Roughly 35% of the U.S. population resides in rental housing while in New York this figure is approximately 24%. New York City is among the most costly cities to purchase or lease residential property with the median rent price of $1,830 for unregulated units in 2016. The city has managed laws regarding the tenant screening process for many years. The latest change was the “Tenant Screening Report Disclosure,” which the New York State Association of Realtors (NYSAR) says outlines requirements of real estate brokers and those who screen potential tenants on behalf of landlords. The rules include the various disclosures that must be provided. We will review what you can expect from the process, address credit, and types of inquiries that may be potential violations of fair housing laws.
Overview of Tenant Screening
A tenant screening report involves communications with a consumer reporting agency regarding a consumer's credit history, standing, or capacity. In addition, it may relate to housing, civil, or criminal history, and other characteristics for the purpose of determining suitability for housing. Consumer reporting agencies are entities engaged in gathering, evaluating, and providing consumer information. Those offering housing have the right to establish qualifications for applicants based on financial and credit factors. This activity is subject to the Fair Credit Reporting Act that has protections for records gathered by credit agencies, medical data organizations, and tenant screening companies.
When a housing providers request information from potential tenants, they must disclose that this data may be used to access a tenant screening report and specify the reporting agencies. If the housing provider makes a decision that leads to adverse action (denial) against the potential tenant, they must inform them. Those adversely impacted have a right to access and review the reported data at no cost and dispute any information deemed as inaccurate.
Some of the most commonly considered information that factors into the tenant screening process includes:
- Current & past employment (limited to seven years)
- Prior rental history
- Credit score
- Personal, work, and housing-related references
- Criminal record
- Sex offender registry status
- Prior evictions
- Other restrictions may involve pets, smoking and potential ratio of income to rent.
Those executing the application process are only permitted to make legitimate inquiries that are within the rules of fair housing law. Screening criteria should be consistent for all applicants and may not be based on discriminatory factors, e.g. race, gender, religion. These violations are cause for legal ramifications.
Rules Unique to New York
The fundamental aspects of the process for tenant screening are similar from state-to-state, yet New York has a few notable differences. The state's Office of Court Administration provides data from housing court to those conducting tenant screening—long considered the “tenant blacklist” report. Security deposits must all be treated as trust funds and remain separately accounted for. The state allows application fees of any amount, as the rules simply state that the amount is deemed as “reasonable”.
Tenant screening laws can be complex but are considered as a means for a fair process. It gives the leasing agent an opportunity to determine if the renter is qualified, and it gives the renter the opportunity to contest or dispute any inaccuracies on his or her report. If you are looking to lease property in New York City, be aware of the screening laws and know that you have rights in this process.
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