By Paul Smith: Digested from the Utah Apartment Association
Recently a member called us about doing income and employment verifications. He was wondering if it was appropriate to ask for checks stubs. He was concerned about violating fair housing or getting into legal jeopardy. His questions about best practice and liability prompted us to write this article to answer the question for all 6,000 readers of the Landlord Times.
Poor or unemployed people are not a protected class
So it is perfectly legal to discriminate against them! When you say it like that it sounds mean. But it isn’t. It would be a poor decision to go into business with someone who was unable to fulfill their economic obligations to you, and the best indicator of future performance is past performance. The best way to check past income and employment performance is to require information you can verify.
Certainly there are some good renters who have other income or means of paying rent then employment (like government housing vouchers, government payments or pensions). But since most renters are employed and need to stay employed to maintain their rental obligations, it is important to know how to verify income and employment. Typically there are three options for verifying income and employment.
1 – Calling the employer.
Most rental applications asked for the name and number of the employer. Landlords like to call this person and verify a) that the person is employed, b) the amount the employee earns each month, and c) if the job is temporary or long term.
These kinds of questions will help determine how risky the applicant is. Most housing counseling agencies encourage people not to spend more than 40% of their gross income on housing because people who do, often default. So, most landlords require renters have a combined household income of 2 and ½ or 3 times the rental rate. For instance, it is common for a landlord renting a $1,000 a month place to require verifiable income of $3,000 per month. Knowing if the job is temporary or long term is also valuable. Be sure to ask
2 – Some employers cannot be reached or do not answer questions about employees.
No problem. In that case the backup is check stubs.
3 – If applicants are self-employed, it is common to require bank statements to verify deposit of the record amount and regularity.
Walter Merrill, a landlord attorney in Layton advises his clients to limit queries to employers to the scope of just verifying employment and income, but says it is always appropriate to ask if it is full or part time employment, to ask specifically how much they make and how long they have been there. These questions, he says can help assess risk and are completely legal.
Verifying Income and employment is one of the most important things landlords can do. It is not discriminatory to refuse to rent to people who cannot provide such verification. Talking to employers, getting copies of checks stubs or seeing bank statements are common methods of verification and can help assess risk and avoid problems.