Are landlords allowed to run background checks on tenants?

Tenant Screening and Background Checks for Landlords in Maryland

As a landlord in Maryland, it is essential to understand the legal framework surrounding tenant screening, including background checks. Conducting thorough tenant screening helps property owners make informed leasing decisions, minimize risks, and maintain safe and stable rental communities. This guide outlines Maryland’s laws and best practices regarding background checks on prospective tenants.

Are Maryland Landlords Allowed to Run Background Checks?

Yes, landlords in Maryland are permitted to run background checks on prospective tenants. These checks often form part of a broader tenant screening process that may include reviewing credit reports, rental history, and criminal background history. However, landlords must comply with both federal and Maryland state laws that regulate the use of background information.

Key Legal Considerations for Tenant Background Checks in Maryland

1. Compliance with the Fair Credit Reporting Act (FCRA)

Maryland landlords who use tenant screening reports must comply with the Federal Fair Credit Reporting Act (FCRA). The FCRA governs the procurement and use of consumer reports (including credit and background checks) and includes the following requirements:

• Disclosure and Consent: Landlords must disclose in writing to the tenant or applicant that a background or credit report may be obtained and must receive written permission before running such a check.
• Pre-Adverse Action Notice: If the landlord intends to deny the application based on information obtained in the report, they must provide the applicant with a pre-adverse action notice that includes a copy of the report and a summary of consumer rights.
• Adverse Action Notice: After denying the application, the landlord must send an adverse action notice indicating the decision and providing contact information for the reporting agency that supplied the background report.

2. Maryland Consumer Protection Act and Tenant Screening

In addition to federal requirements, Maryland’s laws specifically address tenant screening materials and practices:

• Security Deposits: Maryland law outlines how landlords use tenant screening to assess financial responsibility but places limits on the amount that can be charged for screening fees.
• Screening Fees: Landlords in Maryland can charge prospective tenants a screening fee; however, the fee must be reasonable and should not exceed the actual cost of obtaining the reports.
• Notice Requirements: Maryland law encourages transparency during the tenant screening process, ensuring tenants understand how their information will be used.

3. Restrictions on Criminal Background Checks

Maryland landlords may consider a prospective tenant’s criminal history as a part of the screening process, but there are important caveats:

• Relevance and Fairness: Maryland courts have emphasized that screening criteria related to criminal records must be reasonably related to rental suitability and must not unfairly discriminate against applicants.
• Ban on Discrimination: Under the Maryland Fair Housing Act, landlords cannot use criminal records in a way that discriminates based on race, color, national origin, or other protected categories. Policies must be consistent and applied fairly.
• Consideration of Rehabilitation: Maryland encourages landlords to consider the nature and timing of criminal offenses and rehabilitation evidence rather than automatically disqualifying anyone with a criminal record.

4. Restrictions on Use of Credit Reports

Credit reports are a common component of tenant screening in Maryland:

• Factors Considered: Landlords usually evaluate credit scores, payment history, outstanding debts, and bankruptcies to assess the applicant’s financial responsibility.
• Equal Application: Credit screening policies must be applied consistently to avoid claims of discrimination.
• Disclosure: As with other consumer reports, credit checks require proper notice and consent, along with adverse action procedures if the application is denied.

Best Practices for Conducting Background Checks on Maryland Tenants

To maintain compliance and minimize potential liability, Maryland landlords should follow these best practices when conducting background checks:

Obtain Written Permission

• Always request and obtain written authorization from the prospective tenant before running a background or credit check.
• Use clear disclosure forms explaining what types of reports will be obtained and for what purpose.

Use Reputable Screening Agencies

• Partner with licensed tenant screening services that comply with the FCRA and Maryland regulations.
• Verify the accuracy and completeness of the reports received before making housing decisions.

Apply Consistent Screening Criteria

• Develop standardized screening criteria for all applicants and apply these criteria consistently to avoid claims of discrimination.
• Document the criteria and ensure that they relate directly to rental eligibility, such as rental history, creditworthiness, and criminal activity relevant to safety.

Provide Required Notices Promptly

• If you intend to deny a rental application based on information obtained during screening, promptly provide the applicant with the required pre-adverse action and adverse action notices under the FCRA.

Limit Screening Fees to Actual Costs

• Charge screening fees that reflect only the actual cost of obtaining the reports.
• Provide receipts and be transparent about any fees charged.

Summary

Maryland landlords are allowed to run background checks on tenants as part of the tenant screening process, provided they comply with federal and state laws. The FCRA mandates procedural safeguards including disclosure, consent, and notification requirements. Maryland law stresses the need for reasonable, non-discriminatory screening policies and limits on fees. Landlords should responsibly use criminal, credit, and rental history information to make fair and informed leasing decisions while maintaining transparency and legal compliance throughout the process.

Understanding these requirements and following best practices will help landlords in Maryland effectively mitigate risks and contribute to safe and stable rental housing.