Tenant Screening Laws: What Landlords Can (and Can’t) Do

Tenant screening is one of the most powerful tools landlords have—but it also comes with legal responsibilities.

Failing to follow tenant screening laws can result in costly lawsuits, fines, and even discrimination claims. The good news? Staying compliant is straightforward when you understand the rules—and use tools like Landlord Studio that help automate the legal parts of the process.

In this article, we’ll break down the key federal and state laws landlords must follow when screening tenants, what you can and can’t ask, and how to protect yourself from legal risk.

Why Legal Compliance in Tenant Screening Matters

When you screen tenants, you're handling sensitive information and making judgment calls that can affect someone’s housing access. That’s why tenant screening is regulated by several federal laws and many state laws, too.

Failing to comply can result in:

• Discrimination lawsuits
• Fines from the FTC or HUD
• Tenant disputes
• Legal costs and reputational damage

Knowing the law is not optional; it’s part of being a responsible landlord.

Landlord-tenant laws can vary broadly between states. Which is why we’ve put together state-specific landlord-tenant legal guides here. 

Key Laws That Govern Tenant Screening

1. Fair Housing Act (FHA)

The Fair Housing Act prohibits discrimination based on:

• Race or color
• National origin
• Religion
• Sex (including gender identity and sexual orientation)
• Familial status
• Disability

You can’t reject a tenant based on any of these characteristics, even if unconsciously.

You can, however, reject an applicant for objective reasons—like poor credit, prior evictions, or insufficient income—as long as those standards are applied consistently to everyone.

Read: Common Tenant Screening Mistakes →

2. Fair Credit Reporting Act (FCRA)

The FCRA governs how credit and background information is collected and used.

Here’s what it means for landlords:

You must get written or electronic consent before running a credit/background check.
If you reject a tenant based on the report, you must send an Adverse Action Notice.
Tenants have the right to dispute incorrect info in their report.

💡 Landlord Studio’s built-in screening tools help you follow these steps automatically.

3. State and Local Screening Laws

Several states and cities now enforce their own rules that go beyond federal laws, setting specific limits on what landlords can charge applicants during tenant screening. Here’s what to know for 2025:

Key State-Level Restrictions

• California: Under Civil Code §1950.6, landlords may only charge a screening fee when they have an available unit and the candidate meets basic rental criteria. The fee must not exceed the landlord’s actual out-of-pocket expense plus a fair administrative cost, which is adjusted annually for inflation using the Consumer Price Index (CPI). In 2025, the cap is approximately $62.02.
• Delaware: Application fees are capped at the greater of 10% of monthly rent or $50, whichever is higher.
• Maine: Landlords may only charge applicants the actual cost of screening (credit, background checks, etc.) and must disclose all costs in writing before a lease is signed (a requirement added in 2025).
• Massachusetts: Application fees are not allowed, unless charged by a licensed real estate broker.
• Minnesota: Landlords can only charge the actual screening cost, and any excess must be refunded.
• New York (State): Fees are capped at $20 and must be waived if the applicant provides a portable tenant screening report that was issued within the past 30 days.
• Vermont Application fees are banned entirely.
• Virginia Fees cannot exceed $50, excluding any actual third-party screening costs.
• Washington State: Application fees must match the exact cost of screening.
• Washington D.C.: Caps the application fee at $50.
• Wisconsin: Fees are capped at $25, and landlords must provide a copy of the screening report to the applicant.
• Oregon: Fees are limited to reasonable, actual costs of screening.

Read the full guide: Rental Application Fee Laws By State

Local Ordinances & Portable Report Rules

• In Seattle, tenant screening and move-in fees (including application fees) must not exceed 10% of one month’s rent—and when combined with security deposits, they cannot exceed one month’s rent.
• Some states have implemented Portable or Reusable Tenant Screening Report (PTSR) laws:
  
  • New York, Rhode Island: Landlords must waive fees if applicants submit a recent (e.g., 30‑ or 90‑day) credit or background report.
  • Maryland, Washington, Colorado: Landlords must notify applicants whether PTSRs are accepted. In some states, acceptance is voluntary, meaning landlords may still charge fees if they choose not to accept these reports.

Why It Matters

• Tenant Protection: These laws help ensure fees are fair, transparent, and tied to actual screening costs, not used as profit generators.
• Avoiding Junk Fees: Landlords are under growing scrutiny over opaque fee structures; federal agencies and advocates have called out excessive ancillary charges.

Tip of the day: Laws are evolving fast. Always check your current local housing authority or state website for the latest caps and compliance requirements before charging any application fees.

Discrimination and Tenant Screening Questions

Asking the right tenant screening questions is an important part of evaluating potential renters. These questions help landlords and property managers learn more about applicants and determine whether they’re a good match for the property. However, it’s just as important to understand which questions are legally acceptable and which ones are prohibited under Fair Housing laws.

Most screening questions typically fall into a few key areas:

• Basic personal information
• Financial status
• Background and references
• Reasons for moving

Examples of Questions You Can Ask Legally:

• What’s your current employment situation?
• Can you provide references from your current and/or past landlords?
• Have you ever been evicted?
• How many people will be living in the unit?
• Do you have any pets? If so, what kind and how many?
• Can you show proof of income (e.g., pay stubs or bank statements)?
• Why are you moving from your current home?
• How long do you plan to stay?
• Have you ever broken a lease or rental agreement?

You can also tailor questions based on your specific rental criteria to get a clearer picture of who will be living in your property. Just be sure to keep everything within legal boundaries.

Questions You Cannot Ask by Law:

Landlords are not allowed to ask questions related to a person’s:

• Race or ethnic background
• Marital status
• Whether they have children or plan to
• Religion or place of worship
• Disability or medical conditions
• National origin or first language
• Membership in a protected class
• Source of income, such as public assistance or welfare
• Sexual orientation or gender identity

Even if a question seems harmless or part of casual conversation, it may be considered discriminatory under Fair Housing laws. These rules are in place to protect renters and ensure fair treatment for everyone, regardless of background or personal circumstances.

By sticking to appropriate, relevant questions and steering clear of those that violate legal protections, landlords can build a fair and consistent screening process while reducing the risk of legal issues.

Adverse Action Notices: What to Do If You Reject an Applicant

If you deny an applicant based in whole or in part on a screening report, you are legally required to send them an Adverse Action Notice.

This must include:

• The reason for denial (e.g., low credit score, prior eviction)
• The name and contact of the reporting agency (e.g., TransUnion)
• A statement that the applicant can request a free copy of the report
• Notice that they can dispute inaccuracies

Landlord Studio makes this easy with an Adverse Action Notice template built into the system. Learn more about Adverse Action Notices here →

How Landlord Studio Helps You Stay Compliant

With Landlord Studio, you don’t have to worry about missing a step:

• Tenants authorize reports securely through TransUnion
• No need to handle sensitive data like SSNs
• Adverse Action Notices and compliance steps built-in
• Records stored securely in the cloud
• Screening tools backed by federal-compliant systems

Read: How to Run a Tenant Screening Report Online (Step-by-Step)

Tenant Screening Laws: Final Thoughts

Tenant screening is essential, but only when done right.

Understanding and following federal and local screening laws protects you and your tenants, reduces legal risk, and helps build a fair, professional rental process.

With Landlord Studio, you can screen tenants confidently, knowing your process is secure, legal, and compliant from end to end.

Start Screening Tenants the Right Way. Create your free Landlord Studio account and run compliant, professional screening reports today.