When you are performing a tenant screening, you’re going to come across plenty of sensitive information.
This includes full names, dates of birth, previous addresses, employers, social security numbers, financial histories, and other information that is considered private and protected.
This can end up being a concerning ethical and legal problem if handled incorrectly.
When a tenant hasn’t authorized information to be handled by a third party (such as an office manager or another landlord working with the same company), what can be shared?
How does this vary from place to place?
We’ll be answering these and other questions in this two-part series.
As usual, privacy laws vary from place to place, and can change quickly.
Always corroborate any information you read online elsewhere, and if you have any questions it’s always a good idea to hire a lawyer.
Best Practices
Matters of the law aside, there are certain ethical best practices to take into account when collecting and using an applicant’s personal information to run a tenant screening.
First, don’t take any information you don’t need to conduct the screening.
This may seem obvious, but many companies use applications from other rental companies, or that they find online. They may not actually need all of the information they’re requesting.
If you’re disseminating information through your office, consider what’s actually needed.
If someone is performing an employer verification, for instance, they don’t need the individual’s social security number, so you can remove that from the application before passing it on to the employee.
Finally, always make sure any files containing confidential information are locked away securely, or encrypted if they’re digital. This will help protect you from prying eyes, burglars and hackers.
Use the Need to Know Rule
In the healthcare industry, medical files are made available on a need to know basis.
If you don’t need the information, you shouldn’t have access to it.
Applying that same rule to your tenant screenings is a good idea. If a file contains information not needed to make a rental determination, remove it from the file.
The Federal Housing Administration has guidelines that protect certain classes. Any discriminatory rental practices could have you facing serious financial penalties.
That makes it important to reduce the associated risks by eliminating access to information that could be considered prejudicial.
In addition to using unverified sources, some companies have an application process that could expose them to liability.
If you ask one applicant a few questions and ask a second applicant different questions, that could be problematic.
Before you start background checks, be sure you collect the same information from every person applying.
Then, keep the different documentation separate.
The person handling the credit check will need an applicant’s social security number, but the person doing a reference check will not. Unless you are handling everything personally, you will want to put strict controls in place regarding the spread of personal information.
Handling personal information is a necessary part of the property management business — you need to conduct thorough tenant screenings – but you’re engaging in an act of trust.
To handle this information irresponsibly is to do your tenants a grave disservice.
Always make sure that you take all the necessary steps to protect your applicants’ sensitive information.
Not only is it the law, but it’s what you’d want them to do for you.
Read Part 2 for more information about certain state-specific legal issues.
