Q. I am the listing agent for a residential rental property and my firm is screening the applications. We’ve received a lot of interest and have narrowed the search down to two applicants. My client has asked for a copy of the applications. May I provide this information? What about other supporting documents like credit reports and photo identifications?
A. The answer to these and other questions related to screening applicants relies on a proper understanding of the Realtor’s® role in the review process and the applicant’s expectations.
Ensuring that all citizens have fair access to housing is essential “[to protect] the peace, health, safety, prosperity, and general welfare of all the inhabitants of the Commonwealth …” (Virginia Code § 36-96.1(B)). Screening applicants is a necessary step in the leasing process, but it’s also when many Fair Housing Act violations can occur. Realtors® serve a vital role in promoting fair access to housing, and screening applicants is one of the most undervalued services Realtors® provide their clients. Few professionals are better suited for this role.
When screening applications for your landlord client, appreciate the gravity of that assignment. Your job is to find the best possible tenant for your client without regard to protected classifications or by means of unlawful discriminatory housing practices. Landlords, who are often inexperienced in Fair Housing rules and regulations, are far more likely to engage in illegal acts of discrimination (intentional or unintentional) than those represented by Realtors®.
By sharing the application with your client, you do yourself and the client a disservice. Not only do you diminish your value added to the transaction, you expose your client to a greater risk of Fair Housing Act violations. The fines for violating Fair Housing laws are substantial, and the societal harm from a discriminatory housing market is incalculable.
Realtors® are still obligated under Article 1 of the Code of Ethics to present all offers and counteroffers to their clients. However, that does not mean that Realtors® must provide the entire application and supporting documents to the landlord and are, in fact, not authorized to do so by the applicant (discussed below). Realtors® perform an essential screening process by only providing the landlord that which is reasonably necessary for the landlord to make an informed decision regarding the offer.
Another important consideration is whether the applicant has consented to sharing the application with the landlord. When an applicant submits NVAR Form K1008 (Rental Application), authorization to “verify information” and “perform any creditor investigative inquiries necessary to properly evaluate Application” is given to the reviewing firm, not the landlord. This arrangement protects the tenant and the landlord from Fair Housing Act violations by removing the landlord from the review process, which reduces the likelihood that impermissible classifications will be considered.
The same analysis applies to supporting documentation submitted with the application, such as credit reports, and photo IDs. Delivering these supporting documents, without consent, may also violate laws unrelated to Fair Housing. For example, sharing the credit report without consent may be a violation of the Fair Credit Reporting Act since the applicant has not consented to the landlord reviewing the application. Photocopying a U.S. government issued identification may violate federal law (See Title 18, US Code Part I, Chapter 33, Section 701).
Remember, Realtors® are on the frontlines of Fair Housing and play an essential role in protecting “the peace, health, safety, prosperity, and general welfare of all the inhabitants of the Commonwealth.” When viewed in this light, Realtors® should think twice before handing over the application. Discuss these issues with your clients upfront to ensure a smooth transaction.
Q. My buyer’s home inspection is scheduled for today. I am extremely busy and can’t make the appointment. Do I need get the seller’s approval before providing access to the buyer and inspector if I’m not going to be present for the entire inspection?
Article 3, Standard of Practice 3-9 of the National Association of Realtors® Code of Ethics (the “Code”) states that Realtors® representing buyers or tenants “shall not provide access to listed property on terms other than those established by the owner or the listing broker.” The Regional Rules and Regulations for the SentriLock Lockbox System (the “Lockbox Rules”) also prohibit use of the SentriCard® or SentriSmartTM Mobile App for the purposes of gaining “[un] authorized entry into real property on which a system Lockbox has been installed.” The foundational assumption throughout the Code and Lockbox Rules is that third parties should never have unsupervised access to a property without a seller’s consent.
Sellers have the right to place restrictions on accessing their property and may do so for numerous reasons. For example, an unaccompanied minor may live in the home or there may be valuables or other sensitive items present. Best practice is to always confirm with the listing agent that unaccompanied access to the property is permitted. If the access is permitted, a One Day Code or Call Before Showing Code can be issued in order to provide the authorized access. This simple step will protect the rights of sellers and avoid unintended consequences.
If you have any questions, contact the Legal Hotline at NVAR.com/LegalHotline