While paperwork is never the best part of any job, when it comes to property management, it is a necessary evil.
Tenant files are used for:
Screening tenants;
Day-to-day management;
Evictions;
Winning tenant disputes;
Debt collection; and
Sale or financing of the rental property.
What Goes in the Tenant File?
For every rental applicant, there should be an initial intake form that is filled out during the first contact — usually the phone call answering the rental ad. The same form should be used for each inquiry and it should list the questions asked of each applicant.
Hang on to a copy of the photo ID provided before the property tour, unless a photo is prohibited. In that case, make a note of the information and include that in the file.
The completed rental application is crucial. This information is needed to screen tenants, prove fraud, counter discrimination claims, and collect a judgment for unpaid rent or property damage. If the applicant was rejected, keep the application, along with a rejection letter if there is one.
The tenant screening reports, or notes from the reports, belong in the file. This should include any interview sheets listing the questions asked of references along with the answers provided.
A receipt of any money provided by tenant should be in the file, starting with an application fee, deposit and first month’s rent. Each month’s payment should be recorded.
The signed lease agreement and any attachments must be in the file, along with any subsequent modifications of the lease.
The move-in condition report is crucial for proving damage.
Keep a record of all tenant communications, including complaints and repair requests. These notes should reference the relevant dates — when the request came in, when the landlord responded, followed-up and so on. These records should be contemporaneous, but if you forget to write something down in the moment, do it as soon as you remember, and reference the approximate date.
The move-out condition report must be retained.
The final accounting of the security deposit is important. Include any receipts for repairs.
Landlord Tip: Along with tenant files, copies of income and expenditures — like rent payments and repair costs, should also be kept in a master file for use when preparing tax returns, financial documents, or due diligence for a sale or financing.
How Long Should I Keep My Files?
The most popular answers are two, three and six years. Those numbers represent the most common statutes of limitation for legal claims that might be raised by rental applicants or tenants — like discrimination, or security deposit disputes.
Because those rules differ from state to state, there is no universal answer as to how long the information from tenant files may be relevant. Ask an attorney in your area to provide the best answer.
Don’t keep the information for longer than necessary, because that only increases the risk of accidental disclosure. Dispose of the information safely — like in a private paper shredder or delete digital files. Don’t forget to delete copies from the device’s trash or back-up files.
Protecting Tenant Privacy
Tenant files contain sensitive information, and landlords must take reasonable steps to prevent unauthorized disclosure or theft.
For hard-copy files, locate file cabinets away from high-traffic areas and use a locking system. Keep the key separate from other keys. Don’t store files in boxes or in a shared storage room.
For computer files, anticipate what might happen if the device is stolen. If possible, keep sensitive information on a system that is not frequently out in public. Change passwords frequently or upgrade to biometric features like fingerprint recognition. Encrypting the hard drive may prevent unintended disclosure. Cloud storage may be a good solution, however, data breaches still can occur, so choose a reputable provider.
Educate employees on the need to protect sensitive data. Avoid disclosure of information to contractors, vendors and family members who may have access to the leasing office or home office files or computers.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
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Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.
