tenant screening practices are the common rental transactions that collect personally identifiable information used in the decisioning process for tenancy. However during the course of the tenancy, a landlord may become knowledgeable of additional personal information about the tenant and his household. This information must also be protected from loss and misuse.

The loss of personally identifiable information can result in substantial harm to individuals, including identity theft or other fraudulent use of the information. Landlords have the responsibility to protect confidential information from loss, misuse or inadvertent disclosure.

There are a number of privacy and data security considerations for a landlord in developing business policies to ensure compliance with various federal and state laws governing privacy and data security.

The collection of information is an important security consideration in developing practices for safeguarding sensitive information. A landlord should evaluate his current business practices to review the collection and use of personally identifiable information. The analysis provides data on the amount of information being collected and what use is made of that information. Historically landlords collected as much information as possible, some of it relevant to business decisioning, some of it “just in case.” Current policies have revised collection practices to focus on business necessity, i.e. the purpose of the data supported by applicability to rental practices and legal compliances. Limiting the amount of data collected to business necessity can reduce risks of potential liability for data breach, landlord negligence in handling sensitive information, or violation of applicable privacy and security regulations.

A landlord should consider developing a business privacy policy to disclose to applicants and tenants the collection, use, protection, and handling of personally identifiable information. The disclosure should detail the purpose of collecting personally identifiable information; what personal information is collected; what methods and sources are used to collect that information; how that personal information is used; what information is shared with third parties; and what security measures are in place to safely access and safeguard confidential information.

Keeping tenant information confidential requires best practices in rental operations including file organization and document controls. File organization of rental documents is best done in a manner that’s makes sense for business reporting, taxes, landlord-tenant statute requirements, fair housing requirements, and other compliance and regulatory purposes. Whether organized by rental property location or tenant name/unit number, all rental documents, paper, digital, or both, must be retained for as long as needed for business necessity and in accordance with document retention requirements by statute.

Physical security measures to safeguard confidential tenant information should include storage of documents under lock and key. Access to tenant documents should be restricted to individuals who have an identifiable business need to access a file. Documents containing personally identifiable information such as applications, leases, credit reports, etc. should not be left unattended and open to public view.

Security measures include digital security measures when using computers and electronic devices to conduct rental operations. Digital files stored on electronic devices must be securely protected by enabling firewalls, password protected Wi-Fi connections, strong password management, authentication procedures, data encryption, up-to-date operating systems and application software, anti-virus and anti-malware software, and management of cloud transfer, access, and storage. Studies have shown that half of all reported data breaches were as a result of improper storage and handling of sensitive data. Access to tenant files containing sensitive information must also be restricted to those individuals with an identifiable “need to know.”

When landlords use consumer reports to make tenant decisions, they must comply with the Fair Credit Reporting Act (FCRA). When a consumer report is no longer required for business necessity, landlords must securely dispose of the report and any information gathered from it according to the Disposing of Consumer Report Information Rule.

The Disposal Rule requires disposal practices that are reasonable and appropriate to prevent the unauthorized access to – or use of – information in a consumer report. For example, reasonable measures for disposing of consumer report information could include establishing and complying with policies to:

• burn, pulverize, or shred papers containing consumer report information so that the information cannot be read or reconstructed;
• destroy or erase electronic files or media containing consumer report information so that the information cannot be read or reconstructed;
• conduct due diligence and hire a document destruction contractor to dispose of material specifically identified as consumer report information consistent with the Rule

. Due diligence could include:

• reviewing an independent audit of a disposal company’s operations and/or its compliance with the Rule;
• obtaining information about the disposal company from several references;
• requiring that the disposal company be certified by a recognized trade association; and
• Reviewing and evaluating the disposal company’s information security policies or procedures.

Proper disposal and destruction of sensitive information obtained from sources other than those governed by FCRA requirements should use similar methods as those outlined in the Disposal Rule.