Posted: September 03, 2021
When a landlord rents an apartment to a tenant, he or she wants to know that the tenant can pay the rent and their property will be maintained. To verify that this is possible, a landlord may do a background check, a tenant credit check, an eviction search, an employment check, and a previous landlord reference check. The landlord may also verify that a potential tenant is actually employed or has a source of income. But before accessing this information, by law according to the Fair Credit Reporting Act (FCRA) the landlord must have the applicant’s signed authorization stating that they have permission to order and view this consumer information. But how long must the landlord keep the applicant’s signed authorization should on file to be complaint with the FCRA?
Keep Them Until You Are No Longer Liable
The easy answer is that you should keep the documents until you are no longer liable in a potential criminal or civil suit. For instance, if a potential tenant claims that you performed a credit check or background check without their authorization, you can use the rental application as proof that the applicant knew that getting the apartment was contingent on such a check taking place. State law dictates how much time an applicant or tenant has to file a civil suit, which is generally between five and seven years.
Are You At Risk for Being Audited?
Keeping a rental application on file may be helpful in the event of a state or federal tax audit. The application may help establish how many tenants a landlord had in a given year and when they moved in. It may also help to verify when rent was paid, which may play a role in when the money has to be reported for tax purposes. In general, the IRS can audit a tax return for up to six years or longer if they suspect fraud.
Was There Ever a Tenant-Landlord Agreement?
Keeping a rental application is important in establishing that there is a landlord-tenant relationship. If there is no such relationship, landlord laws do not apply, but it may be harder to collect rent or other fees or get someone to leave your home. Paperwork establishing that a landlord and tenant had a formal relationship as such should be kept until any disputes regarding rent, living conditions or how to deal with a security deposit that a tenant may want back.
Landlords should keep any information that verifies that they have a valid lease or have acted in accordance with landlord laws. These records should be kept until any relevant statute of limitations has run out for civil action from a tenant or an audit from the government. As a best practice for confidential data security, sensitive records should be kept in a secure location such as a locking filing cabinet or a password protected file on your computer until they are destroyed.