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The task of managing your properties comes with the challenge of ensuring that your residents are reliable, trustworthy, and able to pay rent promptly. This is where tenant screening comes in. However, landlord-tenant laws can vary depending on your location. If you have properties in the Lone Star State, it’s important to be familiar with the various Texas screening laws to stay compliant.
This blog takes a closer look at the nuances of the tenant screening process in the state of Texas and what property owners need to remember to remain compliant with the state’s landlord-tenant laws.
The importance of tenant screening for the health of a rental business matters whether you’re a seasoned investor possessing a multi-property portfolio or a newbie homeowner starting out with just one rental. Proper rental applicant background checks weed out residents who won’t be able to take care of your property or will struggle to make rent payments. In a study conducted by the Harvard Joint Center for Housing Studies surveying 2,500 homeowners, it was found that smaller and mid-sized landlords experienced a higher number of rent arrears in 2020 . This suggests the urgency of conducting a thorough screening process of rental applicants to avoid any disruptions to the business.
Before honing in on the nuances of Texas screening laws, we outline some steps of the rental applicant screening process that no homeowner should skip!
A credit report contains valuable information about a prospective renter’s financial behavior, which gives you an impression of how well an applicant will be able to pay rent. Typically, credit reports will contain the different credit accounts that an individual has, any monthly payments they have to make, and bankruptcies that they’ve filed in the past.
Although a credit check is definitely an important part of the tenant screening process, it’s important to consider that this data alone will not be able to tell you if an applicant is qualified or not. Findings from a study conducted by the Consumer Financial Bureau analyzing the current state of the tenant screening industry even suggest that only a weak link exists between a renter’s credit score and their likelihood to pay rent. This means that each applicant must still be screened holistically, taking into account various aspects of their background and financial standing.
One common dispute that arises during a tenancy is late payments. Hence, it’s important to take the necessary steps to confirm during the screening process if an applicant has a stable source of income that will enable them to consistently pay rent. Conducting an employment and income verification can validate their stability and give you a comprehensive overview of whether or not your applicant’s financial standing aligns with your property.
A reliable employment and income verification process takes a look at any documentation that an applicant can provide and confirms this information with their employer. Some documents that can be helpful during this step include an applicant’s paystubs (at least 3 months’ worth), a W-2 , and even bank statements.
Next, your process should include confirming these references with the employer that a prospect has listed in their application. There are a number of ways to go about this, such as reaching out to the employer directly or requesting a salary verification letter which should contain evidence of how much an applicant makes.
Two aspects of a renter’s profile must be carefully considered to make the most appropriate decisions for your rental business: criminal background and rental history. These two records will reveal any patterns of behavior that could raise any potential risks to your business, and even to the community around you.
As part of the tenant screening process, it’s important to take note of any criminal offenses an applicant has been charged for and if they’ve been evicted from their previous rentals. You might be able to determine any patterns of behavior that could suggest that they might break your lease terms during their tenancy.
However, it’s important to note that eviction history and criminal records should not be the only defining factors when it comes to your decision. Apart from assessing each facet of a prospective applicant’s profile, it’s also essential to understand the context of any offenses or evictions that you see on their record. It’s also wise to read up on relevant Fair Housing Act regulations related to screening applicants with criminal backgrounds to ensure that you remain compliant and avoid any discriminatory practices.
A thorough tenant screening process should be able to give you a clear picture of the type of residents you’ll be placing in your rentals. However, if you’re a homeowner with properties in the Lone Star State, then there might be some Texas screening laws that you need to be aware of.