The Landlord’s Guide to State And Federal Rental Application Laws

The Big Picture On State And Federal Rental Application Laws:

Landlords must avoid discrimination based on race, color, national origin, religion, sex, familial status, and disability.
Federal law requires landlords to accommodate service and emotional support animals, even with a no-pet policy.
HUD restricts blanket policies against applicants with criminal records.

Before doing any tenant screening, having a fully completed and signed rental application form for each applicant over the age of eighteen is a must!

Only then is it worth running tenant screening reports, contacting employers and former landlords, and so on.

Still, there are plenty of regulations, on both the federal and state levels, that landlords should take into consideration before throwing around rental application forms. These landlord-tenant and anti-discrimination laws are especially important to know given the number of free rental applications floating around the good ol’ interwebs.

 

Nationwide Rental Application Dos, Don’ts, & Fair Housing Laws

Rules, rules and more rules surround just about everything surrounding real estate investing. And the lease application process is no exception. Therefore, it’s essential to have a clear guide to state and federal rental application laws to avoid legal issues.

The Federal Fair Housing Act is part of the Civil Rights Act of 1968. The idea behind it was to protect and defend against discrimination on the basis of color, race, national origin, religion, family status, disability, and sex. Over the years lawmakers have added new protected classes such as age.

Recently, criminals have even been granted certain Fair Housing protections. Even though those that have a criminal record may not be necessarily a protected class, there are still limitations placed on landlords deciding whether to lease to them. The Department of Housing and Urban Development (HUD) has initiated rules to prevent property managers and landlords from having blanket guidelines about criminal records.

What should landlords do when choosing between rental applications, to avoid becoming the next Fair Housing lawsuit against a landlord?

Cover your butt, and have your selection criteria in writing. Be careful what and how you ask for information. Never even bring up words like “single” or “married,” or otherwise distinguish between protected classes.

Treat everyone who completes a rental application in the same regard, never scrutinizing one over another. An example would be, all young, single people being required to have a higher credit rating than married couples. Big no-no! Get familiar with Fair Housing pitfalls and how to avoid them.

Protected Classes & Discrimination Summary

For a better picture, below are some of the major no-nos under the Fair Housing Act.

Protected Classes 
Examples of Discrimination to Avoid

Race, Color, National Origin
Refusing to rent based on race or ethnicity or applying different rental terms or conditions based on race or ethnicity

Religion
Refusing to rent to someone due to their religious beliefs or enforcing rules that restrict religious practices

Sex
Refusing to rent to a single woman or man or applying different rental criteria based on gender

Familial Status
Refusing to rent to families with children or restricting families to certain areas of the property

Disability
Refusing to make reasonable accommodations for tenants with disabilities

Other Protected Classes (varies by state)
Age discrimination, sexual orientation discrimination, and source of income discrimination

 

Fair Credit Reporting Act (FCRA) Requirements

Yet another set of federal rules on how landlords collect and screen rental applications? The laws listed in the FCRA or the Fair Credit Reporting Act are a crucial part of any guide to state and federal rental application laws.

They regulate how a landlord or property manager use, store, and dispose of the information they receive on a rental application form and any tenant credit reports run. The information may not be used for any other purpose than for renting and tenant screening. It also must be stored securely.

Furthermore, written permission must be obtained by the applicant to collect and view the private information in a rental application and/or credit report. A good rental application form will include a statement of permission with signature lines for each applicant.

TIP: Be careful when receiving and storing all of private tenant screening information electronically! If possible, meet all rental applicants in person. Additionally, have them provide proof of identity. There are so many rental scammers in the world today. It is very risky leasing sight unseen.

 

How Many Tenants Can Live in a House?

Determining a rental house’s maximum tenants involves property size, local ordinances and state laws. The nationwide standard typically follows a two-person-per-bedroom formula, but some states use different rules. California applies a “two-plus-one” rule, allowing two people per bedroom plus one additional person.

Landlords must consult local housing codes, comply with state regulations and follow policies in the Fair Housing Act, the Keating memo and International Property Maintenance Code to set occupancy limits.

Upfront Rent Limitations for Landlords

The amount of upfront rent a landlord can request varies by state. In Pennsylvania, a 2018 court case brought the issue to the forefront.

The law aims to protect tenants from excessive upfront costs while still providing landlords with reasonable security.

The “Hairy” Issue of Service and Emotional Support Animals

There has been much hoopla around what constitutes a service animal, a support animal, a pet, and so forth.

According to the ADA (Americans With Disabilities Act), as of March 15, 2011, only dogs are recognized as service animals under Titles II and III. These dogs are considered working animals, not pets. They have a defined purpose.

Federal laws require landlords to permit reasonable accommodations to those tenants with disabilities. That means that if Fido is classified as a service or emotional support animal, they can take up residence in the rental unit, even if the landlord has a “No pets” policy. The landlord may not say no if there is specific and sufficient proof that the animal is, in fact, a service animal or even an emotional support animal.

As with anything, there are exceptions. One such exception is when the landlord is living in the rental unit and they or an immediate member of the family is allergic. Another exception is if the support or service animal in question has been deliberately aggressive with anyone.

As you can from the chart to the right, landlords and property managers are required to accept service and emotional support animals, but not therapy dogs.

 

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Do States Have Unique Rental Application Laws?

The short answer: some do.

One of the biggest differences between state landlord-tenant laws on rental applications is the application fee that landlords are allowed to charge. Generally speaking, application fees should be close to the landlord’s actual tenant screening costs.

For instance, if the tenant screening service you are using charges $45, it’s almost certainly taboo to charge applicants $150 each. And in some states, like California, there are strict limits set. As of this current writing, $49.12 is the most a landlord may charge to an applicant as a California rental application fee. (Where on earth do they get these numbers?)

SparkRental’s tenant screening reports may be used even in restrictive California (how’s that for a shameless plug?). The charges range between $25-40 (depending on which tenant screening reports you order), and you can still charge the reports directly to the applicant.

 

Other State Law Differences & Rental Application Requirements

Every landlord needs to thoroughly understand the local and state landlord-tenant laws that apply to each of their investment properties. That includes learning about any special laws surrounding the rental application process.

For example, Washington state imposes several mandates to be followed regarding the rental application process. Under Washington law, the applicant must be informed about exactly what information will be shared with the landlord, any criteria that may cause a rejection of the rental application, the consumer reporting agency which will be used, fees and more.

Maryland has its own state-specific rental application laws as well. In Maryland, landlords with more than five units at a single location must provide a rental application that clearly outlines the applicants’ rights and responsibilities regarding the application fee.

Under Florida rental application laws, as outlined in the guide to state and federal rental application laws, a military service member must be informed of the approval or non-approval of their rental application within seven days after it has been given.

California rental application law asserts that the applicant is entitled to a copy of their credit report should they request a copy.

These are just a handful of state rental application laws. Overall, most states do not regulate too heavily the managing and processing of rental application forms, fees, and tenant screening. But be sure you know if yours does!

Apartment Application vs. Rental Application: Same Difference?

If you were to run a Google search on “rental application form,” “apartment application,” and “house rental application,” the results would be very much the same.

Because overall, they are simply different names for the same form.

However, in some states like Maryland (see above), there may be specific laws for owners of apartment buildings. These laws may require text to be included in the apartment application.

Yet another reminder that everyone who owns rental property know and understand the laws!

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Are All Rental Application Forms the Same?

If it waddles like a duck, it is a duck, right?

Not exactly.

What’s the difference between a comprehensive rental application and a shoddy one? Can free rental applications be high-quality? Or do you have to pay money for a comprehensive rental application?

My experience as a property manager has been that there is no reason to purchase a rental application form. There are hundreds of free rental application forms available online, and many can be completed 100% digitally. (As I touched on above though, it’s best practice to have at least one meeting with all applicants in person, and have them verify their identity!)

For example, we offer an excellent free rental application here at Spark Rental. But even if you use a free rental application from another source, make sure it includes the following at a bare minimum.

 

What Makes a Good Rental Application?

First and foremost: it is clear and easy to read!

But also make sure your rental application includes the following fundamentals:

Name
Social Security number (remember, you are responsible to safely secure this information)
Employment information
Additional, or other income sources
Current and prior address, as applicable
Current landlord info
Prior landlord info
Occupant info (all those under age 18)
Car info
Pet Info
Basic financial info
References (non-related)
Confirms legal records and rental history such as bankruptcy, eviction, and late rent payments
Includes a clear authorization to pull tenant screening reports, contact employers and former landlords, and otherwise investigate the applicant within the confines of the law
Includes a clear statement of any application fee and that it is non-refundable, as long as permitted by your state law
A way for the applicant to sign it

As mentioned above, Spark Rental does offer an emailable rental application that can be typed into, e-signed, and emailed back. And yes, it does include all the elements of a good rental application.

Of course, I may be a bit biased.

 

A Final Warning About Rental Discrimination

Remember, just because you ask for it, does not mean you can turn down the applicant because of it. For instance, landlords are entitled to ask who will be occupying their rental property. But when you discover that the applicant lists two-year-old twins as additional occupants, that cannot be used in any way, shape or form as a reason for denial.

This is why it’s essential to familiarize yourself with the guide to state and federal rental application laws to ensure compliance.

Additionally, you will notice that I did not include “marital status” or “ethnicity” as part of what makes for a good rental application. No sense in asking for this type of information; no good can come of it for you as a landlord.

For example, if you ask whether two co-applicants of the same sex are married, it leaves the door wide open for a discrimination lawsuit if you reject their lease application.

Tenant screening and signing a lease agreement is a business relationship. You can and should ask questions that are relevant to that business relationship, such as verifying that the applicant has a history of paying their rent on time. But avoid even the slightest room for preconceived notions or subconscious prejudices to influence your leasing decisions when screening your next tenants.

 

Wrapping It Up

Remember, tenant screening is more than a rental application. It is getting to know your prospective renters. Meet them in person at least once, if possible. And do not forget to get proof of identification! (Which, incidentally, is included in our tenant screening reports.) Be sure to review the guide to state and federal rental application laws to ensure you are complying with all relevant regulations!

Look for the little clues about an applicant that may not be written out clearly on the rental application. For instance, when glancing inside their vehicle, is it littered with trash or debris? If their car is a mess, how will they treat your rental property?

Visit them in their current rental property, for a similar impression of how they live. And if you have an applicant that has many red flags staring you in the face, keep your emotions out of it. This is business. Treat it as such.

Remember you have options to lower your risk as a landlord, and not only by thoroughly screening tenants. You could check out landlord insurance. It is an inexpensive insurance that protects you in case your renter decides paying rent is not important.

Or you could charge a higher security deposit (state laws permitting), or require a co-signer. Or you can reject them and keep looking! Just make sure you keep copies of all rental applications and tenant screening reports for at least six months, so you can defend your leasing decisions if challenged by a rejected applicant.

Have you ever rented to someone using a rental application? Did it go well? Have you ever rented to someone in spite of the information from a rental application? For instance, what if an applicant answers “yes” to being evicted?

 

 

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