There are a number of federal and state laws that every potential landlord needs to know and follow. While it is certainly legal, smart and necessary to do thorough tenant screening, it is crucial to do so within the boundaries of the law. That is one reason why many rental property owners rely on the services of renter screening companies.

The main areas of law that apply to screening prospective applicants are the federal Fair Housing laws, credit reporting regulations and anti-discrimination legislation. It is fairly simple to find the federal and state laws by doing Internet searches, but it may not be easy to understand all of the details. Add to this the additional requirements of local governments and sometimes even civic associations and even the most astute real estate professional may be overwhelmed.

One issue smaller landlord’s face in tenant screening is how to choose among several qualified applicants without risking any potential claims of discrimination. There are a few ways to deal with this situation, each with its own pros and cons. The first is to pick the applicant in a completely random fashion, such as pulling a name out of a hat or flipping a coin. The thought behind this method is that it is difficult for a disgruntled person to argue that the landlord was discriminatory because the decision was basically left to chance.

A second method for a very attractive property is to inform all qualified applicants of the interest and ask if any are interested in making a better offer in the amount of rent or length of lease. This is a very unusual situation for most landlords to encounter and could potentially cause all of the renters to change their mind.  On the other hand, if rental properties are scarce in the area, it could be a way of securing the most reliable candidate of those qualified.

The tenant screening process has become increasingly more complicated as more privacy and data security legislation has been enacted. While those who only own one or two rental properties may be hesitant to pay the cost of hiring a screening company, the pitfalls of not being aware of all landlord-tenant laws are many. Take advantage of the information that many screening companies provide for free.