Screening and choosing tenants is never a straightforward process. First you have to contend with federal and Michigan state tenant laws, but then you also have to consider a tenant’s particular history. No case is simple, and you must stay vigilant to avoid bad tenants or potential lawsuits.
Be aware of Michigan laws
There are various Michigan laws and regulations that change how the tenant screening process works in this state. The key rules to keep in mind include the following:
- There is no maximum limit for an application fee
- The maximum security deposit is 1 ½ times the monthly rent
- Applications fees must be considered separate from a security deposit (security deposits are refundable, while application fees are not)
Comply with the Fair Housing Act
The Fair Housing Act (FHA) is a federal law that prevents landlords from discriminating against a potential tenant. However, the FHA only applies to protected classes, meaning that a landlord cannot deny a tenant’s application for any of the following reasons:
- Race
- Religion
- Color
- National Origin
- Sex
- Disability (physical, mental, or chronic alcoholism)
- Familial Status (presence of at least one child under 18 years old, pregnant tenants, or tenants in process of adopting)
There are exceptions to the FHA. Owner-occupied buildings with fewer than four units or single-family houses (so long as the landlord owns less than three) are not subject to FHA regulations.
Check Income and Credit
You cannot reject an application based on an individuals’ race, religion, sex, etc. However, you can reject an application based on their income or credit history. These two factors are big indicators of reliability and responsibility. Nevertheless, it’s important to have some leeway. The 30 percent rule, for instance, is continuously criticized as outdated. Additionally, an eviction from 20 years ago may not be representative of who the tenant is now.
Criminal Background Check
Finally, there is the criminal background check. Similar to income and credit history, you can reject an application based on what you find in a person’s criminal background. But once again, you should decide on a case-by-case basis. Not all crimes are created equal, and you must decide for yourself which crimes you can look past and which ones you cannot. Here are a few things you should consider:
- What was the offense?
- How serious was the crime?
- Were they convicted?
- How recently did the crime occur?
- How many offenses were they charged with?
Screening and choosing tenants can be fraught with legal implications. Aaron Cox Law can help. To learn more, contact us today.