Finding the Right People.

Resident and Employee Screening Use New Tools to Get the Job Done

Susan, a leasing consultant at a new upscale rental property, wants to do everything she can to reach 100 percent occupancy as quickly as possible. When the young couple pulls up in a Lexus and flashes matching Rolex watches filling out the application, she eagerly has them sign a lease and arrange a move-in date. Little does she know that six months from now, her property will be embroiled in an eviction battle with the nice couple. They didn't pay their rent, and haven't at their last three apartments.

Down the road, a property manager hires a new service technician whose credentials appear to be just what he's looking for: several years of experience in everything from landscaping to toilet repair, and a certification to boot. Even though the man can obviously do the job for which he was hired, he's a big potential legal liability. He was convicted of raping a teenage girl at an apartment community six years ago. Of course, he didn't list that on his application.

The one step that Susan and the property manager forgot was a background check. In their zeal to find the perfect resident and a terrific new employee, they forgot that appearances and applications can be deceiving.

Resident and employee screening Services providers say that new developments make their reports more complete and accurate than ever, and might have helped these two multifamily housing professionals make more informed decisions, potentially avoiding problems down the road.

New Trends

A recent trend that screening professionals are seeing right now is that more and more property managers are conducting background checks. "Screening applicants for past criminal records has always been requested," says Michael J. Lapsley of RentGrow, Inc., of Waltham, Mass. "However, the number of companies requesting and utilizing this service is increasing."

Others say that not only are more apartment communities using background checks, but they're requesting the service and their reports electronically. "Internet delivery is obviously the latest trend," says Sharon F. Renegar of ChoiceDATA in Chattanooga, Tennessee. Todd Katler of Van Nuys, California-based The UD Registry, agrees: "Many companies prefer web-based software since it does not interfere with their on-site computers, and with high-speed Internet access, even better utilization can be made."

Lonnie Derden of Resident Data agrees, adding that this new technology will help property owners do more than get accurate, quick responses to screening requests. "Most of the larger property owners are doing business with 10 or 15 different screening companies," he says. "The Internet is going to provide the basis for finally establishing one leader in the screening industry." It will do this, he explains, by allowing easy access to nationwide data.

Nevel DeHart, senior vice president-sales and marketing for First American Registry, Inc., of Rockville, Md., says that one of the tools his company is using more these days is national landlord/tenant court record databases. "A little known fact is that less than five percent of all rent defaults are ever reported to credit bureaus," he says. "Credit bureaus only collect court record information involving money judgements, and fail to collect information from the remaining 90 percent of landlord/tenant cases involving possession."

"While credit reports may tell you if a prospective resident has the ability to pay the rent," he adds, "information from landlord-tenant court records will tell you how an applicant has performed in the past."

Another trend is credit scoring, which compiles the result of a credit screening into a score--offering a comprehensive picture of an applicant's credit history. "We've had an overwhelming response to our automated credit scoring service," says Scott Connelly of Rental Chex of America, in Albuquerque, New Mexico.

"A good scoring product is one that is based on statistical modeling relevant to the residential leasing industry," says DeHart. His company's scoring, for example, takes into account applicant supplied data, landlord/tenant court reports, and credit information.

In addition, DeHart said that criminal background screening for prospective residents is a growing trend.

Liability

Many property owners say they want to implement thorough background checks for prospective residents and employees, but fear that they'll set themselves up for lawsuits from rejected applicants. Screening professionals respond that by following a few basic guidelines, this is not the case.

Property owners and managers should get to know fair housing regulations and the Fair Credit Reporting Act. They should ask questions and do their own research if they think their screening process might become a liability.

"When someone has legal concerns about any service being provided, they should thoroughly investigate the service and consult with their own attorney to discuss the legality of the service being provided," says Renegar.

When it comes to screening, consistency is key. "Property management companies should set up written policies and practices, then implement them," Lapsley says. "One way to make sure screening is consistent is by automating the evaluation process with a system that provides the appropriate feedback to senior management that the system is being utilized and followed."

"We advocate screening each potential resident in a consistent manner," says Connelly, adding that property managers should check with attorneys to ensure their screening processes are legal and fair.

Lapsley also advises property managers to not make exceptions for prospective residents, no matter what story or excuse they have. "Some people have really sympathetic stories as to why they have particular problems," he says. "Managers who accommodate some individuals with particular issues but not all, are discriminating."

The same thing goes for criminal background checks, he added. "Managers cannot arbitrarily perform criminal searches," he says. If you run a check on one person, run a check on everyone.

DeHart agrees. "An owner or manager should never fail to comply with his own written guidelines," he says.

Making sure prospective residents understand the basics about screening can help protect owners as well, Derden says. "Make sure that prospects understand that the information a screening company finds will not be disseminated to anyone," he says. "They're not going to share that information with anyone but the prospect, but the property staff never sees it."

Choosing a Service

When it comes to choosing a screening service, the options can seem overwhelming. So many companies offer so many services that picking one of them can be a daunting task. Screening professionals say there are several questions you should ask and things you should consider before making any decision.

"Some of the most important things to look for in a resident screening company are current nationwide data, rapid turnaround, diversity of products, and training," DeHart says.

Renegar says that property owners and managers should try to find a company with a proven track record. "Technology is easy to provide, but sound screening demands experience and familiarity with the market, the customer, and the laws governing the process," she says.

Lapsley says that the experience should specifically be in multifamily, and that property owners and managers should ask how much of a screening company's business is in the multifamily housing industry as compared with other fields. He also advocates finding out exactly how criminal information is obtained since there is no national database.

Derden says that finding a company that's a good match for a property can be vital. "The company that you choose should be able to provide a product that's returned in a short period of time," he says. "Make sure they can find all the components you need--criminal, credit, et cetera. And ask what the financial strength of the company is."

No matter what service you choose, resident and employee screening are fast becoming requirements in the industry. Lawsuits are on the rise and not performing a check on a potential resident or employee could be just the thing that puts your company on the receiving end of a lengthy court battle.

Katler says: "Never limit yourself so that you don't see the bigger picture. Always be wary of the guy pulling up with the U-Haul and a fistful of cash. Sure, everyone loves to fill occupancies quickly, but consider what a bad resident costs."

Ms. Fernandez is a freelance writer for trade and consumer publications who lives in Bethesda, Maryland. A former managing editor of Units, she has written about the multifamily industry since 1994.