By: Tia Politi, ORHA President
December 14, 2022

continued from Part 1 of this article

Credit history criteria
We may require you to submit a copy of your credit report obtained within the past 30 days. Negative credit reports may result in denial of application. Negative reports include, but are not limited to: late payments, collections, judgments, total debt load, and bankruptcy.

I often hear of landlords requiring a certain credit score to qualify. This is fraught with peril, and I don’t recommend it. Not all credit problems are equivalent in the screening process, so a score is not a good way to evaluate an applicant. What if they have no credit? To me that just shows they don’t like to rack up debt. Why would that be a problem? What if the collection accounts are medical and due to a person’s disability? What if the defaults are due to domestic violence, prior addiction, or mental illness that can be documented? Each of these are ‘protected’ reasons.

Many landlords overlook medical collections, and student loan collections. Credit cards, mail order, jewelry stores, payday loan collections are a higher risk, and money owed to utility companies, cable or satellite companies, cell phone companies and the courts are a very high risk. Money owing to a prior landlord is usually a non-starter unless the applicant is making payments, but remember, debt incurred during the Protected Period cannot be used to disqualify an applicant.

An active bankruptcy poses a potential problem for a landlord as they can be named as a creditor until the bankruptcy is closed, so it’s fair to deny an applicant who is in a pending bankruptcy, but what about a past bankruptcy? While you can’t discriminate against someone who has been through bankruptcy, how much you ding an applicant for having gone through one will largely depend on the reason for it, and what has happened since. Bankruptcy to clear the slate of medical bills is very different from bankruptcy to clear the slate of consumer debt because a person was irresponsible with their money and credit. Incurring more bad debt or collections after bankruptcy can also indicate someone who is at a higher risk of default.

Taking into account the varying reasons for credit problems, your guidelines might look something like this:

1. No collections or late payments, or no credit accounts at all. Applicant meets criteria.
2. Minor credit issues – one or two late payments in the past year, up to three minor collections, under $1000 total - $250 increased deposit or qualified co-signer.
3. Moderate credit issues – some history of late payments, several collections totaling less than $2500, bankruptcy within the past 3 years – $500 increased deposit or qualified co-signer. Require written explanation.
4. Major credit issues – regular history of late payments, money owing to prior landlord, but making payments, many collection accounts totaling more than $2500, money owing to utility companies, or related to consumer debt, or collections incurred after bankruptcy – $1000 increased deposit, double deposit, or qualified co-signer. Require written explanation and copy of payment agreement with prior landlord. Verify that payments are current.
5. Open bankruptcy, money owed to prior landlord (not from the Protected Period) with no agreement to pay – automatic denial.

Prior Rental History
Favorable rental history of years must be verifiable from unbiased and unrelated sources. No evictions within the past five years. We do not consider evictions which took place five years or more ago, not do we consider evictions which resulted in a dismissal or a general judgment for the applicant. We also do not consider eviction judgments that were rendered during the COVID-19 Protected Period (April 1, 2020 – February 28, 2022). Applicants must provide the information necessary to contact past landlords.

It’s standard to require at least one year of verifiable rental history. Some companies require a minimum of two years and some as high as three years. Be sure to verify that the person you are speaking with is the owner or manager of the property by looking up the property ownership info on the county’s tax website. Some sites are easy to use, others not so much, so if you are having trouble just call the county assessor’s office and they will tell you who the owner of record is.

Taking into account your criteria and the information you are able to verify, your rental history guidelines might look something like this:

1. Full positive reference(s), excellent care of property. Applicant meets criteria.
2. Minor lack of history/one or two minor issues or late pays during tenancy – additional $500 security deposit or qualified co-signer.
3. Moderate lack of history/several violations or late pays during tenancy – additional $750 security deposit or qualified co-signer.
4. Major lack of history/regular violations or repeated late pays during tenancy/money owing to prior landlord, but making payments – additional $1000 security deposit, double deposit, or qualified co-signer. Require written explanation.
5. Eviction judgment(s) in the past five years (not including the Protected Period), money owing to prior landlord and no payments being made (unless incurred during the Protected Period), uncured violations of the rental agreement, or even multiple cured violations for things like unauthorized occupants, unauthorized animals, noise/parties, smoking in the unit, harassment, assault, running a business in the unit, subletting or running an Air BNB, unsanitary conditions, or major damage resulting from tenant neglect or failure to report maintenance issues – automatic denial.

Many companies are refusing to provide full rental references anymore and will only verify dates of residency and rent amount. I can tell at least something about the quality of the tenancy by two documents: the tenant ledger and the security deposit accounting. That information could help someone at least partially document their history.

Criminal history criteria
Criminal convictions or pending charges which may result in an application denial include but are not limited to: drug-related crimes, person crimes, sex offenses, any crimes involving financial fraud (including identity theft or forgery), or any other crime that would adversely impact the health, safety or right of peaceful enjoyment of the premises of the residents, owner/agent.

Landlords should evaluate criminal history on a case-by-case basis, considering the nature of the offense(s), the length of time since the offense(s), and the rehabilitative measure taken since. Applicants with criminal history should be required to submit a written explanation of their criminal history, and may offer other supportive documents, resources, or references to attest to their rehabilitation.

In April 2016, HUD issued a Memo alerting housing providers that they had seen a pattern of disparate impact on members of protected classes in regards to the application of screening standards required to get into housing. The concept of disparate impact states that even seemingly objective criteria can have an adverse impact on people in protected classes.

“Across the United States, African Americans and Hispanics are arrested, convicted and incarcerated at rates disproportionate to their share of the general population. Consequently, criminal records-based barriers to housing are likely to have a disproportionate impact on minority home seekers. While having a criminal record is not a protected characteristic under the Fair Housing Act, criminal history-based restrictions on housing opportunities violate the Act if, without justification, their burden falls more often on renters or other housing market participants of one race or national origin over another (i.e., discriminatory effects liability). Additionally, intentional discrimination in violation of the Act occurs if a housing provider treats individuals with comparable criminal history differently because of their race, national origin, or other protected characteristic (i.e., disparate treatment liability).”

So, how does a landlord walk this fine line regarding the past criminal history of an applicant? It is essential to know the specifics. What was the nature of the crime? Was it a one-time thing or repeated? How long ago did the crime occur? Does this history pose a current danger? Were they in the throes of addiction and now they are clean and sober? Did the offender complete their debt to society and comply with the terms of release and probation? What have they been doing since? A written statement from the individual, along with documentation of any programs or classes they have completed relating to their offense(s) may help to determine whether they are taking responsibility for their previous actions and explain why they are not a risk to the landlord or others. Speaking with parole officers, counselors, and class instructors can provide insight into whether the offender is truly repentant and turning their life in a different direction.

Another section of the Memo reminds housing providers that research into criminal history shows that if a prior offender has not committed new crimes within the past six or seven years, the risk of new offenses is like that of a person with no criminal history. However, the Memo does continue to allow the denial of applicants with criminal history if that history includes crimes for the manufacture and distribution of illegal drugs (possession is a different story), many violent crimes, and sex offenses.

I once rented to a family where the dad had a history of methamphetamine use. He was three years clean and sober when he came to us. In his written explanation he accepted full responsibility for his crimes. He provided his certificates of completion for rehab, allowed me to speak to his drug treatment counselor, his parole officer, and his ex-wife. They all vouched for his changed life. His ex-wife told me in no uncertain terms that if he were still using, her children would not be in his house; his current partner said the same thing. He had paid his fines, had a good job, good credit, and three years of positive, verifiable rental history. I made the decision to move forward with a double deposit, and it went well. Within a few years, he got his journeyman’s certification in welding and he and his family were able to buy their own home.

Another great success story was a young lady whose methamphetamine addition had resulted in the loss of custody of her two children. She completed a one-year inpatient rehab program, graduated from Renters Rehab, and we placed her in a one-bedroom apartment (albeit with a double deposit and a co-signer to mitigate the risk). Within the year she was with us, she successfully paid her rent on time, kept to her lease, and regained custody of her daughters. She needed a bigger place and transitioned out. We were all so happy to be a part of helping her rebuild her life.

The question often is, how long clean is long enough? Hard to say. I think one year clean is a good start, along with having complied with the conditions of release. Less than that, or hit-and-miss compliance, and I would have misgivings, but I would call or email the Fair Housing Council of Oregon before deciding to see what they think (www.fhco.org).

In Oregon screening law, you may not consider drug-related convictions based solely on the use or possession of marijuana. When evaluating an applicant, you may not consider the possession of a medical marijuana card or status as a medical marijuana patient when deciding about the suitability of an applicant. Affordable housing providers subject to federal laws prohibiting the use or possession of marijuana (including medical marijuana) by residents on the premises may continue to enforce those rules with their residents.

So, taking all of this information into account, your criminal history guidelines might look something like this:

1. No criminal history or one or two minor violations such as traffic, one DUII, parking ticket, wildlife violation – Applicant meets criteria.
2. Moderate criminal – repeat DUII, major load of parking or traffic violations, criminal trespass, criminal mischief, contempt of court, marijuana with intent to distribute, possession of other drugs - $500 increased deposit, or qualified co-signer along with satisfactory letter of explanation and other supporting information or references to demonstrate rehabilitation.
3. Major criminal – harassment, assault, theft, ID theft, burglary, unauthorized use of motor vehicle, unauthorized possession of firearm. $1000 increased deposit, double deposit, or qualified co-signer along with satisfactory letter of explanation and other supporting information or references to demonstrate rehabilitation.
4. Drug manufacturing, arson, patterns or history of violent crimes, sex offenses, and crimes of ID theft or forgery – automatic denial.

Co-signers
A co-signer is someone, usually a relative or close friend, who agrees to be financially liable for damages or defaults related to the tenancy. Co-signers are most often used with young people setting out on their own who have no history to evaluate but can be used in lieu of a higher deposit if you’re willing.

If you do decide to accept a co-signer, you need to have criteria for them too. Use Co-Signer Application – ORHA form #52A. It provides a good basis for qualification and allows you to fill in the multiplier regarding the amount of income you will require. If the Co-Signer meets your criteria, you will execute Co-Signer Agreement – ORHA form #52. Sometimes with groups of students renting for the first time we would have some who had co-signers and some who didn’t. We had to establish something fair and reasonable, so we came to the standard that each person needed to provide either a $500 increased security deposit or a qualified co-signer.

Special Circumstances - Reasonable Accommodation (RA)
When a person who was once addicted to drugs or alcohol stops using and becomes sober, they are considered to have been disabled during the addiction period and should not be held responsible for their actions while using. The same is true for untreated mental illness that is now under control. It can also apply to victims of domestic violence.

In cases like this, you may deny an applicant for some poor history or credit, only to have them respond with a reasonable accommodation request and verification to discount that part of their history during the time they were disabled or victimized. Like any reasonable accommodation request you are required to consider it. At a minimum, it can mean overlooking some minor lease violations, but at it’s extreme, you could be required to overlook quite a lot. An applicant may apply with RA paperwork in hand, prepared to make their request at the time of application or bring a request after application denial. In this case, you must consider the request and if you are provided with appropriate verification of the disability or history of domestic violence, you must consider discounting the negative history. The applicant must be under the care of the person verifying the disability-related need, and the verifier must have direct knowledge of the disability or victimization. You can get a good idea of how that process works by looking up the publication, Moving Forward with a Past. It’s a guide for residents with some amount of poor history that takes them through how to apply for a reasonable accommodation and how to write letters of explanation.

I once denied an applicant who had poor credit, negative rental history, and an eviction on his record that was a couple years old, but a few days later received a reasonable accommodation request and verification from his counselor letting us know that during the three-year span where the credit problems, eviction and poor rental history accumulated, he had been a victim of domestic violence by his intimate partner. According to his counselor, he didn’t know that he had been legally evicted, or that his partner had racked up substantial debt in both their names or that he owed money to a prior landlord. We discounted that part of his history, but still charged him a higher deposit because he didn’t meet our income requirement. The original property he had applied for had been leased to someone else, but we found another comparable unit and moved forward.

Victims of domestic violence are often not aware of their rights at the time the abuse is happening and sometimes lack the ability to assert any rights they are aware of, so the law takes a compassionate approach that allows victims who become aware of their rights once they are out of the abusive relationship, to ask a prospective landlord to overlook some or all of the poor history.

Addressing issues of disability through the RA process in screening is walking a fine line. I once had three people apply for a unit who had been clean and sober for one month. That didn’t seem reasonable to me, considering their extensive criminal history with methamphetamine. In another case, a friend of mine managed an apartment complex where a mentally ill resident had twice set his unit on fire while off his meds, but now was back on his meds and receiving treatment. The manager was evicting him for the behavior, but his counselor wanted to use the RA process to stop the eviction. The manager declined and the resident and his counselor chose not to fight it. What would have happened if a complaint had been filed? I don’t know, but in cases like these it’s important to document the reasoning and if you have any questions, contact FHCO. They can provide guidance.

Inability to verify information
If, after making a good faith effort, we are unable to verify information on your application, or if you fail to pass any of the screening criteria, the application process will be terminated.

The law is very clear that if you are unable to verify the information provided by the applicant, that you are not obligated to rent to them. There can, however, be reasons that some part of an applicant’s history is unavailable such as the death of the landlord. Be sure to check on that, though. I did once have an applicant tell me his landlord was dead, only to find out that he was very much alive and was owed more than $5000 by the tenant for the damage done to the home. Google is very helpful in discovering whether someone is still with us.

Every day a property sits empty, is a day with no rent. It’s reasonable to work an application for a couple of days, and let the applicant know if one or more of their references is not responding, but at some point, you need to move on. Just make sure you can document your efforts to reach the person in case the applicant thinks you just went through the motions to deny them for some other reason.

Explanations/Exceptions
All applicants may submit a written explanation with their applications if there are extenuating circumstances which require additional consideration.

In any case of deficient credit or criminal history it’s important to require a written explanation. I always advise applicants to go belly up, be honest about what happened and why, and tell me why I can trust that whatever happened won’t happen again. It’s a bad sign if the applicant won’t take responsibility, they deflect blame onto others, they demonstrate that they don’t really understand what they did to create or contribute to the problem, or if they can’t articulate the measures they have taken to ensure the behavior won’t be repeated.

False or inaccurate information
Falsification or misrepresentation of any part of the application will be grounds for denial.

This statement speaks for itself but do overlook unintentional errors that the applicant can explain. Some applicants may have a disability that impacts their memory. Sometimes, for example, dates may not match up perfectly based on what the applicant reports and what the reference reports, and may or may not be cause for concern.

Portland screening rules
In the city of Portland, city regulations restrict many areas of screening. To read the full outline, click here. ORHA has created Portland screening forms that are available on the forms store site.

If you own a property in the city of Eugene, you need to be aware that the Renter Protection Committee is working to adopt some of the Portland rules and the city council will be voting on those soon so stay tuned.

Best practices
Screen the applicants and screen them fully. Just because someone fills out an application, doesn’t mean they were truthful. Credit reporting laws changed in 2018, and now civil judgments like evictions or small claims money awards are not showing up on credit reports. Best to hire a screening company at least to pull the eviction and civil/criminal history to be sure it’s accurate. If you hit a piece of information that you would likely deny for, don’t stop there, perform the full screening.

Ask the right questions. What were the dates of tenancy? Rent amount? Did they pay rent on time? Did they take care of the interior and exterior of the property? Were there any complaints related to the tenancy, or did you have to serve them any notices for noncompliance? Did you ask them to move, or did they initiate the move? Did they get any refund? Do they owe money? If so, have they made payment arrangements? Would you re-rent?

Verify the references. Applicants can set up false references, so take a few minutes to verify that you are speaking to the right person. Property ownership is a matter of public record. Before you call that landlord reference, take a few minutes to look up the owner of record either on the county website in question, or by calling that county’s records department and asking. Same with employment. Don’t just call whatever number you are given and take their word. Call the local or regional office and get copies of pay stubs or tax returns.

Watch for fraud. I once had a man rent a property, and everything checked out. He provided paystubs and a solid employment reference. He didn’t have rental history as he was new to the US, so we moved forward with a double deposit. A short time later, a friend of his applied for another of our available rentals. He provided similar documentation and we moved forward. The new tenant exhibited some odd behavior that the neighbors reported to the owner, and she started digging further. Turns out the address on the paystubs of both men did not exist. They had created false paystubs and had used virtually the same fake company to verify their employment. We terminated both tenancies without cause and never did find out what they were up to, but they were also on the police department’s radar. The lesson there was to verify everything, even if it looks legit.

Don’t be pressured. One of the most obvious things an applicant can do that should cause you concern is when they pressure you, say they’re in a hurry, have all the money, can pay six months’ rent in advance, anything to get you to just take their money and give them the property. No matter how tight your financial situation, I can promise you that it will blow up in your face. Don’t take shortcuts, ever, in the screening process.

Statute of Limitations
Keep denied apps or apps that for whatever reason did not result in a tenancy for a minimum of two years. Keep tenant apps for at least two years after the termination of tenancy.

The Takeaway
Screening will often require some sort of judgment call by the screener in relation to an applicant not quite meeting criterion. Just make sure your decisions are based on an objective measure of risk, not membership in a protected class. Watch out for your internal prejudices and stick to your formula. Jot down notes regarding any negative determinations in case you are investigated for discrimination. Having written guidelines and processes for approval and denial will help you keep your objectivity during the screening process. It will also provide something that could help you justify your decision-making process if you are accused of discrimination.

This column offers general suggestions only and is no substitute for professional legal counsel. Please consult an attorney for advice related to your specific situation.