Screening tenants in New York State is more than simply reviewing the application of someone who can pay rent on time. Properly navigating the sometimes complex state-specific laws and regulations can help protect you and your rental property from legal troubles by ensuring a fair selection process.
For instance, New York law regulates the types of questions you can ask on a rental application. The state also controls how to use screening reports and even strictly limits the amount you can charge for a background check.
In this article, you’ll learn the essential rules and regulations for tenant screening in New York, from what you can legally include on an application form to common pitfalls that can lead to costly mistakes. This way, you can find reliable tenants while staying compliant with state laws.
Key takeaways from tenant screening laws in New York
- Application fees: New York landlords can charge an application fee, but it can’t exceed the actual cost of background and credit checks or $20, whichever is less.
- Security deposit limit: The security deposit for a rental unit can’t exceed one month’s rent.
- Written consent for background checks: Before conducting any credit or criminal background checks, you must obtain an applicant’s written consent to comply with legal regulations. It also respects the privacy of your potential tenants.
- Timing of criminal history inquiry: You can only ask about an applicant’s criminal history after making a conditional housing offer. This law helps prevent discrimination against individuals with criminal records, giving them a fair chance at securing housing.
- Fair housing compliance: New York’s tenant screening laws require adherence to federal Fair Housing Act regulations. You must avoid questions that could reveal an applicant’s protected class status and apply your screening criteria consistently to all applicants.
- Eviction history: While you can consider eviction history, evaluating its context is important. Not all evictions should automatically disqualify an applicant, especially due to extenuating circumstances like financial hardships during the COVID-19 pandemic.
- Disclosure of screening criteria: Clearly explain your screening criteria to prospective tenants upfront. That includes benchmarks like required credit scores, income ratios, and rental history standards, which help ensure transparency and fairness in the screening process.
- Adverse action notices: If you decide not to rent to an applicant based on their screening report, you must provide them with an adverse action notice, as stipulated by New York law and the Fair Credit Reporting Act (FCRA). This notice should include your reasons for denial and information on how the applicant can access and review the report that influenced your decision.
Steps for screening tenants in New York
Tenant screening in New York involves several essential steps for selecting the best tenants while staying compliant with state laws and regulations. Here’s a detailed step-by-step guide.
Rental application requirements
When you’re ready to accept applications, the next step is gathering all necessary information:
- Information to collect: Include fields for personal details (i.e., name, current address, and contact information), employment history, income details, previous rental history, and references.
- Questions to ask: Be sure to include questions about the applicant’s employment status, income, reason for moving, and any past evictions or bankruptcies.
Conducting background and credit checks
New York law places specific limitations on what information you can check and when:
- Background checks: You must obtain written consent from the applicant. Remember, you can only inquire about criminal history after making a conditional housing offer.
- Credit checks: Here again, written consent is required. Evaluate the applicant’s credit score and financial history to gauge their ability to pay rent consistently.
- Financial evaluations: Assess income statements, evaluate bank statements, and verify employment to ensure the applicant meets your financial criteria.
Legal limitations
There are specific legal boundaries to respect during the screening process:
- Prohibited questions: Avoid questions that could reveal protected class status under fair housing laws, such as inquiries about race, religion, national origin, sex, disability, or familial status.
- Application fees: You’re limited to charging no more than the actual cost of background and credit checks or $20, whichever is less.
- Adverse action notices: If you deny an application based on screening results, provide a clear explanation and information on how the applicant can obtain a copy of the report used in your decision.
Tenant selection and fair housing in New York
Fair housing laws in New York are designed to give every prospective tenant a fair and equal opportunity during the application process. These laws protect specific classes of people from discrimination and mandate that housing providers apply their screening criteria equally to all applicants.
Overview of fair housing laws
In New York, fair housing laws protect applicants from discrimination by prohibiting landlords from asking direct or indirect questions revealing an applicant’s protected class or using this information in their decision-making process. That means you can’t ask about or base tenancy on the following:
- Race or color
- National origin or ethnicity
- Religion
- Sex or gender identity
- Disability status
- Familial status (e.g., having children under 18)
- Age
- Marital status
- Sexual orientation
- Military status
Best practices for screening tenants in New York
To maintain compliance with New York state laws during tenant selection, consider using these best practices:
- Uniform application process: Apply the same screening criteria to all applicants. That includes consistent requirements for income, credit scores, and background checks.
- Avoid discriminatory questions: Don’t ask about race, national origin, religion, sex, disability, familial status, or other protected characteristics. Refrain from requiring medical documentation unless it’s necessary for a disability accommodation request.
- Consistent documentation requirements: If you require government-issued identification, accept any valid form of ID. Avoid asking for documents that could reveal protected class status, such as birth certificates or passports.
- Equal treatment of references: When checking references, treat all applicants the same. Contact previous landlords and employers about a prospective renter’s work and rental history without regard to personal characteristics.
- Interpret credit and background check results fairly: Consider the context when reviewing background check results. For example, a poor credit score might be due to medical debt rather than financial irresponsibility. Always look at the bigger picture before deciding.
- Training and education: Have all individuals involved in the tenant selection process trained on fair housing laws and emphasize the importance of non-discriminatory practices.
- Recordkeeping: Maintain detailed records during the application process and the criteria used for each applicant. That can help demonstrate your compliance with the law should any disputes or investigations arise.
- Handling adverse action notices: If you deny an application based on the results of your screening process, provide an adverse action notice. This notice should clearly state the reasons for the denial and inform the applicant how to obtain a copy of the report used in your decision.
- Seek legal advice: When in doubt, consult with legal experts or the New York Department of State Fair Housing Division to ensure your practices align with current laws and regulations.
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