The Texas Rental Application: A Landlord’s Guide to Screening Laws

Understanding Texas rental application laws is important for landlords who want to make informed, compliant, and fair rental decisions.

Governed by both the Texas Property Code and federal regulations like the Fair Housing Act (FHA) and the Fair Credit Reporting Act (FCRA), these laws provide clear guidelines on what landlords can and cannot do in the screening process.

By following these rules, landlords can avoid legal pitfalls, protect their properties, and foster a respectful and transparent application experience for tenants. This guide will walk you through the key laws, best practices, and tools available to simplify and streamline the screening process.

Overview of Texas tenant application and screening laws

Tenant screening in Texas is subject to specific sections of the Texas Property Code, which are part of the broader Texas landlord tenant laws. These laws outline what landlords can and can’t do in the tenant application process, which ensures fair treatment for applicants and legal protection for property owners.

Key Texas Property Code Sections for Tenant Screening

When it comes to tenant screening in Texas, there are several key sections of the Texas Property Code that landlords and property managers should be aware of. These sections outline the requirements and regulations for tenant screening to guarantee a fair and transparent process for all parties involved.

Section 92.3515 - Notice of tenant selection criteria

This section mandates that landlords must provide applicants with a written notice outlining the landlord's tenant selection criteria and any grounds for possible denial.

The notice should include screening factors like the following:

• Criminal history
• Previous rental history
• Current income
• Credit history
• Any failure to provide complete and accurate information in the application

If applicants fail to meet these criteria, or if they provide incomplete or inaccurate information, their application may be denied, and their application fee won't be refunded. The law also requires applicants to sign an acknowledgment that they had an opportunity to review these selection criteria before proceeding.

Section 92.352 - Application fee:

Texas landlords are allowed to charge a reasonable application fee to cover screening costs. This fee should reflect the actual expenses involved in evaluating the applicant’s background and nothing more.

Section 92.331 - Retaliation by landlord:

Landlords cannot retaliate against tenants or applicants for exercising their legal rights. This law reinforces the need for fair and consistent screening practices.

How Federal Laws affect tenant screening in Texas

In addition to Texas state laws, federal regulations — namely, the Fair Housing Act (FHA) and the Fair Credit Reporting Act (FCRA) — play an important role in shaping compliant tenant screening practices.

Fair Housing Act (FHA)

The FHA prohibits discrimination in housing based on the following protected characteristics:

• Race
• Color
• National origin
• Religion
• Sex
• Familial status
• Disability

For Texas landlords, this means the following:

• Screening criteria must be applied equally to all applicants to prevent discrimination.
• Rental advertisements cannot show preferences based on protected classes.
• Questions regarding an applicant’s protected characteristics should be avoided during the application process.
• If an applicant has a disability, landlords must offer reasonable accommodations upon request.

Fair Credit Reporting Act (FCRA)

The FCRA governs how consumer reports, including credit reports, can be accessed and used:

• Landlords must obtain written permission from applicants before running credit checks
• If an adverse action (like denying an application) is taken based on information in a credit report, the landlord must provide the following:
  • Notice of the adverse action (denial)
  • Name and contact information of the credit reporting agency
  • A statement that the agency did not make the decision
  • Notice of the applicant's right to dispute the information
• Landlords must securely store and dispose of credit reports and other sensitive applicant information.

Screening criteria and process in Texas

Building on the legal foundations of tenant screening in Texas, landlords apply a range of criteria to evaluate applicants while adhering to established guidelines.

Tenant screening background checks are important for identifying potential risks associated with tenants, such as criminal history and previous evictions. A comprehensive tenant screening report, which includes elements like credit scores and eviction records, helps landlords make informed decisions about potential renters.

Here’s a closer look at the key criteria and considerations involved in this process.

• Credit history: Landlords often assess an applicant’s credit score, payment history, outstanding debts, and any past bankruptcies or foreclosures. While Texas doesn’t set a specific credit score requirement, landlords are expected to apply their standards consistently to avoid claims of bias.
• Income verification: It’s typical for Texas landlords to require proof that a tenant’s income is 2-3 times the monthly rent, ensuring the applicant can afford rent payments comfortably. This is a common practice but should be applied equally to all applicants.
• Rental history: Previous rental experiences carry significant weight, as landlords may consider past eviction records, timely rent payments, property care, and the tenant’s relationships with prior landlords. This history helps gauge a tenant’s reliability and responsibility.
• Criminal background: Texas landlords can consider criminal history, but they should focus on convictions rather than arrests and consider a reasonable timeframe when looking back at offenses. Additionally, landlords should evaluate the severity and relevance of any offense to the applicant’s ability to rent.
• Employment verification: Stable employment is a key factor. Many landlords verify current employment status, length of employment, job title, and income to understand if the tenant has steady work that aligns with the income verification requirement.

Texas application processing requirements

Landlords must also consider the procedural aspects of application processing to ensure transparency, compliance, and efficiency. Here’s a breakdown:

1. Written notice requirement:  As previously discussed, according to Texas Property Code Sec. 92.3515, landlords must provide applicants with a written notice outlining the selection criteria before collecting an application fee. This transparency helps applicants understand what’s expected and reduces misunderstandings.
2. Fair Housing compliance: Landlords must comply with federal and state fair housing laws, avoiding discrimination based on protected classes, as mentioned above.
3. Application processing time: Under Texas law, if an application is not accepted within seven days of submission or after taking a deposit, it’s considered rejected. This ensures a timely response and transparency in the screening process.
4. Co-applicant rejection: If one applicant in a group is rejected, all applicants in that group must be rejected.
5. Application fees: While there's no cap on application fees, they should reasonably reflect the actual cost of screening.
6. Adverse Action Notices: If rejecting an applicant based on information in a consumer report, landlords must provide an adverse action notice as required by the Fair Credit Reporting Act.
7. Consistency: Screening criteria should be applied consistently to all applicants to avoid discrimination claims.

Screening tips for Texas landlords

To establish a fair and compliant tenant screening process, Texas landlords should consider the following best practices:

• Establish clear, written screening criteria: Create standardized screening criteria that align with both state and federal regulations.
• Train staff on Fair Housing Laws: Educate any staff involved in tenant selection to understand fair housing laws — this helps prevent potential discrimination and ensures unbiased practices.
• Obtain written consent for background checks: Always secure written permission from applicants before conducting background or credit checks.
• Provide Adverse Action Notices when necessary: If an application is denied based on a credit report or other consumer information, supply the legally required adverse action notice, detailing the reasons and applicant’s rights to dispute the information.
• Maintain detailed records: Keep thorough documentation of each applicant’s screening process to promote transparency, streamline audits, and demonstrate compliance.

How Azibo’s tenant screening services support Texas landlords

Azibo’s tenant screening services simplify compliance and streamline tenant selection for Texas landlords, helping them evaluate applicants fairly and responsibly.

Comprehensive screening reports: Azibo provides detailed credit and criminal background checks, tailored to comply with Texas laws. This helps landlords assess applicants’ financial reliability and backgrounds accurately.

2. Automated compliance: With Azibo, landlords can easily meet Texas disclosure requirements by sharing screening criteria with applicants upfront. The platform also automates adverse action notices when needed, which ensures FCRA compliance.

3. Secure and efficient process: Azibo securely stores sensitive data and manages application fees in line with Texas regulations. This creates a seamless, transparent application experience.

4. Consistent, non-discriminatory screening: Azibo’s standardized criteria help Texas landlords maintain fair housing compliance, which reduces risk by ensuring consistency across all applications.

With Azibo, Texas landlords save time and gain peace of mind.

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Confidently processing a rental application in Texas

For Texas landlords, understanding tenant screening laws makes it easier to run a fair, efficient, and legally sound rental business. By adhering to the Texas Property Code, complying with federal guidelines, and leveraging tools like Azibo’s tenant screening services, landlords can streamline their application process, reduce risk, and build stronger relationships with tenants.

With the right practices in place, tenant screenings become more than just a formality — they’re a way to create a transparent, balanced, and positive experience for all parties involved, setting a strong foundation for successful rental management.