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SCREENING
NEW OWNERS AND/OR TENANTS?
By
Jan Bergemann
Published
August 16, 2013
Be
careful what you wish for! One can fill a whole book with
stories from associations that lost their shirts in lawsuits
over denying an applicant – be it a potential buyer or a
potential tenant.
Before
you even start, make really sure that your governing documents
actually allow you to screen potential owners/tenants. And
don’t listen to your
CAM
who might tell you that you can! He/she is the first one fleeing
the scene if you run into problems.
Many
governing documents just don’t allow “screening” – and
if your governing documents don’t specifically allow screening
--- don’t even get the idea.
But
even if your governing docs allow screening, make sure that you
have “reasonable” written guidelines in place that point out
what reasons will lead to denial of the application. Make sure
your guidelines don’t violate any “Fair Housing” laws.
Make sure that your guidelines don’t discriminate against
anybody. That could get really expensive! It could happen that
the applicant suddenly owns your building – depending on the
jury verdict.
Before
you even hold the first interview of a possible new owner or a
new tenant, make sure you have guidelines that show ahead of
time which applicants you will reject. Don’t make up rules
“as you go along.” You endanger the financial welfare of
your neighbors!
And
remember, the maximum charge for such an application is $100 –
for the whole family – not $100 for each of the members of the
family. I just recently saw a demand for $400 sent to a family
with two kids! The father informed the "future"
landlord saying Thanks -- but no thanks -- and the landlord who
just lost a potential renter was fuming!
Screening
is not supposed to be a moneymaker for board or
CAM
– it’s intended to weed out the bad apples – if that’s
even possible.
Don’t
create unreasonable time limits. I just saw a case where the
association limited lease contracts to six months max – so
they can screen – and charge for it – every six months.
Rejecting
a renter because of a low credit score? Make sure you understand
that the renter pays the rent to the landlord, the owner of the
condo/home he/she wants to rent – not to the association. The
deeded owner is still liable for paying the association dues –
even if the unit is rented out. Remember how the system really
works: Persons with a high credit score are normally already
paying for lots of loans they took out for all kinds of
purposes. The more they already pay for loans, the less is left
to pay the rent! Ever thought about it?
If you feel that you have the right to judge other people,
deciding if they are worth living in your community, you should
make sure that you are using common sense – and not prejudice.
Be careful what you wish for! You really don’t want the denied
applicant to own your building.
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