The pandemic led to many property owners finding themselves with tenants that are thousands of dollars behind in rent. Property owners, faced with the recently-extended eviction moratorium, likely want to know how to avoid renting to applicants that may add to their list of tenants not paying rent during the COVID-19 crisis. One way to reduce the risk of having tenants that do not pay rent is to explore the reasons to reject a tenant application during the pandemic.
Understanding the nationwide eviction moratorium likely helps property owners collect as much as possible in rental payments from tenants. The effect of non-payment of rent on property owners, and the rights of landlords during the pandemic, is another area that needs exploration while considering whether current screening methods are effective. The American Apartment Owners Association assists property owners with tenant screening services, tenant credit checks, and information related to landlord rights.
If you are a property owner with tenants that owe back rent, you are not alone. The Los Angeles Times reported that millions of tenants were unable to pay rent at the time of the article publication in February 2021. The article cited the Urban Institute and Moody’s Analytics, who stated that more than nine million tenants owed an average of nearly $10,000 each in back rent. The article included information from a survey conducted by USC and UCLA indicating that households with less than $25,000 income in 2019 were the most likely to default on rent during the COVID pandemic, with households earning less than $50,000 at a close second among those that were most likely to not pay rent.
What does this mean for property owners that want to avoid renting to tenants that cannot pay rent? In addition to the rules that prevent landlords from evicting tenants that comply with the moratorium rules, they are also prohibited from denying housing to applicants based solely on rent that is accrued during the coronavirus pandemic.
Another issue for landlords to be aware of is the fact that several sources indicate that the rate of fraud in tenant rental applications has increased during COVID-19. This typically occurs during recessions, and requires due diligence to fight tenant application fraud.
Consider these nine reasons to reject a tenant application during the pandemic, and to thoroughly screen applicants, using the AAOA rental application as your guide.
1. The rental application is not properly completed
Missing or vague information raises a red flag. Many states have identical or similar guidelines for rental applications and screenings. One example is the Ohio Fair Housing Guide for Landlords. The guide suggests that property owners use current applications that ask detailed questions without violating laws regarding protected classes or other illegal application information.
2. The applicant insists that the property owner uses the credit check printout that the applicant brought along
Credit check printouts provided by applicants are easily created on a home computer. Relying on a professional rental credit check for information helps to protect you.
3. Information on the application does not match information obtained through the tenant screening report
Applicants that transpose digits of their social security number, provide a false or misspelled name, or that provides a fake address are reasons to reject a rental application even during the pandemic.
4. An applicant provides self-supplied references
Self-supplied references from an alleged employer or landlord may be the applicant’s friend or relative. The standard rental application form provides property owners with documentation of the contact information for references. If the references do not check out as valid, or otherwise do not meet rental requirements, there is a record that protects property owners.
5. An applicant provides pay stubs but does not want the employer contacted
Pay stubs and a written statement regarding an applicants’ employment can be faked or forged with little effort. Requiring employer contact information on the basic rental application form provides the company contact information, which allows for a direct check with the company.
6. The prospective tenant is vague about income
Many people work from home since the pandemic started, and there are millions of people that are legitimately self-employed.
USA.gov, the Official Guide to Government Information and Services lists verifying a tenant’s income as one of several ways that property owners can protect themselves from scams that target property owners.
7. The applicant wants to rent the property sight unseen
The FBI lists this as one of the warning signs that is an indicator of fraudulent activity targeting property owners. Agreeing to this likely means that the applicant also wants to send the application fee and rent without meeting in person.
8. There is an unusual sense of urgency to rent the property
What does the tenant have to hide? Why is there an urgent need to rent the property? Applicants may offer to pay more than the deposit or rent to get the property owner to quickly rent them the apartment.
This is another red flag from the list of common rental scams described by the FBI. Sticking to the strict tenant background check procedures means less risk of being scammed while still complying with the extension on the eviction moratorium.
9. There is a history of evictions
Although property owners are not permitted to deny tenancy to an applicant that is based solely on rent accrued during the coronavirus pandemic, a history of prior evictions is still a legitimate reason to reject a rental application.
Can I Evict a Tenant for Reasons Other than Non-Payment of Rent?
This is an area where property owners still have protections and resources during the COVID pandemic. The State of North Carolina provides an answer to this question which is similar to many other states. Property owners can indeed have tenants removed for reasons not related to rental payments.
If a landlord discovers that tenants lied on their application, engaged in criminal conduct, damaged the property or committed other offenses in violation of the landlord tenant laws, an eviction action may proceed if the property manager explains the reason for the proceedings, and the judge or magistrate grants the request. This is true even if the tenant completed the CDC Declaration Form.
Some property owners likely feel that they have no recourse to reject rental applicants or tenants once they move into a property because of the pandemic. Fortunately, courts and government agencies still allow property owners to continue screening for qualified applicants, and to legally remove tenants for just cause.