Richard AgamaIt is undoubtedly important to know whether a potential tenant can afford the rent required of them. However, asking about a tenant’s source of income is a question landlords cannot ask, as it is illegal to ask or discriminate against a tenant’s source of income. That’s why this article will review a few ways to legally verify tenant employment and wages.
Ask for the Right Legal Documentation
When it comes to asking for the right legal documentation, you need to first inquire as to whether the applicant is self-employed or not. If the applicant is not self-employed, you can ask for a copy of their pay stubs or W2 forms. However, if you ask for pay stubs, ask for a few months’ worth to see if their income fluctuates and to see that they’ve been consistently employed. If the applicant is self-employed, you can ask for their bank statements or 1099s. Bank statements will show how much they’re bringing in. 1099s are tax documents given to freelancers and contractors that can show you how much they were given in the past year.
Run a Credit Check
You can also choose to run a credit check if you want to get a bigger picture of their financial standing. A credit check can show you that they’ve been able to fulfill any financial obligations and how responsible they are with payments. With a credit check, you can see how much debt they have, their overall credit score, and if they’ve filed for bankruptcy. Ideally, their debt-to-income ratio should be around 35 percent or lower.
Ask for an Employment Verification Request
Typically, employment verification requests are only required if it is coming from a federal agency, but that doesn’t mean you can’t ask for one. However, to ensure that you aren’t crossing any boundaries, you should make it part of your screening process. Ideally, you’ll have this in the background check agreement for them to sign. After you’ve received consent and the self-reported income is a proper fit, you can contact their employer. Just remember that employers can refuse you for legal reasons.
Now that you know of a few ways to legally verify tenant employment and wages, you can ensure that you’re asking the proper questions. Just remember to always review federal, state, and local laws if you’re unsure of your compliance and legal limitations.
