One of the responsibilities of a property manager is to procure qualified tenants for properties under management. Determining whether a tenant is “qualified” generally involves more than looking at a prospective tenant’s income. It requires looking at things like a prospective tenant’s employment history, rental history, criminal record, credit history and more.
Each of these factors can be important in making a decision to rent a property.
North Carolina tenant screening laws are different than other states. In North Carolina property managers should be familiar with the following rules and regulations when running a background check;
Tenant Application Fees
There is no limit to how much a property manager can charge for an application fee; however, the fee should only cover the actual costs of for the application processing and tenant screening and is not intended to be a profit center for a property manager.
Generally we see tenant application fees range from $25 to $125 depending upon what all is involved with the application process and included in the actual tenant screening package being utilized by the leaser.
An application fee in North Carolina is separate from any security deposits and do not have to be escrowed like security deposits. Unlike security deposits, application fees are non-refundable. You may choose to refund an applicant when you deny or accept them, but the decision is up to you.
Understanding Tenant Screening Pricing
When considering tenant screening pricing, it’s important for property managers to choose a package that aligns with the needs of their rental properties. The pricing for background checks in North Carolina generally reflects the level of detail involved in the screening process. While basic checks focus on criminal records and eviction history, more comprehensive packages include additional services like credit reports, employment verification, and income checks.
Landlords can expect to pay between $44 and $74 per check, depending on the selected screening tier. Investing in a thorough tenant screening can help reduce the risk of renting to unqualified applicants, ultimately saving time and money by avoiding costly evictions or tenant issues down the line.
Comprehensive Background Check Options
Choosing the right tenant background check package is essential for ensuring that landlords can make informed rental decisions. Standard checks typically include searches for criminal records, evictions, and credit history. However, more detailed background checks often provide insight into an applicant’s employment history and verify critical information like Social Security numbers and past rental behavior.
By opting for a more in-depth tenant screening service, landlords and property managers can better assess the potential risk of each applicant, ensuring a safer rental process. This approach is especially useful for properties with high turnover or in areas with significant rental demand, as it minimizes vacancies and boosts overall property management efficiency.
Disclosure and Authorization Forms
Before landlords can run a background check on an applicant there’s one important thing you need– a signed Disclosure and Authorization form. The good news is we provide free sample forms to all clients to help you develop your own forms and remain compliant with the law.
Adverse Action Notices
In NC if a property manager refuses to rent to a prospective tenant or changes the rental terms (e.g. increasing the rent, increasing the security deposit, requiring a co-signor, etc.) based even partially upon information in a consumer report, then the property manager must give the prospective tenant an “Adverse Action Notice.”
Although giving an oral notice is permitted, written notice is recommended, because it provides evidence of compliance with the FCRA.
According to the FTC, an Adverse Action Notice generally must include;
- The name, address and telephone number of the CRA that supplied the consumer report, including a toll-free telephone number for CRAs that maintain files nationwide;
- A statement that the CRA that supplied the report did not make the decision to take adverse action and cannot give the specific reasons for it; and
- Provide a notice of the individual’s right to dispute the accuracy or completeness of any information the CRA furnished.
- Include a copy of the consumer report (Background Check).
- And include a copy of “The Summary of Rights under the Fair Credit Reporting Act”.
We provide all of our Property Managers with free access to generating Adverse Actions Notices including all required documents with ONE-CLICK in their account.
MORE INFORMATION
For more information about Tenant Screening we encourage Property Managers to check out the following resources.
- The Federal Trade Commission’s BCP Business Center (www.business.ftc.gov) has published the following articles which contain useful information on this topic for property managers: “Using Consumer Reports: What Landlords Need to Know,”
- And the basic “Tenant of credit reporting, and Disposing of Consumer Report Information? Rule Tells How.” also available from the FTC’s website listed above.
Property managers and landlords who fail to comply with the FCRA can be sued in federal court. If a broker or landlord loses such a case, then he or she may have to pay court costs, the plaintiff’s reasonable legal fees and punitive damages. For more information on the FCRA or for a copy of the Act, you may call 1-(877) 382-4357 or go online at www.ftc.gov/os/statutes/fcrajump.shtm.
