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2007-07-26 16:57:00

Good, Bad, and Ugly Ways to Handle Rental Applications

I am a manager of a 56-unit complex. One of the tenants informed me that his girlfriend had moved in. I gave him an application for her to fill out and return. It has been ten days and it hasn't been returned. The owner has told me that the girlfriend cannot live there unless we have approved her application and have her name on the lease. How can I force them to return the application?

If the lease prohibits the assigning or subletting of the premises without your permission, you can serve a three-day notice to perform conditions and/or covenants or quit, detailing the violation. The notice should require that they either turn in the application or she vacate the property within the three-day period. If they do not comply with the notice, you could commence eviction procedures.

We have a policy of allowing prospective tenants who have poor credit to qualify if they have a qualified guarantor sign the lease. We want to change that policy. Do we have to do anything legally speaking to modify our policy?

Document the details of the new screening policy and the effective date that it will be implemented. That way, if someone claims they were given different screening criteria than someone else, you have documentation to show when the new policy came into effect.

My apartment building is located in a high crime area. Do I have a legal obligation to notify prospective tenants of the crime rate?

If you are asked, refer the prospective tenants to local law enforcement for information. On the other hand, if there have been recent crimes committed on your property that pose a risk to new residents, you may have a duty to disclose the potential hazard to prospective residents.

How long should a denied tenant application be saved? How long should the application and rental agreement be saved after a tenant moves out?

The statute of limitations for fair housing cases ranges from one to three years; the statute of limitations for a written rental agreement is four years. The statute of limitations is the time someone has in which to file a lawsuit. Therefore, you should keep your application documents a minimum of four years for an accepted tenant; three years for a denied applicant.

In order to screen prospective tenants, I want to establish a ratio standard of income/debt vs. rent. Is this legal in California?

Many landlords use a formula to determine qualification of residents based upon their financial stability. This type of screening is desirable because of its objectivity. Well-thought out point systems can also work well to avoid even a perception of discrimination.

My company and I are new to California and its laws. I read recently that when qualifying applicants, the income of roommates/multiple residents must be combined, rather than each one qualifying separately. Is this true?

If you do not require married couples to individually qualify, then unmarried roommates must be given the same benefit. If the combined household income meets your standard, all the applicants qualify. This pertains only to the amount of income required to qualify. If any of the proposed roommates have poor credit or poor rental history, they still could be turned down.

It is our company's policy to charge higher security deposits for applicants with borderline credit. Do you see any problems with this?

So long as you have specific and objective criteria to determine credit rankings, such as a point system, you may condition acceptance upon the ability to pay a higher security deposit. Your written rental criteria should spell out this "second qualification tier." This conditional acceptance is also considered an adverse action against the applicant's credit report and notification of the applicant's rights to dispute the information with the credit reporting agency must be provided.

We require all adult applicants to fill out an application and sign the lease. Does this mean a 19-year-old student son of an applicant should also fill out an application and sign the lease?

Yes. If you don't, you could be accused of violating fair housing laws. Otherwise, you may have to allow other adult residents to be "occupants" rather than tenants, which is not a good business practice. Additionally, if the parent moves out, leaving the son or daughter, you will want his or her name on the lease as a responsible party. 

(LegalEase is intended to provide general information and should not be considered legal advice. Please contact the nearest office to discuss the facts of your particular situation. Kimball, Tirey & St. John makes no warranty of any kind, expressed or implied, with regard to this information. Kimball, Tirey and St. John shall not be liable in the event of incidental or consequential damages in connection with, or arising out of, the use of any information herein contained.)

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