With North Carolina rental prices up 28% from 2020, more and more people are considering this potentially lucrative investment. However, there is more to it than buying property and putting a tenant in it. For your investment to succeed, you need to have low vacancy rates and tenants paying monthly rent. 

Following North Carolina tenant screening laws helps you select the best tenants for your rental property investment. 

Know the Law 

Before you become a landlord with tenants, you need to know the law. Review the North Carolina Landlord Tenant laws. This will save you from making potentially expensive mistakes that violate the law. 

Fair Housing Act 

The federal Fair Housing Act protects applicants and tenants from discrimination for their race, color, religion, sex, national origin, familial status, or disability. The North Carolina Fair Housing Act expands on these protections by protecting against age discrimination, marital status, and income source. 

By using tenant screening services in North Carolina, you can protect yourself by following these landlord tenant laws. This will ensure you follow a process that isn’t knowingly or unknowingly discriminatory. 

Application Screening  

The first step in applicant screening is to have the person fill out an application form. This is typically a generic form that asks for basic information. It will include contact information, employment history, income verification, reference list, rental history, consent for a credit check, and consent for a tenant background check in North Carolina.

It could also include other screening questions based on your specific criteria, such as smoking or pets. However, it should not contain any questions about criminal history or the protected classes under the Fair Housing Act. 

Use this initial application as a screening tool by applying the same set of standards to all applications. You can also charge an application fee, but it can’t exceed the screening process cost. 

Smoking 

When performing your tenant background check in North Carolina, you can ask if the applicant smokes. This is not a protected class, so rejecting an application for being a smoker is allowed. 

Pets 

Landlords commonly ask tenant screening services in North Carolina about pets. While pets are not protected, disabled individuals are. Under landlord tenant law, you cannot reject someone for being disabled and having a service animal. 

A landlord could decide only to allow certain types of pets or limit the number. In many cases, landlords do not allow a specific list of dog breeds that are generally considered dangerous. 

Tenant Background Check Laws

Under tenant background check laws, you can run a background check on an applicant. However, you must get written consent first. Working with a screening service can make obtaining this consent easier. 

As per North Carolina tenant screening laws, landlords must provide a copy of the report to the applicant if they request one. 

The background check will provide insight into the applicant’s past behavior. For example, North Carolina’s “Ban the Box” law doesn’t let landlords ask about criminal history on the application form.

However, the background check will include information about prior convictions. A criminal conviction may not automatically disqualify an applicant. Many landlords look for drug or violent convictions. 

The background check will also show past bankruptcies, judgments, or liens. These are all legal issues that could create a financial strain for the application, making them unable to pay their rent. 

Finally, you will see the applicant’s prior address history. Compare this information with their application to determine the applicant’s truthfulness.

In addition, an applicant that moves in quick succession is likely to do it again. This makes them an unstable choice for your rental property, where you want tenants to stay as long as possible. 

Tenant Credit Check

Landlords in North Carolina are subject to the Fair Credit Reporting Act. It requires you to get written approval to run such a report and provide a consumer report disclosure afterward. 

As part of a tenant background check in North Carolina, it provides insight into the applicant’s financial status. Once you run the tenant credit check, look at the credit score, payment history, debt-to-income ratio, and amount of outstanding debt.

Employment Verification 

Landlords should include employment verification as a part of their tenant background check in North Carolina. Anyone can write anything on their application. Verification ensures that the applicant was truthful on their initial application forms. 

Check that the contact information is correct by doing your own internet search. Then, confirm the applicant’s length of employment and pay rate with the employer. This verifies the applicant’s truthfulness and ability to afford the rent. 

In North Carolina, landlords cannot discriminate against income sources. Some applicants may not make enough through employment but receive child support, alimony, or government assistance. 

References 

If you ask an applicant to provide references, call them. Ask them how long they have known the applicant and how they know them.

Try to have a casual conversation that puts the other person at ease. This goal isn’t to interrogate them but to get a better understanding of the person behind the application. Their references will tell you about the people they associate with, which can provide insight into who they are. 

In-Person Meeting 

Using tenant screening services in North Carolina will give you all the data and information. However, it can’t replace meeting the applicant in person. This is your chance to get a feel for who they are. 

Look at how the person presents themselves and acts during the property showing. Be careful not to discriminate and violate the Fair Housing Act. Go with your gut feeling, and do not rent to someone that makes you feel uncomfortable. 

Application Denial 

There will be applicants that you decide to decline. This is allowed and expected. However, you must provide the tenant with a notice of denial, why you denied them, and how to appeal the decision. 

Follow North Carolina Tenant Screening Laws

As a landlord, you want to keep your vacancy rates low. Doing this starts with using tenant screening services in North Carolina. Not only will they ensure you follow North Carolina tenant screening laws, but they will also help you choose better-quality applicants. 

Contact our experienced team and use a better tenant screening process for your rental properties.