How an Effective Property Manager Approaches Tenant Screening

All landlords have heard the horror stories about expensive damage to rental properties and unpaid rent. Tenant screening is a crucial step in protecting your rental property investment. A thorough and compliant screening process can help avoid potential problems. However, navigating the legalities and ensuring that your screening process meets all local and federal regulations can be challenging. One misstep can lead to costly disputes or even lawsuits. 

With over a century of experience in Seattle’s South Puget Sound, Powell Property Management understands the intricacies of tenant screening, especially in Washington State, where the legal landscape is multifaceted and ever-evolving. With our extensive experience and a legal team on retainer, we help landlords implement screening practices that are both fair and legally sound. In this blog, we’ll walk you through how a professional property manager approaches tenant screening, ensuring compliance with local regulations while finding the right tenants for your property.

The Legal Landscape for Tenant Screening in Washington State

Tenant screening laws in Washington State are strict, and landlords must comply with both federal laws, such as the Fair Housing Act, and state-specific regulations, like the Fair Tenant Screening Act. These laws govern what information you can and cannot use when screening tenants, ensuring all applicants are treated fairly and without discrimination. Recent changes in local regulations, especially in the Seattle and South Puget Sound areas, add further complexity.

For instance, certain jurisdictions, such as Seattle, have implemented "ban-the-box" laws, which limit when and how criminal background checks can be used during the screening process. These laws are designed to give individuals with past convictions a fair chance at housing. However, outside of Seattle, landlords may still consider criminal history but must follow strict guidelines to avoid any appearance of discrimination. Similarly, credit checks and income verification are permissible, but landlords must be cautious about evaluating this information to comply with Washington's Fair Credit Reporting Act (FCRA).

Additional local ordinances may impact tenant screening in areas like Burien, Des Moines, and Federal Way. For example, South King County has begun adopting policies similar to Seattle's regarding housing protection. With these laws constantly evolving, working with a professional property management company ensures you’re always up-to-date on the latest regulations.

Rental Screening Criteria Best Practices

One of the most important aspects of tenant screening is having clear, well-defined criteria before you begin the process. Establishing consistent standards helps ensure that all applicants are treated fairly and that there is no room for potential discrimination claims. Powell Property Management works with landlords to develop these criteria, ensuring they align with Washington State laws while protecting your property’s best interests.

Key Screening Aspects for Tenants

• Income-to-rent ratio: A common standard requires tenants to have an income of at least 2.5 to 3 times the monthly rent. This helps ensure that tenants can comfortably afford their housing costs.
• Employment history: Consistent employment and income stability are crucial indicators of a reliable tenant.
  • Confirm employment details by asking the employer about the tenant’s length of employment and salary.
  • Use privacy-compliant questions, such as: “How long has this employee worked with you?” and “Can you verify their income?”
• Credit score: Credit history can be a useful measure of a tenant’s financial responsibility.
  •  Understand the limits of relying solely on credit scores, especially with newer laws limiting how landlords can interpret certain debts, like medical bills.
  • Comply with Washington’s Fair Tenant Screening Act by disclosing how credit information will be used and offering tenants the right to dispute errors.
• Rental history: Evaluating a tenant's past rental behavior, such as late payments or evictions, helps gauge how they might treat your property.
  • Contact previous landlords to verify the tenant’s rental history.
  • Ask critical questions like
    • "Did the tenant pay rent on time?"
    • "Were there any significant lease violations?"
    • "Would you rent to this tenant again?"

These criteria must be applied uniformly to all applicants. Deviating from your established criteria or making case-by-case exceptions can open the door to Fair Housing violations. Washington State laws, alongside the federal Fair Housing Act, prohibit discrimination based on race, color, national origin, religion, sex, familial status, disability, and more. At Powell Property Management, we ensure that the criteria are applied consistently and in compliance with these laws, providing both legal protection and peace of mind for landlords.

Early Documentation for a Smooth Rental Application Process

Requesting supporting documents from applicants upfront helps expedite the process. We advise landlords to ask for key documents like a driver's license, pay stubs, and rental references as part of the application package. This proactive approach speeds up screening by giving us all the necessary information to quickly verify an applicant’s qualifications. If an applicant is denied, landlords are legally required to provide written documentation explaining the reason for rejection. We handle this process to ensure compliance with the Fair Credit Reporting Act (FCRA) and prevent potential legal issues. By setting clear standards and requesting documentation early, Powell Property Management makes the screening process smoother and more efficient.

Declining Applicants: Staying Compliant

Even with clear criteria and best practices in place, there will be times when a prospective tenant doesn't meet the necessary qualifications. When this happens, following the proper legal steps to ensure compliance and avoid potential legal challenges is essential. In Washington State, landlords must provide a written explanation for the rejection if a tenant is denied housing based on information gathered during the screening process—such as a credit report or rental history check.

The Fair Credit Reporting Act (FCRA) mandates that if any information from a credit report is used to deny a rental application, the landlord must issue what is known as an adverse action notice. This notice explains the reason for the denial and includes contact information for the credit reporting agency that provided the report, allowing the applicant to dispute any inaccuracies. Similarly, if the rejection is based on other screening factors—such as rental history or income verification—the tenant must be informed in writing of the specific reasons for the decision. This written notification not only fulfills legal obligations but also provides transparency and fairness to the applicant.

At Powell Property Management, we manage this process to ensure that all communication with applicants is handled professionally and in compliance with Washington's laws. By providing clear, documented reasons for denial, we help protect landlords from unfair treatment or discrimination claims. This approach also reinforces professionalism and fairness that benefits landlords and prospective tenants, creating a smoother and more legally sound screening process.

Resident Retention Through Careful Screening

An often-overlooked benefit of effective tenant screening is the positive impact it can have on tenant retention. Finding the right tenant isn’t just about filling a vacancy; it’s about securing a reliable, long-term resident who will contribute to the stability and success of your rental property. Tenants who pass a stringent screening process—demonstrating financial responsibility, good rental history, and steady employment—are more likely to meet their rental obligations and renew their leases. This reduces the costs associated with frequent tenant turnover, such as lost rental income and expenses related to marketing, screening, and preparing the unit for new occupants. Well-screened tenants are more likely to maintain the property, reducing the likelihood of costly damages and repairs.-

Your Property Manager is Your Gateway to Quality Tenants in Burien, Des Moines, Federal Way, and Normandy Park

With Powell Property Management, you can have peace of mind knowing that your tenant selection process is thorough, efficient, and legally sound, leading to higher-quality tenants and better property performance. Contact us today to learn how our professional screening process can help protect your property and maximize your investment.