What Is a Prospective Tenant?
Definition and Steps to Become an Actual Tenant
When there is an opening for a job, an employer will often interview several applicants before selecting an individual for the job. When there is a vacancy at a rental property, a landlord will interview several prospective tenants before selecting a tenant to live in the property. Learn what defines a prospective tenant and the steps they must go through to become an actual tenant.
What Is a Prospective Tenant?
A prospective tenant is an individual who could potentially move into a rental property. He or she has already begun the initial steps of the tenant screening process. At a minimum, he or she has begun the first step in the rental process, which is reaching out to you, whether by phone, email or through a realtor, about a vacancy at your rental property.
There are, however, several more steps involved before a prospective tenant becomes an actual tenant. The individual must go through your complete screening process, must sign a lease agreement, and must pay their first month’s rent and security deposit before they are considered an actual tenant. Until that point, they are still referred to as prospective, or potential, tenants.
How a Prospective Tenant and Actual Tenant Are Different
- Called About the Property
- Viewed the Property
- Filled Out an Application to Rent the Property
- Is Undergoing Your Tenant Screening Process
- Has Been Approved Through Your Tenant Screening Process
- Has Signed a Lease or Rental Agreement
- Has Paid Security Deposit and Rent
- Is Currently Residing in Your Rental Property
Example of a Prospective Tenant
- Sara sees an ad for a two-bedroom apartment online. She calls and sets up an appointment to view the property on Saturday. Shelia would be considered a prospective tenant. Once she pays her first-month rent, security deposit and moves into the apartment, she would be considered an actual tenant.
Landlord Must Follow Fair Housing Standards
At every point in the screening process, the landlord must treat all prospective tenants equally. This can be done by having the same qualifying standards for all potential tenants. In addition, the landlord must follow the Fair Housing Act. This act prevents tenants from being discriminated against based on factors such as race, religion or five other classes.
1. Contact Owner About Viewing the Property
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 may pre-screen the tenant over the phone to determine if the individual will continue to the next step of the process.
2. View the Property
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 a real estate agent or property manager.
3. Fill out Rental Application
If the tenant likes what he or she sees during the viewing of the rental, he or she can fill out a rental application. This application will include basic information about the tenant, such as:
- Full Name
- Yearly Income
- Employment History
- Number of People That Will Be Living in the Apartment
- Current and Previous Addresses Including Landlord Contact Info
4. Agree to Background and Credit Check
The rental application will often include an area where the tenant agrees to have a background or credit check conducted. This will often require more personal information, including Social Security numbers and dates of birth.
5. Pass Background and Credit Check
The information on the tenant's rental application will be verified. If any red flags are discovered during this screening process, the landlord can discuss the issues with the applicant. Examples of issues that could come up are poor credit score, a history of evictions or a criminal record.
6. Sign Lease Agreement With Landlord
If everything checks out to the landlord's satisfaction, then the tenant has the option of signing a lease to rent the property. The lease term can vary from a weekly lease, a monthly lease, or a yearly lease and will be agreed on by both landlord and tenant. A signed copy of the lease must be executed by both parties.
7. Pay Security Deposit and First Month's Rent
Before moving into the rental, the tenant must pay the security deposit, as well as the first month's rent. The maximum amount of the security deposit may be set by a statewide limit. Typically security deposits are one month's rent but can range from half of a month to two months or more depending on local regulations and circumstances—for example, an additional security deposit amount may be required if there will be pets.
8. Move Into the Rental
Finally, the applicant can move into the rental. This is the point where 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.