Are landlords allowed to run background checks on tenants?

Tenant Screening and Background Checks for Landlords in South Dakota

As a landlord in South Dakota, conducting thorough tenant screening is an essential part of managing rental properties effectively. One common question is whether landlords are permitted to run background checks on prospective tenants. This guide provides a comprehensive overview of South Dakota’s laws and practical considerations related to tenant background checks, helping landlords make informed decisions while complying with legal requirements.

Are Landlords Allowed to Run Background Checks in South Dakota?

Yes. Landlords in South Dakota are legally allowed to run background checks on prospective tenants as part of the tenant screening process. This practice is common and generally encouraged to reduce the risk of renting to tenants who may pose financial or safety risks.

What Does a Background Check Typically Include?

When landlords in South Dakota conduct background checks on prospective tenants, they typically look for:

• Criminal history: Records of any criminal convictions or charges that can impact the safety of the property or neighborhood.
• Credit history: Information regarding a tenant’s creditworthiness, including payment history, outstanding debts, and financial stability.
• Eviction history: Past evictions or landlord-tenant disputes indicating potential rental issues.
• Employment verification: Confirmation of income sources and employment status.
• Identity verification: Confirmation of the applicant’s identity to prevent fraud.

Legal Requirements for Tenant Background Checks in South Dakota

When conducting background checks, South Dakota landlords must comply with federal and state laws that regulate tenant screening, including:

1. Fair Credit Reporting Act (FCRA)

The FCRA is a federal law that governs how landlords use consumer reports obtained from credit reporting agencies or background check companies. Key points include:

• Written consent: Landlords must obtain written permission from the prospective tenant before running a background or credit check.
• Disclosure: Landlords must provide the applicant with a disclosure notice explaining the intent to use a consumer report for tenant screening.
• Adverse action notice: If a landlord denies an application based on information found in the background check, the landlord must notify the applicant and provide details about the reporting agency so the applicant can dispute the information if needed.

2. South Dakota State Law

While South Dakota does not have tenant screening laws that are distinctively different from federal regulations, landlords should be aware of general privacy principles and anti-discrimination laws such as:

• South Dakota Human Rights Act: This act prohibits discrimination against prospective tenants on the basis of race, color, religion, sex, disability, familial status, or national origin. Landlords should avoid using background check information to unlawfully discriminate or impose policies that disproportionately affect protected classes.
• Reasonable use of background information: The information obtained should be relevant to the tenancy. For example, bankruptcies older than 10 years or expunged criminal records should generally not be held against applicants.

Best Practices for South Dakota Landlords When Running Background Checks

To maintain compliance and uphold a fair screening process, landlords in South Dakota should consider the following:

Obtain Proper Authorization

• Always secure written consent from the applicant before initiating any background check.
• Use a clear and comprehensive disclosure form that explains the purpose of the check.

Use Reputable Screening Services

• Partner with reputable tenant screening agencies that comply with FCRA requirements.
• Confirm that the screening company provides timely, accurate, and complete reports.

Consistent Screening Policies

• Apply the same screening criteria uniformly to all applicants to avoid claims of discrimination.
• Maintain clear documentation of the screening process and criteria for rejecting or approving an applicant.

Evaluate Information Objectively

• Assess the relevance and severity of any negative information discovered.
• Consider factors such as the nature of any criminal record, the time elapsed since the offense, and evidence of rehabilitation.
• Make reasonable judgments to avoid unfairly denying housing to applicants based on minor or unrelated issues.

Notify Applicants in Case of Adverse Decisions

• Provide an adverse action notice promptly if you reject an applicant based on background check results.
• Include the name and contact information of the consumer reporting agency.
• Inform the tenant of their right to dispute inaccurate information.

Summary

In South Dakota, landlords are permitted and encouraged to run background checks on prospective tenants as a responsible step in tenant screening. Compliance with federal regulations like the FCRA is essential, requiring landlords to obtain written permission, disclose their intent, and notify applicants if their application is denied based on report findings.

By following best practices, landlords can effectively use background checks to select reliable tenants while respecting applicants’ rights and adhering to South Dakota laws. This proactive approach ultimately helps landlords protect their properties, maintain safe communities, and promote fair housing standards.