In the rental industry it has become common practice that when landlords qualify potential applicants, they send out rental verification forms to previous landlords. This is a good way to get some insight into how the applicant will be as a resident from someone who actually dealt with them in their own rental property. Not many people stop to think, though, whether any law governs rental verifications and whether there is a reason to fill them out. What information can you ask for, and what information should the previous landlord provide?
There is no standard form for a rental verification. Most landlords create their own form and ask the questions that they think are the most relevant to the application. It is common to ask how long a resident stayed in the unit, whether they fulfilled their lease, the amount of the monthly rent, whether they were evicted, and whether the landlord would rent to that resident again. This type of information sounds good, but can lead to problems for both the new landlord and the previous landlord.
As to the new landlord, they could run into fair housing issues if they improperly rely upon information provided in a rental verification. Fair housing laws say that you must treat all applicants the same and may only reject an applicant if they fail to meet your screening criteria (we strongly suggest having your criteria in writing—anything else is insufficient). However, much of the information in a rental verification may not be part of the new landlord’s screening criteria, and the new landlord may be unable to confirm the validity of what the former landlord is saying. For example, if a former landlord states that they wouldn’t rent to the applicant again, the new landlord may be inclined to reject that applicant. However, the new landlord wouldn’t know the true story—it is possible that the resident was truly bad, or it’s possible that the former landlord was engaging in illegal practices. In either case, the new landlord wouldn’t want to rely on someone else’s statements in the event a fair housing complaint was filed.
As to the former landlord, there are more potential issues with completing rental verifications. It is important to recognize that there is no real benefit to the former landlord and a rental verification is done as a professional courtesy only. Once you realize this, you realize that there could be a lot of problems with giving an opinion about a former resident. Questions that are absolutes (such as what the rent was and the term of the lease) are easily answered. But whether the manager would rent to that person again leads to completely subjective answers and potential liability. This is because this question likely requires the manager to go away from facts and delve into opinions.
Think for a second—if the old landlord gives a negative rental verification, the resident is likely going to be denied their new rental and the resident will know who caused their denial. This can lead to very negative feelings and threats of litigation. The most common threat we have heard relating to rental verifications is that the former resident will file suit for libel. In Arizona, a claim for libel means that a false statement was “published” to a third party and the person who was the subject of the statement was damaged. All of these elements are easily proven with a rental verification—the only question is whether the information is false. However, when you are dealing with subjective opinions and legal conclusions, what is false can be a grey area. For example, if a resident terminates their lease because a landlord won’t fix things, the landlord may say that the resident didn’t fulfill their lease. However, as a matter of law they did, because the landlord breached. A clever attorney can make any statement potentially sound false when the statement contains enough subjective opinions and not facts.
Because of this, we generally advise clients to only ask for, and to only provide, three basic facts about the tenancy: (1) that the resident did rent the property; (2) the term of the lease as per the contract; and (3) the rental rate. These facts are easily proven with the lease and do not leave room for subjective opinions. Again, since rental verifications are merely a “courtesy” in our industry, it is better to be safe than sorry.
Content Provided by
Williams, Zinman & Parham P.C.
7701 E. Indian School Road, Suite J
480-994-4732 | www.wzplegal.com
Contact Me Today
Increase Rent & Lower Expenses........................... Reduce Your Liability .............Free Up Your Time & Energy