Running A Background Check On A Tenant? Read This Now.

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I am absolutely in love with learning and sharing all things real estate. I’m an agent for Jacaranda Real Estate In Harare, Zimbabwe. This blog will be the ultimate resource for all things real estate so subscribe and stay tuned.

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The right and wrong tenant makes all the difference when it comes to the potential success and failure of the tenancy.

This makes procedures like tenant screening absolutely crucial but screening a tenant yourself can only get you so far; sometimes you need to call in the professionals to do what professionals do; running a background check.

What Is A Tenant Background Check?

Background checks are by all means, professionally done tenant screening procedures that conduct thorough analyses on a prospective tenants’ past; done with the intent of exposing any information that would provide a landlord with legal justification to deny a tenants’ application of tenancy on the property. They are usually done by verified business entities.

What Happens When A Landlord Asks For A Background Check?

In the event of a landlord asking a tenant to conduct a professional background check on them; the following steps will take place in the procedure:

  1. Landlord requests the background check (within state boundaries).
  2. Prospective tenant approves and pays an application fee to run the background check.
  3. Landlord and tenant agree on the terms and criteria of the background check.
  4. A verified agency is employed by the landlord to execute the background check.
  5. Once executed and completed, results are sent back to the landlord for review.
  6. The landlord decides whether or not to approve the tenancy request from the prospective tenant

1. Landlord requests the background check (within state boundaries).

Depending on the laws of the state, most landlords’ are required by law to tell a tenant that they would like to run a background check on them before approving their request to accommodate the property.

This can be done on the lease application form or after a face to face discussion. Regardless of state laws, it is a good common courtesy to inform a prospective tenant when you want to undertake a background check.

Background checks reveal personal details and that must be respected.

2. Prospective tenant approves and pays an application fee to run the background check.

It’s common for the landlord to charge an application fee that would cover the process of getting the background check done.

The amount is often non-redeemable regardless of whether or not the tenant approves the tenancy request; unless the tenant goes against the agreed-upon terms of running the background check.

3. Landlord and tenant agree on the terms and criteria of the background check.

If an application fee is charged, landlords (depending on the state); are obligated to disclosing the criteria by which they will evaluate a tenants’ application of tenancy through the background check.

Landlords are held liable to the criteria they decide to judge the tenant on and cannot refuse tenancy because of non-agreed upon criteria terms; lest they risk a legal backlash.

Background checks will typically only be used as a last check for on prospective tenant who has otherwise met the landlords’ needs and requirements for a valid tenant. Landlords are expected to give a tenant; who they have requested a background check from – a definitive answer on their request before dealing with any other prospective tenants (This can and should be a term of the agreement).   

4. A verified agency is employed by the landlord to execute the background check.

Once the terms and criteria of the background check have been approved between the landlord and prospective tenant; the landlord will decide on a verified agency to conduct the background check and uncover the specific elements for the agreed-upon criteria.

Depending on the agency, some may provide a blanket background check that includes a lot of information on top of that which was only required for the criteria.

A landlord will not (usually) be able to refuse tenancy because of these additional details. Unless they undoubtedly pose a justifiable threat to the tenant and their property. This makes it important for the landlord to effectively decide on the necessary criteria to judge the tenant by.

5. Once executed and completed, results are sent back to the landlord for review.

The verified agency conducting the background check, once done; will deliver the information to the landlord for their review.

The agency who conducts their background check will inform the landlord on how long the process will take and the tenant should inform the prospective tenant on the timeframe as well. Tenants may have special considerations that will not allow them to be without an answer for that long.

6. The landlord decides whether or not to approve the tenancy request from the prospective tenant.

After review of the delivered information, the tenant must give a definitive answer on whether to approve or deny the tenants’ application.

If denied, the landlord will have to justify where and how the tenant did not meet the requirements of the agreed-upon criteria.

If proven, the landlord can proceed with evaluating other prospective tenants and even requesting other background checks from other tenants.

*Because of the often agreed terms of running a background check – most landlords will only run one on a single tenant at a time  (if the property is looking to only accommodate one tenant/household).

What Does A Background Check Show?

As stated above, background checks are simply professionally done tenant screening procedures. They can be as extensive as a tenant wants but the real value of running a background check is for when you need to verify something from a tenants’ past that is a potentially large risk for the landlords’ business (property, other tenants, income).

Common key information checked in a background check are the following:

  1. Identification details and history + immigration status.
  2. Employment and financial history.
  3. Conviction history.
  4. Rental and Eviction history.

1. Identification details and history + immigration.

Information that verifies the tenant is who they say they are and that they are legally in the state. This is important as there may be legal ramifications for housing specific individuals who are not legally within the country for specific reasons.

Identification also accounts for being the foundation by which any form of screening including background checks is founded on. You need to make sure you who the tenant is before you can start analyzing them.

2. Employment and Financial history.

This involves information on a tenants’ credit, occupation,  insolvency information and proof of payment ability through bank account verification (tenants will provide proof of funds through income statements over a specified period – 8 months +).

Financial history is a top factor of background checks because it provides information over the tenants’ ability to pay. Pay for rent, insurance, property damages, occupation, etc.

No landlord should not be knowledgeable and certain that their tenant can afford to pay their rent.

3. Conviction history.

Let me begin by saying this; “you often cannot discriminate occupation because of a prior conviction,” unless you can justifiably explain how the conviction can reasonably be seen as a threat to the business side of renting.

Does their prior conviction justifiably influence whether the prospect will be a good tenant? Usual records that can justifiably influence tenancy can include violent offenses, drug convictions and theft and robbery (in the case of roommates or Homes in Multiple Occupation).

4. Rental and Eviction history.

Verifiable research on the outcomes of a tenants past rental arrangements (if they were previously a tenant). 

If a tenant was ever evicted from a property; information over the ordeal such as why it happened and when would also be provided.

Is A Tenant Background Check Legit?

When it comes to the legitimacy and trustworthiness of running a professionally done background check, it is the most reliable source of information that a landlord can attain over a tenant aside from the prospective tenant themselves (and your complete trust of them).

Landlords have 3 avenues of gaining information about a tenant:

1. The tenant.

They can give you the most up to date, relevant and accurate information that they WANT to give you. No one will ever know your tenants’ past as well as your tenant and you should hear things from their point of view as well as from 3rd parties.

A bad referral from a previous landlord may involve a lot more details that would shed more light on whether the prospect is a bad tenant or individual who had to take care of sick a relative during hard times.

2. The landlord.

As a landlord, it is in your right to ensure that you are renting out your property to a qualified individual but your ability to find information on your tenant will likely be limited to the referrals that they gave you and their social media (Which can reveal a lot; don’t get me wrong).

3. A verified tenant screening agency.

Will have access to channels that allow them to get verifiable information on a tenant. And because they are paid service business with a reputation to uphold; they will take their fact-checking and due diligence to a degree that will most likely top a landlord’s Facebook check of a tenant.

These screening agencies have the means and permission to look at the under-belly of a tenants’ life. They may not always be 100% accurate but they are right more often than not.

As an added benefit, tenant screening agencies will often give you information over the tenant in a digestible format that helps you to make an appropriate decision of the tenancy application.

Conclusion – Why And When Would A Landlord Run A Background Check?

Background checks are important but they are only extremely important in specific cases. A background check is an invasive procedure for a tenant that is rarely ever comfortable for anyone whether they are innocent or not.

As hard as it is to believe, there are fewer people out to cheat you than you’d expect. In cases where there is a lot at risk such as for when the property the tenant is applying to occupy has multiple roommates who would be put at risk if a dangerous tenant was allowed in the property.

That being said, there is ultimately no major risks to carrying out a background check despite the time it takes to produce and review the information and the cost of getting the background check done (often paid by the tenant).

If it puts you at greater ease to have it done – get it done.

If you don’t reasonably feel as if you have to run a background check, it is still important to effectively screen your tenant than just rely on your gut feeling. If you are interested in knowing what you should keep an eye on when it comes to tenant screening, I have written out a blog that thoroughly gives a rundown of tenant screening (HERE).  

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I am absolutely in love with learning and sharing all things real estate. I’m an agent for Jacaranda Real Estate In Harare, Zimbabwe. This blog will be the ultimate resource for all things real estate so subscribe and stay tuned.