The Property Management Shop
by Marc Wilson
Q. Last month my wife and I advertised a flat for rent on Craigslist. The walls in the unit are quite thin and the second bedroom is small, with no closet and one small window. A young woman with two small children inquired about the flat. During her conversation with the prospective tenant, my wife intoned that the unit was probably not suitable for young children because of the aforementioned deficiencies. The prospective tenant immediately got defensive and accused my wife of family-status discrimination. Needless to say, the rest of the conversation did not go well. We subsequently received a formal compliant from the Department of Fair Employment and Housing (DFEH). We never said that she couldn’t rent the unit; my wife just questioned whether the unit was suitable for young children. What should we do?
A. You should immediately liquidate all of your assets, place the cash in a bowling ball bag, dye your hair, get a fake mustache and get out of town. Whatever you do, don’t tell anyone where you’re going. Of course, I’m just kidding. First of all, don’t panic. These things have a way of working themselves out. The DFEH is just doing its job as the largest state civil-rights agency in the country. In 1980, the DFEH was established as an independent department charged with, among other things, enforcing California’s comprehensive housing nondiscrimination laws. The DFEH is in receipt of a formal complaint from your disgruntled prospect and is charged with the responsibility of investigating the matter. You did not say that you would not rent to families with children. You did not say that you would not show her the apartment. You did not reject her application. You did not refuse to give to her or accept from her an application to rent. You just stated that you didn’t think the unit was suitable for young children. I don’t think that this particular set of facts is going to end too badly for you. Hire an attorney and respond to the allegations. Your worst case is legal fees and a $10,000 fine—in all probability, just some legal fees.
What did you do wrong? Two things: You had verbal communication with a prospective tenant and you attempted to qualify your applicant before she even viewed the apartment or submitted an application to rent the unit. In other words, you took a short cut and now you’re being persecuted by someone who, in all likelihood, would have never tendered a completed application in the first place. (The fact is that most people who look at your vacant unit will not submit an application simply because they don’t want to rent the unit.)
In the future, don’t interview prospective tenants over the phone or at the open house. Your only job is to hold the vacant unit open to all prospective renters, and to receive detailed offers to lease and rental applications made in good faith. Do not interview or otherwise entertain prospects who have not even submitted an offer to lease. The goal is to reduce the total amount of potential litigants relative to housing discrimination claims. Why not limit your exposure to only those people who have actually toured the apartment and submitted an application to rent? The way you’re doing it, anyone and everyone on Craigslist is a potential litigant.
The right way is easy: advertise your apartment (include pictures), use a voicemail message that indicates the dates and times of your open houses, show the unit to all interested parties and receive real written offers to lease with a $300 good faith deposit. My written offer to lease stipulates that the prospect only gets the $300 back if I decide to deny their application and/or rent to another party. This means that I only receive real applications made in earnest. I rarely receive flaky applications because I don’t use a flaky offer-to-lease form or a flaky application process.
Price your apartments so that you receive multiple applications. This way, you will be able to rent to your preferred tenant profile (presumably someone with high income levels, positive landlord references and high credit scores) without rejecting a particular applicant for a particular reason. No one can blame you for renting your apartment to the applicant with the best credit and references. I rarely reject an applicant; I just choose to rent to one of the other multiple applicants. If you choose not to rent to someone, be professional, timely and courteous with regard to informing the applicant and returning her good faith deposit. My applicants are told that if they don’t get a call from me the following morning by 9 a.m., it means that I rented the apartment to someone else. In this event, I immediately return their good faith deposit in the envelope that they addressed at the time of the application. My applicants always address an envelope at the time of their application so that I know where to mail their good faith deposit in the event that I rent the apartment to another party. This serves two purposes: it prepares the applicant emotionally for the very real possibility that they might not be selected, and it makes it easy for me to be timely with regard to informing the applicant and returning the deposit. I simply write the applicant that “I received many applications and that I am only sorry that I do not have more available units at this time.” My response is concise, timely and professional; most importantly, there are no hard feelings.
The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of SFAA or San Francisco Apartment Magazine. Marc Wilson is the president of SFAA and has specialized in the brokerage of San Francisco apartment buildings for 20 years. He can be reached at 415-229-1275. Copyright © 2006 by San Francisco Apartment Magazine. All rights reserved.