Landlords can leave themselves at the mercy of poor tenants or even scams if they don't exercise thorough tenant screening.
A report in Apartment Management Magazine advised that landlords who want to avoid those issues take steps to protect themselves through well-written lease agreements and an organized screening process. The first step, said the report, is establishing uniform standards for a good tenant "based on legitimate business reasons," and then writing these standards down and presenting them to each applicant. These standards can include requiring tenants to pay an application fee, providing valid photo identification, proving their U.S. residency status, or passing criminal background checks. Ultimately, it is up to the landlord to decide which requirements are most reasonable for their business.
Once they've sent these standards, the onus is on the landlords to actually uphold them. That means performing thorough criminal background checks, researching applicants' credit histories and finding information on their rental history. It is also important that landlords deny unfit applicants based on their stated tenant qualifications – doing so for any other reason could violate the Fair Housing Act for discrimination. A written notice of denial based on a stated business reason is the best way of informing a rejected tenant.
Landlords in many areas have been hit with federal charges for violating the Fair Housing Act. The Department of Housing and Urban Development recently charged two Wisconsin property managers for allegedly denying a family because they had children.