As a matter of standard operating procedure, RSA has always recommended that members use a tenant screening service to check the credit and housing court history of potential tenants. RSA’s Court & Credit service provides members with reports that include a history of all landlord-tenant court proceedings, as well as a credit history.
The Federal Fair Credit Reporting Act and the State Fair Credit Reporting Act already impose various legal obligations upon both the firms that provide this information and the users of this information, such as property owners. On March 2, a new law was signed by Mayor Michael Bloomberg that imposes new requirements upon owners and agents who rely upon these screening services. The new law will go into effect on July 2, 2010.
The new law requires any owner or agent who requests lease application information from a prospective tenant to disclose certain information. If the application information is requested in writing, the disclosure notice must also be in writing. The following information must be disclosed:
If the owner or agent uses a tenant screening service: The application must disclose that any information provided by the prospective tenant in the application may be used to obtain a tenant screening report, and the name and address of the consumer reporting agency which will be used.
If the owner or agent does not use a tenant screening service: The application must disclose that the application information provided will not be used to obtain a tenant screening report.
If the owner/agent rejects the tenant based on information obtained from the application: The owner/agent must notify the tenant that such action was taken and provide the tenant with the name and address of the agency that provided the tenant screening report. The owner or agent must also inform the tenant:
(1) That he or she has a right to inspect and receive one free copy of such report by contacting the consumer reporting agency used by the owner/agent, and
(2) That he or she has a right to obtain a free copy of the report from each national consumer reporting agency (Transunion, Equifax, and Experian) annually, and
(3) That he or she has a right to obtain a report from www.annualcreditreport.com, and
(4) That he or she has a right to dispute any inaccurate information in the report.
The disclosure notice must be set off in a box and printed in a color that contrasts with the printed information on the application.
The new law also requires owners/agents to post a sign with the disclosure notices in their rental office. The form and contents of the sign will be promulgated by the Department of Consumer Affairs.
Penalties: The law provides for civil penalties of not less than $250.00 and not more than $500.00 for a first violation and not less than $500 nor more than $700 for any subsequent violations.
You can download a copy of Local Law 2 of 2010 by clicking on the “Download” tab on the left side of the RSA homepage, under the “Tenant Screening” section.
Owners should consult with their attorneys to ensure that all of their leasing procedures which rely upon credit reports and similar information comply with all federal, State and local laws and regulations. If you want to learn more about RSA’s Court & Credit program, please call Leo Lehrer at 212-214-9255.
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