Screening New Tenants...

[pixelrogue1]

Seeing a trend with renters who's primary income would be social security. How would a landlord protect themselves in the event of a lease break if the tenant's primary income would in the form of a government check (such as social security?) Is it legal to not accept a prospective tenant based on their income "type"? Guess the same question goes to someone who would be self employed.

 

[FarmerJ]

It seems to me that your concern should be if the prospective tenant has enough income to afford your property and not be paying out a high percentage of income so if the rent is going to take 60 % of a tenants income then perhaps you should find a way to discourage that applicant and make sure that your rental applications spell out a minimum income requirement from now on. Years ago when I was a kid older relatives said 25 % of your income should go toward rent. Well over the years ive seen people say 30 -35% , when one gets to a point that much more than that is needed to pay rent then tenants may make choices such as needing car repairs vs paying rent a week late , too easy to snowball into bigger problems. If your state laws don't prevent it then your free to require first last and deposit all in cash up front so that way if a months rent is missed your able to swiftly act and begin the process that leads to a eviction based on non payment. If they are on SS or not its possible that you will never collect a dime from a tenant should they not pay and you have to use the courts to evict. so first last and dep all at once will reduce what your loss a bit if its only unpaid rent and they didn't have a lot of damage.

 

[HRZ]

In some views a tenant on SS who has sufficient SS or other rerirement to afford the unit is a safer bet than somebody with similar income with a job that may or may not be there next month .

I think you are asking for problems as to age discrimination if you reject SS or retirement income . But if you screen out based on a consistent rent to income ratio and screen for short term unverifiable income that may be different.

I live on a state line and under prior law which prevented wage attachments for rent in my state but not the next one over, other things equal I always looked at out of state applicants a bit more favorably .

If the tenant cannot afford the unit with a bit of safety margin ...keep looking...that tenant is a big risk for " issues " downstream ,
...

 

[pixelrogue1]

It seems to me that your concern should be if the prospective tenant has enough income to afford your property and not be paying out a high percentage of income so if the rent is going to take 60 % of a tenants income then perhaps you should find a way to discourage that applicant and make sure that your rental applications spell out a minimum income requirement from now on. Years ago when I was a kid older relatives said 25 % of your income should go toward rent. Well over the years ive seen people say 30 -35% , when one gets to a point that much more than that is needed to pay rent then tenants may make choices such as needing car repairs vs paying rent a week late , too easy to snowball into bigger problems. If your state laws don't prevent it then your free to require first last and deposit all in cash up front so that way if a months rent is missed your able to swiftly act and begin the process that leads to a eviction based on non payment. If they are on SS or not its possible that you will never collect a dime from a tenant should they not pay and you have to use the courts to evict. so first last and dep all at once will reduce what your loss a bit if its only unpaid rent and they didn't have a lot of damage.

To be clear, the only purpose to this question is so there is a way to collect a judgement in the event of a lease break. This is not about their % of income, as the % of income would not matter. They could be a millionaire, yet if those funds are in the form of a government check, they can not be garnished to cure a judgement.

We collect first, last and security up front, and can tell you it takes MONTHS going through courts to evict and the last-months rent (and even security deposit which is there for a different purpose) does not cover the expenses involved in an eviction along w/lost rent (lost opportunity etc.). If the tenant gets evicted, you have a judgement for past due rent, yet the tenant's income is through a government program (i.e. social security), which you can not garnish - how does a landlord protect their interest? Are you allowed to not accept a tenant based on payment "type?"

 

[LdiJ]

To be clear, the only purpose to this question is so there is a way to collect a judgement in the event of a lease break. This is not about their % of income, as the % of income would not matter. They could be a millionaire, yet if those funds are in the form of a government check, they can not be garnished to cure a judgement.

We collect first, last and security up front, and can tell you it takes MONTHS going through courts to evict and the last-months rent (and even security deposit which is there for a different purpose) does not cover the expenses involved in an eviction along w/lost rent (lost opportunity etc.). If the tenant gets evicted, you have a judgement for past due rent, yet the tenant's income is through a government program (i.e. social security), which you can not garnish - how does a landlord protect their interest? Are you allowed to not accept a tenant based on payment "type?"

You are not allowed to discriminate and both age and disability could be discrimination issues...and again, someone with that kind of a fixed income is never going to suddenly lose their income. Or, at least is far less likely to lose their income than anyone else.

Therefore, I think that you are over estimating potential risk.

 

[pixelrogue1]

In some views a tenant on SS who has sufficient SS or other rerirement to afford the unit is a safer bet than somebody with similar income with a job that may or may not be there next month .

I think you are asking for problems as to age discrimination if you reject SS or retirement income . But if you screen out based on a consistent rent to income ratio and screen for short term unverifiable income that may be different.

I live on a state line and under prior law which prevented wage attachments for rent in my state but not the next one over, other things equal I always looked at out of state applicants a bit more favorably .

If the tenant cannot afford the unit with a bit of safety margin ...keep looking...that tenant is a big risk for " issues " downstream ,
...

Would a person on SS be a safer bet than someone w/can easily jump job-to-job, sure, and safer than someone who has their own business. Yet in all three of these cases, you have no way minimal opportunity to cure a judgement.

I do not see a way to collect when the tenant's income is a government check. So this can be anything from public assistance programs to social security. Age is not the factor, and in the event that government payment is social security, there is risk that prospect tenant would infer that the issue is age rather than government payment related.
(As a landlord you have the choice to accept, or not accept, section 8 ~ and prospective tenants are aware that the acceptance is optional and not required.)

Someone w/an acceptable credit score (as I keep the same criteria for all applicants,) with acceptable income (even excessive over-the-top income) ~ is a risk in the event of a lease break, if they are self-employed or receiving government income.

So how does a landlord protect themselves in these situations? While a landlord can require a credit score to be over a specific number, can a landlord require W2 income; deny those who are getting any type of government payment (ss, public assistance, disability etc), deny self-employed?

Screening based on debt-to-income ratio and credit score is already part of the process, yet does nothing to cure a judgement. Are we allowed to screen based on income 'type?'
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I have been in this business for many years now, and while I have been fortunate that lease breaks have been few and far between, the problems I have run into have revolved around government payments, self employed.

 

[pixelrogue1]

You are not allowed to discriminate and both age and disability could be discrimination issues...and again, someone with that kind of a fixed income is never going to suddenly lose their income. Or, at least is far less likely to lose their income than anyone else.

Therefore, I think that you are over estimating potential risk.

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Yes, not interested in screening based on age or disability. Simply a way to be protected in the event of a lease break. Someone w/fixed income does not lose their income, but they can decide (and have) to stop paying rent. (One instance was a tenant who reprioritized the purchase of a new vehicle over the rent.)

 

[FarmerJ]

Then if your state hasn't legally barred it get first and last two months and deposit OR get first, last , deposit and co signer ( since a co signer would give you one more party to go after) , even if you have a supposedly wealthy tenant , some of those tenants aren't very angelic and treat leases like TP just because they can afford the consequences.

 

[LdiJ]

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Yes, not interested in screening based on age or disability. Simply a way to be protected in the event of a lease break. Someone w/fixed income does not lose their income, but they can decide (and have) to stop paying rent. (One instance was a tenant who reprioritized the purchase of a new vehicle over the rent.)

The only people on Social Security are the elderly and the disabled.

 

[pixelrogue1]

The only people on Social Security are the elderly and the disabled.

Can an apartment owner in PA require tenants to have W2 employment, so long as that rule was applied across the board to all tenants/prospective tenants for that person's business? Other business extending credit (loans etc) require W2, not accepting SS or self-employed.

 

[DeenaCA]

I agree that requiring employment could be found to be discriminatory against elderly and disabled applicants. Take a look at the fair housing guidelines brochure from the PA Association of Realtors. It does appear that a PA housing provider may legally require a minimum gross income for renting a unit. Such a requirement could result in disqualification of many of the applicants you are trying to avoid.

 

[pixelrogue1]

Looks like a no. Thank you everyone for the input. Was hoping there was a different angle.