If I hired a property manager, can I still approve or reject a tenant, as long as I do so within Fair Housing Laws?
Generally, as the property owner, you can override the decisions of your manager. Indeed, you should reserve the final approval authority to yourself, in most cases. That doesn’t mean it’s a great idea to override the recommendations of your property manager.
Doing so exposes you more directly to claims of housing discrimination (they aren’t always well-founded, but you can be targeted just the same!), and also deprives you of the expertise and advice of an experienced and qualified property management firm (assuming you hired a good one, which we assume you did).
If you are going to get directly involved, though, it’s generally a good idea to have a written rental application approval criteria and stick with it. In a litigious society, these criteria may give you a legal life raft to cling to in case you are sued for housing discrimination.
That’s right, you can still be sued for unlawful housing discrimination, even if you think you are operating within federal and state fair housing laws. This is because people have differences of opinion, naturally, and the mere perception of discriminatory practice can cause a lot of problems for people who are very much trying to do the right thing.
If you have a previously published criteria you can point to, and you acted reasonably in accordance with this criteria, and the criteria itself does not call for unlawful discrimination in housing, you can potentially save yourself a lot of grief.
This excellent guide from the American Bar Association goes into more detailed reasons why such a published policy is important. One of the key passages:
“Landlords should have a written rental policy detailing the criteria necessary for approval to live in their property. The rental policy should include occupancy guidelines, availability policy, rental criteria (i.e. employment history/income, credit standards, etc.) with an explanation of what the criteria are, an outline of the application process and that your client adheres to all applicable fair housing laws. Questions included on the application should not ask about physical or mental disabilities, and landlords should limit questions about drug/alcohol use and lawsuits.”
Here is an example of a detailed statement of rental approval criteria, in this case attached to the application (though one must stop to consider how bright an attorney is who recommends his landlord clients ask a self-employed individual for a W-2! Self-employed people get 1099s, not W-2s, which only go to statutory employees!).
Here’s another example of a published rental criteria.
Some jurisdictions require landlords to furnish applicants with the specific criteria they use when they apply. Colorado is not among them, as far as I can tell. But you should have your written criteria and policy to guide you, for your own self-protection from a risk management point of view, and also to help you remember to make business decisions with your head, not with your gut.
Writing about personal finance and investments since 1999, Jason Van Steenwyk started as a reporter with Mutual Funds Magazine and served as editor of Investors’ Digest. He now publishes feature articles in many publications including Annuity Selling Guide, Bankrate.com, and more.