A prospective tenant is an individual who could potentially move into a rental property at some future point in time, but who hasn't done so yet. They've begun the initial steps of the tenant screening process. At a minimum, they've reached out to the landlord by phone, email, in person, or through a realtor, about a vacancy at a rental property.
A landlord will typically interview several prospective tenants when they have a vacancy before selecting a tenant to live in the property.
What Is a Prospective Tenant?
Several steps are involved before a prospective tenant becomes an actual tenant. The individual must go through a landlord's complete screening process, must sign a lease agreement, and must pay their first month’s rent and security deposit before they're considered an actual tenant. They're still referred to as prospective or potential tenants until that point.
- Alternate name: Potential tenant
How Does a Prospective Tenancy Work?
The first step to becoming an actual tenant is to express interest in a rental vacancy. The potential tenant will contact the landlord to determine the process for viewing the rental. The landlord might pre-screen the tenant over the phone to determine if the individual is likely to continue to the next step of the process.
The next step is for the prospective tenant to schedule an appointment and actually view the property. This can be done by coordinating a time with the landlord, a real estate agent, or a property manager.
The prospective tenant can fill out a rental application if they like what they see when viewing the rental. This application typically includes basic information about the tenant, such as:
- Full name
- Yearly income
- Employment history
- Number of people who will be living in the rental property
- Current and previous addresses, including contact information for the landlords of those properties
The rental application will often include an area where the tenant agrees to have a background check or a credit check conducted, or both. This will often require more personal information, including a Social Security number and date of birth.
The information on the tenant's rental application will be verified, typically through a tenant history report. Numerous databases exist for this purpose and will provide information for a fee, such as rental payment history and any evictions. The landlord can discuss the issues with the applicant if any red flags are discovered during this process.
Examples of issues that could come up during the screening process include a poor credit score, a history of evictions, or a criminal record.
Prospective tenants can contact the database company to dispute any erroneous information that might turn up in the report. The company has 30 days to investigate. Misinformation can be hard to pin down, however, because landlords aren't required to hand over copies of these reports to prospective tenants. They're required to divulge the name of the investigating company, however.
The tenant has the option of signing a lease to rent the property if everything checks out to the landlord's satisfaction. The lease term can vary from weekly, monthly, or yearly, and it will be agreed upon by both landlord and tenant. A signed copy of the lease must be executed by both parties.
The tenant must pay the security deposit, as well as the first month's rent, before moving into the rental. The maximum security deposit might be set by a statewide limit. Typically security deposits are one month's rent, but they can range from half a month to two months or even more depending on local regulations. Laws regarding security deposits are set by the state.
An additional security deposit amount might be required if there will be pets in residence, or if the prospective tenant has a poor credit history.
Finally, the applicant can move into the rental. This is the point when the individual goes from being a prospective tenant to being an actual tenant. Make sure that any damage related to moving in is covered in the signed lease agreement.
Prospective Tenant vs. Actual Tenant
As an example of a prospective versus an actual tenant, Sara sees an ad for a two-bedroom apartment online. She calls and sets up an appointment to view the property. Shelia would be considered a prospective tenant. She would be considered an actual tenant when and if she pays her first month's rent, pays the security deposit, and moves into the apartment.
|Prospective Tenant||Actual Tenant|
|Has made contact to inquire about the property||Has passed the tenant screening process|
|Has viewed the property||Has signed a lease or rental agreement|
|Has filled out an application to rent the property||Has paid a security deposit and the first month's rent|
|Is undergoing a tenant screening process||Is currently residing in the property|
Requirements for Landlords
Landlords must follow fair housing standards when looking for tenants. They must treat all prospective tenants equally at every point during the screening process. They should have the same qualifying standards for all potential tenants.
A landlord must additionally follow the terms of the Fair Housing Act. This act prevents tenants from being discriminated against based on factors such as race, color, religion, sex, national origin, familial status, or disability.
- A prospective tenant is someone who has expressed interest in renting a property.
- Prospective tenants should view the property in question and potential landlords should then screen them, including doing credit checks and criminal background checks.
- Landlords are bound by the Fair Housing Act to treat all prospective tenants equally.
- A prospective tenant becomes an actual tenant when they pay the first month’s rent, a required security deposit, if any, and move into the rental.
Consumer Action. "What Is a Tenant History Report?" Accessed Aug. 28, 2020.
The Markup.org. "What Can You Do if Your Tenant Background Report Is Wrong?" Accessed Aug. 28, 2020.
American Bar Association. "Security Deposits." Accessed Aug. 28, 2020.
United States Department of Justice. "The Fair Housing Act." Accessed Aug. 28, 2020.