As a landlord in North Carolina, you need the maximum amount of confidence in a prospective tenant before you decide to establish a lease agreement. Property management, when done well, can be incredibly profitable.
On the flip side, a property owner stands to lose out on a month-to-month basis if the selected tenant from the rental application procedure is less than ideal.
We don't want you to experience that, so we thought the best thing to do was assemble some essential insights into the rental application process, especially since there's a legal element of the whole thing to think about.
What to Include
There are technically two different rental application form types used in North Carolina. The first, which is the one you're less likely to be working with, is a Department of Housing and Urban Development (HUD) rental application form. This is a special form that is used to capture details for subsidized dwellings being offered under the Section 8 Housing umbrella.
Next, there's the standard or general North Carolina rental application form. This is the one you'll likely be using for your rental property.
Generally, you'll want to include information such as the following:
- Credit history check consent
- Personal informatrion
- Written consent for background checks
- Income information
- Rental history
You can customize your application form to capture other relevant insights to use too!
Legal Disclosures That Must Be Present on a North Carolina Rental Application Form
A North Carolina rental application form, while being a document that allows a landlord to find out more about potential renters, also must provide certain elements of information. These disclosures are:
- Any associated fees that come with the North Carolina rental application procedure.
- Rent control rules
- Shared utility arrangements
- Security deposit policy
- Smoking policy
What Not to Include
Even if you're simply trying to keep your North Carolina property safe, thanks to the Federal Fair Housing Act (FHA), there are some pieces of data that you're restricted from requesting in your form.
Note that if you should decide to ask for this information or make it a part of your screening process, you will be guilty of an illegal act.
What are these protected classes of information?
- Familial status
- Disability status
A background check is essential in verifying the authenticity and character of the hopeful tenant before deciding to settle on anyone. Each type of check provides a status report on a few key elements.
- Credit history check - A credit report can provide more than just a look at what a credit score looks like. It can encompass your applicants, credit queries, income, address history, etc. Note that express written consent must be provided before you can make a credit check a part of the rental application.
- Rental history - This element of the background check aims to understand how things went with the prospective tenant at previous residences. This includes any evictions that would've happened in the past seven years.
- Criminal history - As the name implies, this check is a look into the tenant's previous criminal activity if any exists. For example, the sexual offender registry may be checked to validate whether the person is on it.
Rental Application Laws
Any North Carolina rental application must be guided by the legal policies set. The last thing you would want is to be in contravention and subject yourself to legal ramifications. This section aims to cover the most essential ones at a high level.
Based on North Carolina General Statutes Chapter 42, Sections 50-56, there are different charging patterns that a landlord may use, but they are highly dependent on the term of the intended agreement.
If the rental application is for a week-to-week tenancy, then the maximum security deposit that can be charged is two weeks' rent.
For a standard month-to-month tenancy, the security deposit maximum becomes one and a half months' rent.
Finally, if the agreement is intended to be a long-form one, a security deposit of up to two months' rent may be charged.
There's an additional informational caveat. Within 30 days of when the lease is expected to begin, a tenant in North Carolina must be informed of which financial institution will house the deposit.
In North Carolina, the law used here is at the federal level. Based on the stipulation provided by the Federal Credit Reporting Act (FCRA), if a landlord intends to carry out a credit history check, written consent must be provided.
Technically, this could happen in the form of a statement alongside a North Carolina rental application. Alternatively, a disclaimer may be prepared as a part of the form and be made official once a signature has been provided by the applicant, it becomes legally binding.
A landlord will always have screening criteria that become essential in separating the different applications and deciding which tenant is the best one. It's a requirement to ensure that a potential tenant is aware of what these points of evaluation are.
Confirmation must be given by the said tenant that the information was shared and this is confirmed with a signature of acknowledgment that is either alongside the North Carolina application document or alongside it.
North Carolina landlords have sole discretion where their application fees are concerned. It is theoretically limitless, and it also happens to be non-refundable.
This harkens back to the Federal Fair Housing Act (FHA) and the fact that informational elements such as familial status, age, sex, etc., are not to appear on a North Carolina rental application document.
Eviction Record Search
While eviction records are in the public domain in North Carolina, the state does not have an online search system.
Therefore, a landlord will need to use this form to make a data request to the North Carolina Judicial Branch.
Considering the manual process involved, it's advisable to have a third-party service provider get the records on your behalf.
Adverse Action Notices
The obtaining of a consumer report may lead you to wish to reject an applicant. Alternatively, you may see value in increasing the initial rent or deposit based on your discoveries.
Any of these are classified as "adverse actions." An applicant must be given a letter of notice including all the relevant details, regardless of if the discovery is the primary basis of the action.
The applicant then has 60 days to dispute the contents of the notice.
Build Your Own
The application isn't the only document a North Carolina landlord will need to think about. A lease agreement must be drafted to mark the beginning of a rental contract and its guidelines. We have placed the appropriate links below, so you may either download a preset one or customize your own:
The Bottom Line
A landlord has a laundry list of considerations to make in the preparation of a rental application as it must remain within the confines of the state and federal legal principles that have been outlined.
Perhaps you may find a lot of value in our template, which will eliminate the need for you to do a lot of the work!
Does a North Carolina Rental Application Require a Social Security Number?
No, this is not a required data point from a legal perspective. However, if certain functions such as credit checks are served by collecting one, doing so becomes necessary.
Should My Application Fee Be Based on the Screening Process Cost?
While there's no policy, landlords are advised to be reasonable with their application fees. Base them on the screening process, as well as any other administrative overhead that may present a cost.
What's the Maximum Application Fee I Can Charge?
State and federal law impose no limit on what the charge can be.