Are landlords allowed to run background checks on tenants?

Tenant Screening and Background Checks for Landlords in Michigan

As a landlord in Michigan, conducting tenant screening is a critical step in selecting reliable tenants and protecting your property investment. One of the most common components of tenant screening is running background checks. Understanding the legal framework governing background checks helps ensure your screening process complies with Michigan laws and federal regulations.

Are Landlords Allowed to Run Background Checks in Michigan?

Yes, landlords in Michigan are legally allowed to run background checks on prospective tenants. Background checks typically include reviewing a tenant’s criminal history, credit report, and eviction records, among other information. Using these checks can assist in making informed leasing decisions and managing rental risk effectively.

However, while Michigan landlords have the right to screen tenants through background checks, several key legal requirements and best practices apply:

Compliance with Federal Laws: The Fair Credit Reporting Act (FCRA)

Before performing any background or credit checks that involve consumer reports, Michigan landlords must comply with the federal Fair Credit Reporting Act (FCRA). This federal law regulates the use of consumer reports by landlords and includes important steps such as:

• Obtaining written consent: You must get the tenant’s authorization before requesting a background or credit report.
• Providing proper notices: If you deny housing based on information in the background check, you are required to provide an “adverse action” notice that includes details about the credit reporting agency and instructions on how the applicant can dispute inaccurate information.
• Using reports responsibly: Only use the information for legitimate tenancy decisions—not for any discriminatory purpose.

Michigan’s Specific Legal Considerations for Background Checks

In addition to the FCRA, landlords operating in Michigan should consider these state-specific guidelines:

• No blanket prohibition on criminal background checks: Michigan law does not restrict landlords from screening tenants based on criminal history; however, you must avoid discriminatory practices and consider individualized assessments where appropriate.
• Restrictions on credit report usage: Michigan law does not prohibit credit checks for tenant screening, but it requires that any adverse decisions based on credit information comply with FCRA rules.
• Fair Housing Act compliance: Federal and state fair housing laws in Michigan prohibit discrimination based on protected classes such as race, color, religion, sex, national origin, familial status, disability, and others. Using background checks to discriminate against tenants unlawfully is prohibited.

Personal Information and Privacy

Michigan landlords should handle all tenant information obtained through background checks with confidentiality. Michigan’s privacy laws require that personal details from screening reports be securely stored and only used for the intended purpose of tenant evaluation.

Steps for Michigan Landlords to Conduct Background Checks Properly

1. Inform prospective tenants early

Explain during the application process that a background check is part of your tenant screening, and outline what reports will be run.

1. Obtain written consent

Use a separate written authorization form, signed by the applicant, before ordering any background or credit reports.

1. Use reputable screening companies

Choose tenant screening services or consumer reporting agencies that comply with the FCRA and have strong privacy standards.

1. Review reports thoroughly and fairly

Consider the nature of criminal offenses, the amount of time since the offense, and its relevance to the tenancy. Avoid automatic denials without due consideration.

1. Supply adverse action notices when applicable

If you decide to deny the tenancy based on the background check results, notify the applicant with proper documentation under FCRA guidelines.

1. Maintain records securely

Keep tenant reports confidential, retain them only as long as necessary, and dispose of them securely.

What Can Be Included in a Background Check?

Michigan landlords commonly include the following in their tenant background screening process:

• Criminal history: Michigan automatic criminal background checks include checking state and national databases for felonies or misdemeanors.
• Credit history: Reviewing a tenant’s credit score, outstanding debts, and payment history.
• Eviction history: Checking court records for past eviction judgments or landlord-tenant disputes.
• Employment and income verification: Confirming that the tenant’s income supports the rent obligations.
• Rental history references: Contacting previous landlords to assess tenant behavior and reliability.

Conclusion

Landlords in Michigan are permitted to run background checks on prospective tenants as part of a comprehensive tenant screening process. It is essential to follow both federal and state guidelines to ensure that the checks are lawful and non-discriminatory. By obtaining written consent, using screening reports appropriately, and providing proper notices, Michigan landlords can make informed and legally compliant decisions to protect their rental properties and foster successful landlord-tenant relationships.