Screening Criteria
The manufactured housing section of Oregon’s landlord-tenant law provides that “Any conditions the landlord applies in approving a purchaser…as a tenant in the event the tenant elects to sell the home” should be disclosed in the rental or lease agreement.”[1]Although those conditions must be in conformance with state and federal laws, there are no limitations or restrictions as to what may be placed in the rental or lease agreement.
MHCO’s rental and lease agreement forms[2]contain a number of criteria that landlords may impose, such as: (a) prior rental references; (b) unsatisfactory credit history or no credit history; (c) character references; (d) criminal history; (e) insufficient income to reasonably meet the monthly space rent and other expense obligations imposed by the rental or lease agreement; (f) the presence, number and size of pets; (g) age verification criteria if the park is a 55+ facility; (h) evidence of falsified or misleading material information; (i) refusal to sign a written lease or rental agreement; (j) additional occupants; and (k) adverse public record information.
Although there may be other criteria that landlords may wish to use when deciding whether to accept an applicant as a tenant, the above list is very comprehensive, and should be sufficient in imposing adequate guidelines when a tenant wishes to sell their home on site. MHCO additionally has an application form which solicits this and other information from prospective tenants.
Landlords and managers should become familiar with the criteria imposed in their rental agreements and rental application forms. Additionally, they should not rely upon the application information submitted to them without a thorough background check that provides the necessary verification. Although Oregon law imposes a 7-day period within which landlords have to respond to a submitted application, it does notprohibit landlords from imposing a longer period so long as the applicant agrees. Additionally, Oregon law expressly states that the 7-day period does not commence if the application is incomplete or inaccurate. Accordingly, landlords and managers would be wise to immediately return any submitted application if it is incomplete – and upon discovering that the prospective tenant/purchaser provided inaccurate information, the application should also be returned. Accepting an incomplete application or continuing with the process after discovering that the applicant has provided bad information can result in an argument by the existing tenant or the new applicant that the landlord is intentionally delaying the process.
It is also important to note that Oregon law permits the “…landlord and the prospective purchaser (to) agree to a longer time period for the landlord to evaluate the prospective purchaser’s application or to allow the prospective purchaser to address any failure to meet the landlord’s screening or admission criteria.” Thus, as noted on the MHCO Application form, there is a place for the landlord to insert a period longer than the statutory seven day period. If the landlord suspects any delay, either on the applicant’s part or his own part, a longer period should be inserted. If the applicant rejects this extension, then the landlord can decide whether he wants to proceed to process the application at all.
Note: If a tenant has not previously given the landlord the 10 days’ advance notice of intent to sell as required in ORS 90.680(4) (a), the landlord’s seven day response time is extended to 10 days. But remember, in no instances does the landlord have to receipt and process an inaccurate or incomplete application. It is better not to accept a defective application – or return it immediately upon finding that it is inaccurate or incomplete, than continuing to process it.
If a landlord requires a prospective purchaser to submit an application for occupancy at the time that the landlord gives the prospective purchaser the application the landlord shall also give the prospective purchaser copies of the statement of policy, the rental agreement and the facility rules and regulations, including any conditions imposed on a subsequent sale. It is important to remember that the terms of these park document given to the prospective tenant need not be the same as those in the existing (i.e. selling) tenant’s documents.[3]
Park Documents.
Landlords and managers should always remember that when they change one of the park documents, they may have to change others. This is because of two risks: (a) The failure to incorporate a change in the lease, say, into the Statement of Policy, and (b) An inconsistency between one or more of the park documents, such as the rental agreement and the rules. Rules can generally be changed in the middle of a tenancy, but rental agreements cannot. So landlords should remember to make sure their documents are all internally consistent.
Fair Housing Laws.
The state and federal fair housing laws are essentially – but not completely – the same. Landlords and managers should familiarize themselves with any special ordinances found in their city or county laws. However, Oregon law prohibits any form of discrimination in the sale or rental of housing when directed at the following protected classes: “…race, color, religion, sex, sexual orientation, national origin, marital status, familial status or source of income.”[4] The easiest, best, and safest way to deal with the risk of a discrimination claim is to make all screening criteria facially neutral. Do not have rules which – even unintentionally - could have a negative impact on a member of a protected class.
In Oregon, most claims of discrimination relate to familial status. Examples range from managers encouraging families to purchase and reside in one particular area of the community (where there are more children), to making off-hand comments to applicants (e.g. “there would be very few children for your kids to play with here”) that may be construed as indicating a desire not to rent to people with children. For this reason, landlords and managers should strive to apply their screening criteria neutrallyregardless of the applicant’s membership in a protected class.
Additionally, caution should be exercised in answering questions over the phone, since federal and state “testers” have been known to test parks by making multiple phone calls asking various loaded questions, such as “Is this a good place to raise my children?” If the community is a family park, the best response to open-ended telephone inquiries is to tell the caller that it is a family park, open to all, and that they are welcome to come in and pick up an application for processing.
One of the biggest areas of concern for landlords and managers today involve issues of immigration status. At the risk of minimizing the problem, there is one basic rule that landlords and managers should always remember when screening applicants. While it is not a “silver bullet,” it should help avoid the vast majority of issues regarding immigration status. Never treat any single applicant differently from another. This means that landlords should not automatically “suspect” that certain persons are illegally in this country and then impose more rigorous screening criteria on them alone. It is best not to ask about immigration status.[5] If the applicant passes the same screening criteria imposed upon others, and all of the information in their application checks out, you should accept the current applicant, regardless of whether you have suspicions about their immigration status. One of the frequently asked questions is whether a landlord may insist that applicants provide their social security number. While this is not automatically illegal, it can be when applied to some applicants and not others. Consistency is the name of the game. Do not request verification in some cases and not others. Do not accept some tenants who fail to provide the number, but accept others (who are not obviously immigrants) without also providing such proof.
Another area of concern is occupancy limits or extra occupancy charges.[6] This is somewhat of a grey area because Oregon law currently permits a two person per bedroom rule – assuming that it is expressly listed as part of the park’s screening criteria and uniformly applied. However, the problem is that federal law contains no specific occupancy limits. This means that, in theory, one could be in compliance with state law, while violating federal law. For example, if a family consisted of two adults and three children who owned a 2-bedroom home, a "2-persons per bedroom" requirement would mean that they could not move into the park. But if the third child was an infant who slept in the parents’ room, one may ask whether this standard is reasonable, even though it complies with Oregon law. At the risk of violating federal law, which imposes no such occupancy limits, the better approach might be to avoid the “slippery slope” problem entirely, by not creating occupancy limits.[7]
Perhaps the most difficult of screening criteria issues is in the area of assistance animals. Since handicap is a protected class, this means that if one could establish a legitimate need for an assistance animal they could not be prevented from having one – even though the park might have a one-pet policy and this might be their second pet. This could be so even though the animal was not trained or certified in providing assistance. MHCO has Form 15 that may be given to tenants applying for a “reasonable accommodation” which is the technical term used when an allegedly handicapped person requests relief from strict application of a rule that interferes with their handicapped. [8]As most landlords and managers know, the handicap protections can be severely stretched. There are many reasons for this, including, among other things, the handicap may be allegedly psychological, and the tenant has nothing more than a note from a doctor – not a treating psychologist or psychiatrist.
The other difficult issue is that assistant animals are not technically “pets” and therefore are not subject to the requirement that the Pet Agreement be completed. Ultimately it comes down to a rule of reason and proof. Does it appear that the person requesting the accommodation is legitimately handicapped? Do they have a known history of the handicap – that is, has it ever come up before? Does it appear that the claim of a handicap is new, and possibly raised as a pretext, say to circumvent a one-pet policy?
Ultimately, the issue comes down to public safety in the community. For example, if the tenant wanted to have a pit bull (in violation of a dangerous breed prohibition) or a bull-mastiff (in violation of a size restriction), the landlord should ask which battle he or she wants to fight? If the tenant isn’t credible, has a history of skirting the rules on this or other issues, it might make sense to refuse and let them take the next step. If they bring the animal into the park in light of the denial, you will have a choice; either do nothing or send out a notice of violation which would require removal of the animal. The risk in allowing dangerous or oversized breed into the park is that it may harm someone, and then the landlord will have to defend a lawsuit for failing to enforce their own rules. Additionally, in consenting, the precedent has been set, now permitting such animals based upon a tenant’s assertion the need it for assistance. Remember, “reasonable accommodations” need only be “reasonable.” Dogs with vicious propensities or who pose danger to children because of their size, are not the only type of assistance animals available.
Marijuana cards raise the same issue, although perhaps even worse, since the cards seem to be freely given to almost anyone. In some cases, however, this too can be dealt with on another level. If the persons with medical marijuana cards have an inordinate amount of traffic at their home throughout the day and night, perhaps the issue is one for the police, since it is still illegal to sell or distribute marijuana, medical or otherwise. If they are dealing in the illegal drug, careful (documented) scrutiny of these comings and goings might prove useful.
Miscellaneous Screening and Application Issues
- Occasionally, tenants apply for occupancy even though they cannot afford to purchase the home on their own, and perhaps would not qualify under the financial criteria imposed for acceptance into the park. However, they may have a parent or other person willing to assist in the purchase and willing to guarantee the applicant’s performance. There is nothing wrong with this approach, assuming that the guarantor passes all of the financial criteria the park would impose. First, remember that the guarantor will not be living in the home – they may have their own housing requirements that impose financial limitations on them. If the tenant defaults, can the guarantor actuallyaffordto pay the space rent? Under such cases, the financial criteria applied to co-signers should be more rigorous than those imposed on tenant applicants. Secondly, landlords should be sure to have their attorney draft a solid guarantee agreement that gives them the right to seek payment against the guarantor without having to first evict the tenant. Third, before accepting a co-signer, a landlord should ask whether they have a sufficiently significant relationship with the applicant such that they will actually be willing to subsidize the space rent if it is not paid.
- A fundamental problem in the tenant screening process is the denial process. Landlords must be prompt in informing applicants if their application is denied. Obviously, a denial can provoke an angry response. Landlords need to be proactive. MHCO has two forms to address the issue, so that the landlord or manager does not have to engage in any more explanation than that provided in the form. MHCO Form 10, identifies the source of the material or information resulting in the turn down. That is all the landlord is required to do, unless it comes from a credit reporting agency. In that case, MHCO’s Form 10A should be given so that applicant has the ability to know which credit company was involved and track down the source of the information.
- It is due to financial issues that many applicants get turned down. Especially today. For that reason, MHCO has developed the “Straight Talk” form, describing manufactured home living and affordability issues. It should be used in all cases, if possible.
- Although we discussed the Statement of Policy (“SOP”) above, there are two additional points to be made: (a) Always be sure to obtain a receipt (MHCO Form 7C), since it is proof positive that the resident received the SOP and the Rules and Rental or Lease Agreement. Without the receipt, the tenant can deny receiving it, and the burden of proof to establish delivery is on the landlord. This can be a difficult task unless witnesses were present who can verify delivery. (b) The second item to note is use of the Rent History attachment to the SOP a copy of the Rent History (Form 7A). This permits the tenant to see the monthly base rent for each of the five years preceding the current year of tenancy.
- Perhaps one of the most important (and newest) forms if not used, is the Flood Plain Notice (MHCO Form 6). It notifies those residents whose homes are located in all or part of a 100-year floodplain. This means that landlords and/or their managers, should look at a currentFEMA map to determine whether all or a portion of their park is located inside such a plain. If so, those residents whose spaces are in the floodplain should be notified. While technically, being located in a 100-year floodplain means that flood water levels are statistically expected to flood onto the plain once every 100 years, most people realize that over the course of 100 years, there could be three or more such floods or none at all. The MHCO form, in compliance with Oregon statute, suggests to those receiving the notice that they consider obtaining flood insurance. The good news is that once having given this notice, a landlord is not liable for any uninsured water loss suffered by the resident due to a flood; the bad news is that failing to give the notice can subject the landlord to the lesser of two months’ rent or the resident’s actual damages, whichever is less.
Conclusion
Landlords would have fewer tenant problems if they took more time during the screening process. This means resisting the temptation to fill a space quicker than the approval process actually takes. Unfortunately, the desire to have the rental flow commence quickly sometimes results in the process becoming rushed. And landlords and managers should never allow the applicant to rush them. Nor should they ever permit an applicant to move into a home before the process has been completed and a new rental agreement signed. Lastly, fairness and uniformity in screening will help to avoid the ever-present liability that can occur under the federal and state Fair Housing laws.
©Copyright by Phillip C. Querin. No portion may be reproduced without the express written consent of the author.
[1]Rental Agreement MHCO Form 5A and Lease Agreement Form 5B.
[2]Rental Application MHCO Form 1, and Application Screening Charge Notice and Receipt, MHCO Form 9.
[3]See, ORS 90.680(5)
[4]Source of income would refer to whether the applicant was receiving some form of state or federal assistance, or child support, for example.
[5]While compliance with the law seems like a reasonable area of inquiry, the problem is that managers and landlords don’t ask this question of a family from England or Germany. This creates the appearance that questions regarding immigration status are reserved for Latinos or those from other Central American countries. National origin is a constitutionally protected class. As a result, this type of selective screening creates (in legal terms) a “disparate impact” on folks from Mexico and Central America, and can therefore be found to be a violation of the Fair Housing laws.
[6]Occupancy limits are sometimes used as “tools” by landlords to impose restrictions on persons with larger families, and therefore poses a potential violation of the familial status protected status. This has not been a significant problem Oregon.
[7]Generally, the only strong justification for occupancy limits in family parks is where it can be claimed that too many people in a home overtaxes the utility systems. While legitimate in some instances, proving it could be very costly.
[8]However, prudence should be exercised here. You would not ask an obviously blind person to fill out a request for reasonable accommodation when asking for a guide dog.