How to Screen Applicants Without Violating Privacy

Rental properties are an important investment, so it’s only natural to want to screen applicants properly and effectively before offering them a tenancy.

You want a reliable tenant who pays the rent and keeps the house in order.

While these are extremely fair and reasonable desires, when it comes to applicant screening, you have to be very careful to respect their privacy and comply with all relevant laws.

It’s not enough to plug “download rental agreement template” into Google and go from there — you’ve got to understand your legal obligations and the best practices in applicant screening so you can provide a fair, legal process that doesn’t expose you to any unnecessary risks.

Understand Your Legal Obligations

As with anything in business, applicant screening for tenants is subject to strict laws to ensure fairness and that everyone involved is protected.

With applicant screening, there are three main legal considerations:

• The Fair Housing Act (FHA)
• The Fair Credit Reporting Act (FCRA)
• State and Local Laws

The Fair Housing Act

The FHA is a federal law, and its primary purpose is to prevent discrimination based on race, color, sex, national origin, familial status, or disability.

It’s not just about avoiding discrimination — it has privacy implications, too.

FHA compliance means landlords should avoid collecting data that could unnecessarily reveal protected characteristics, whether through direct or indirect questions about protected characteristics.

The Fair Credit Reporting Act

The FCRA is essential reading for landlords.

This act outlines how and when to use consumer reports, including tenant screening reports.

Consumer reports include credit reports from credit bureaus, reports from tenant screening companies, criminal background checks, and similar things.

Each of these things contains massive amounts of sensitive personal information, so you need to know how and when to use them — and how to dispose of them properly.

The FCRA has several key provisions for landlords, who must ensure they have:

• Permissible purpose: A legitimate reason to request a consumer report, such as a tenancy application.
• Written consent: Applicants should authorize, in writing, any credit or background checks you want to make on them.
• Adverse action notices: If an application is denied based on the information in the report, landlords must notify the applicant and provide details.

One of the biggest implications of the FCRA on applicant privacy is its requirements for secure disposal of personal data.

Any information received and used must be securely disposed of so that it cannot be read or reconstructed.

Common methods include burning or shredding paper documents and disposing of electronic data properly.

State or Local Laws and Requirements

States vary in their privacy laws.

In California, the California Privacy Rights Act (CPRA) outlines several rights for California residents to control their own data.

When it comes to tenant screening, landlords should be aware that California tenants have various additional rights:

• Right to Know: California residents have the right to know which information you’ve collected about them, and how it’s to be used and shared.
• Right to Delete: Residents can request the deletion of personal information.
• Right to Correct: If information is incorrect, residents have the right to correct it.
• Right to Limit Use and Disclosure: Residents can limit the use and disclosure of information collected about them.
• Right to Non-Discrimination: Residents can’t be discriminated against for using their CCPA rights.

Always be aware of state-level requirements.

Misunderstanding a state’s specific laws can be a real headache for landlords.

Implement Privacy-Focused Screening Practices

Maintaining a privacy-compliant screening process doesn’t need to be difficult.

When you invest in creating a consistent, universally applicable process with privacy built in from the very beginning, you can avoid exposing tenants’ personal data — and avoid exposing yourself to any legal risks.

If you follow these steps, you can maintain privacy while also ensuring accurate and effective screening:

• Collect only strictly necessary information — This includes rental history, income verification, credit reports, and criminal histories (where permissible) — and only ask for it once it becomes necessary.
• Obtain written consent — This is an FCRA requirement.
• Use reputable, privacy-compliant screening services — Use certified CRAs with good security and privacy practices.
• Limit data sharing and storage — Share data only with relevant staff or authorized parties for a specific, permissible purpose.
• Apply consistent, uniform criteria, and document it — Avoid incidental requests for additional data, which could expose sensitive information inadvertently, and always keep records showing you only used and requested relevant data.
• Maintain digital security at all times — Don’t share sensitive information via unsecured email, and always use secure data storage.

Final Thoughts

Applicant screening is a delicate process that balances applicants’ rights to privacy and the need to ensure reliable tenants.

By understanding your legal obligations and engaging in privacy-focused practices, you can maintain an effective screening process that doesn’t violate applicants’ privacy.