You’ve finally located your ideal apartment and are prepared to move. The next step is to apply for your prospective new apartment, and once it has been approved, you must sign the lease for the property.
When considering renting a property, tenants frequently wonder why a landlord would need to look into their finances. However, when you seek to rent an apartment, you can feel like your entire financial history is being made public.
However, it’s not entirely out of place for landlords to request your bank account information and recent bank statements. So fret not and read along to find out what financial information landlords can ask for.
What Financial Information Are Landlords Allowed to Ask Prospective Tenants?
1. Tax Returns
Tax returns, commonly known as the 1040s, can be an essential document for self-employed applicants or a supporting document for W-2 employees. They benefit self-employed people since they do not typically give themselves pay stubs, so tax returns serve as a record of their income.
Landlords request the past two years’ worth of tax returns to confirm their potential tenants’ current and historical income. The applicant may obtain a copy of their filed application by contacting their accountant, the IRS, or by downloading it online.
Pay stubs will provide landlords with income information. Still, the tax return will substantiate those figures, reveal additional sources of income, and reveal debts like alimony, student loan debt, other properties owned, and so forth. It will help if you consider a property manager to help you screen potential tenants.
Landlords utilize this additional information to assess a tenant’s debt-to-income ratio and adjusted income but not to exclude or discriminate against prospective tenants.
2. Pay Stubs
Pay stubs represent the most typical document to demonstrate a tenant’s income. Pay stubs, also known as check stubs, are a section of the paycheck that includes information about the employee’s pay and deductions for taxes, health insurance, Social Security, etc. Tenants will be able to produce pay stubs, as there are currently 41 states that mandate companies deliver pay stubs electronically or physically to each employee.
As part of the rental application and screening process, landlords ask for the two most recent pay stubs from each prospective renter.
3. Banks Statements
Bank statements have a few notable advantages for landlords to verify tenant income, even though they are typically used as a secondary form of verifying tenants’ income. The statements will detail the tenant’s cash reserves, all banking transactions, and paycheck deposits. It will also check their current address and show whether the bank account is in their name. Requests from landlords for bank statements are made to review transactions and compare them to other records, such as tax returns, pay stubs, and Social Security benefits.
Landlords repeatedly compare the amount on the pay stubs to the deposits listed on the bank statement. This is an excellent approach to identifying fake pay stubs and validating gross monthly income. A landlord’s method for ensuring that there is more money coming in than going out and that there are few unnecessary expenditures is to review the applicant’s banking history.
Homeowners look for bounced checks, overdraft fees, and your bill-paying history. A potential renter’s savings account is also examined. This is to determine whether there are sufficient reserves to cover the rent if the applicant loses their job and no longer has a reliable source of income.
4. Employment Letter
A letter of employment is required as secondary evidence of a candidate’s gainful employment and income. Landlords can also use it to find out how long a prospective tenant has been employed. To be eligible to rent an apartment, some landlords require a certain amount of time spent working in the applicant’s current role. This demonstrates constancy in income and dedication, the two most favorable characteristics of a highly qualified tenant. Others, however, merely need to confirm that the potential tenant has sufficient income to qualify.
Tenant’s Rights to Privacy
1. Basic privacy rights
Potential tenants must provide financial information to the landlord before signing a lease. The landlord-tenant relationship gives landlords access to personal data as well. Although it might seem obvious, they have a legal duty to secure this information from disclosure to outside parties and to maintain its confidentiality.
To vet potential renters, project management companies are increasingly using social media. However, landlords can still browse public content on social media even though access to social media profiles cannot be a prerequisite of the application process. Although it’s not an invasion of privacy, it is something to be aware of because it may raise other legal issues, such as housing discrimination.
2. Right to quiet enjoyment
You have the right to sole possession of the property after you sign a lease. That’s how rental security deposits work. As far as quiet enjoyment is concerned, the renter has this privilege. Likewise, every tenant has the right to use the property they have rented without anyone else entering it, even though the landlord or property management company may own it.
Without your permission, the landlord is not permitted to enter. Their agent also falls under this. For instance, it would be against the rules if the property manager entered your apartment and searched through your items. Or suppose the landlord hands the key to your apartment to a painter who shows up uninvited and unattended when you’re in the middle of lunch.
You can consider suing your landlord for violating your right to quiet enjoyment if they enter your space without permission.
Tenant vetting is a sensitive issue. Because of this concern, many landlords will accept just about anyone who applies. Don’t let it scare you, though. It can be challenging to navigate an apartment leasing application that requests financial details. However, you can proceed with your application easily once you know what to anticipate and how the procedure operates.