Landlord Tenant Screening Adverse Action

Landlord Tenant Screening Adverse Action

Steps to take when denying a tenant.

You just received your tenant screening reports, you took the first ste p in trying to protect your property before signing a lease contract by ordering full tenant background check that includes criminal record reports, a credit check as well as landlord and employment verification. Now you have to decide whether or not this applicant meets your requirements for a tenant, and after reading through the reports, you find out that they would not make ideal tenants. Landlords are disappointed when this happens, because that means starting over looking for a new tenant for their property as well as fulfilling certain legal obligations when notifying the tenant applicant that they are being denied and providing them with the report so that they can correct any incorrect information. This process and obligation is what the Fair Credit Reporting Act (FCRA) calls an Adverse Action Notice. Adverse Action Notices is the communication between the landlord to a prospective tenant of "adverse action" that the landlord is taking as a result of a negative mark that was found on the applicant's report which can include information about their credit, rental history including eviction records, a criminal background check, or employment status.

What does an Adverse Action include?

This is any action taken by a landlord that is unfavorable when it comes to the potential tenant based on the information in the consumer report provided by the background check company. Denying an unqualified tenant applicant is a type of adverse action, but it is not he only one that landlords should give notice for. Here are some other common adverse actions that landlords can take:

• Denying a tenant's application

• Requiring a co-signed on the lease contract

• Requiring the tenant to pay a larger deposit

All of these actions are considered "adverse" because it negatively affects the tenant applicant.

What are the responsibilities of the landlord when taking adverse action?

If the consumer report including criminal background check, credit report, income or employment verification is a part of the reason for taking adverse action, the landlord must inform the applicant, even if that was not the main reason for making the decision. Oral adverse action is allowed, however, the Federal Trade Commission (FTC) recommends providing written adverse action or electronic notices; this will provide the landlord with a documented record of FCRA compliance.

From the FTC:

The notice must include:

• The name, address, and phone number of the consumer reporting company that supplied the report

• A statement that the company that supplied the report did not make the decision to take the unfavorable action and can't give specific reasons for it

• A notice of the person's right to dispute the accuracy or completeness of any information the consumer reporting company furnished, and to get a free report from the company if the person asks for it within 60 days.”

AAA Credit Screening Services strives to make this process as easy as possible for landlords by providing forms within our online ordering system that can be accessed by navigating to the "results" page on the applicant's report on the InstaSteen user interface. From there select "Disclosures and Forms" and then select "Adverse Action Tenant Denial" from the drop-down list and click "View". InstaSteen will autmatically populate a Tenant Adverse Action Letter with your information as well as the tenant's information, a disclosure of rights under the FCRA, and the contact information to AAA Credit Screening. All you have to do from there is to make minimal changes to customize the letter accoring to your specific situation and to comply with additional laws in your particular state.

DISCLAIMER: This article is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem.

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