“Limitation of liability” is a pretty technical phrase. Once you get into corporate contracts, it’s an insurance idea. Every bit of error may incur fees, penalties, or insurance payouts, but the aggregate amount of these costs has a ceiling.
But insurance costs aren’t the only liabilities in business, and there’s more than one way to limit them. If you’re looking for the next tenant for one of your rental properties, the entire process is about limiting liability. Primarily, you’re looking for low-risk candidates; people with a history of paying their bills on time and without a history of rampant destruction.
But you also need to be looking for a process that doesn’t destroy your business. There is liability in saying no to applicants for the wrong reasons, and that liability comes with a hefty cost if you’ve (even accidentally) broken HUD guidelines and fair housing tenets. You can go about limiting liability by building a process that doesn’t create new liabilities itself. Here’s how!
1. Create a Standardized List of Factors That Rule Out Applicants
If you have a process, it’s safer to operate. There can’t be gut feelings or impulses when you say no to an applicant. Even if everyone you consult agrees, there has to be an ironclad reason for the decision. Build out a standard operating procedure and double-check it against HUD rules. Check through rental advice sites. Even consider having an attorney look it over to make sure each factor is a legal basis for a decision.
2. Have a Credible Applicant-Screening Service
Unless you have a management company do all the work, screening prospective tenants is a mix of paid services and legwork. You should call up previous landlords and employers when applicable, and that investigation should go a couple of landlords back.
But you also need documentation from an accredited source. Not only does that mean you can rely on the check to back you up in the event of a claim or a suit, you can make the right choices for your company. Good background check services also have an online portal so you aren’t liable for paper copies of personal information, either.
With TruDiligence, Limiting Liability Couldn’t be Easier
Contact us to start creating a standardized process of finding new tenants. We believe your experience with TruDiligence will be far superior to other applicant screening providers as our commitment to true diligence is far more than a business name – it is our mission.