• Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Legal Templates

Legal Templates
  • Business Forms
    Business & Contracts

    All of our legal contracts and documents are drafted and regularly updated by attorneys licensed in their respective jurisdictions, paralegals, or subject matter experts. Save your hard-earned money and time with Legal Templates.

    Top Business Forms
    Business Formation
    • Business Plan
    • LLC Operating Agreement
    • Articles of Incorporation
    • Corporate Bylaws
    • Buy-Sell Agreement
    Business Operations
    • Business Contract
    • Partnership Agreement
    • Non-Disclosure Agreement
    • Release of Liability
    • Letter of Intent
    Sales and Payments
    • Purchase Agreement
    • Sales Agreement
    • Invoice
    • Purchase Order
    • Business Purchase
    Employment and HR
    • Employment Contract
    • Employment Offer
    • Employment Verification
    • Freelance Contract
    • Non-Compete Agreement
    View All Business Forms
  • Real Estate Forms
    Real Estate

    All of our legal contracts and documents are drafted and regularly updated by attorneys licensed in their respective jurisdictions, paralegals, or subject matter experts. Save your hard-earned money and time with Legal Templates.

    Top Real Estate Forms
    Landlords
    • Lease Agreement
    • Property Management
    • Eviction Notice
    • Late Rent Notice
    • Lease Termination
    Tenants
    • Room Rental
    • Sublease Agreement
    • Roommate Agreement
    • Notice to Vacate
    • Early Lease Termination
    Home Ownership
    • Real Estate Purchase Agreement
    • Mortgage Deed
    • Quitclaim Deed
    • Deed of Trust
    • Moving Checklist
    View all Real Estate Forms
  • Personal & Family Forms
    Personal and Family

    All of our legal contracts and documents are drafted and regularly updated by attorneys licensed in their respective jurisdictions, paralegals, or subject matter experts. Save your hard-earned money and time with Legal Templates.

    Top Personal and Family Forms
    Estate Planning
    • Power of Attorney
    • Last Will & Testament
    • Living Will
    • Advance Directive
    • DNR Form
    Personal Finance
    • Bill of Sale
    • Loan Agreement
    • Purchase Agreement
    • Promissory Note
    • Sales Agreement
    Family Matters
    • Parenting Plan
    • Child Travel Consent
    • Divorce Agreement
    • Separation Agreement
    • Prenuptial Agreement
    Affidavits
    • General Affidavit
    • Gift Affidavit
    • Affidavit of Identity
    • Affidavit of Residence
    • Affidavit of Death
    View All Personal Forms
  • Support
    Resources
    • Business
    • Real Estate
    • Personal and Family
    • Financial
    • Estate Planning
    Support
    • About Us
    • Careers
    • Contact Us
    • All Legal Documents

    Monday - Friday | 9AM - 7PM EDT

    (855) 335-9779

  • Sign In
  • :email

Home Resources Commercial Tenant Screening: What Is It?

Commercial Tenant Screening: What Is It?

Are you a landlord of office, retail, or restaurant space? Learn how to conduct commercial tenant screening and pick the right renter.

Jana Freer

Updated July 29, 2022 | Written by Jana Freer
Reviewed by Susan Chai, Esq.

Landlords use commercial tenant screening to choose the right renters for their commercial properties. 

This process enables property owners to look at an applicant’s business income and liabilities to evaluate whether or not the applicant:

  • Can make rent payments on time
  • Will treat the property with proper care

Commercial tenant screening also uncovers any adverse actions an applicant has made in the past that pose a risk to the landlord and other tenants in the building.

IMPORTANT

As a landlord, you need commercial tenant screening to protect yourself and your property.

Screening also helps you develop a strong relationship with your tenants since it shows that you want their mutual trust and respect. 

Read on to learn more about commercial tenant screening and how to conduct it. 

Table of Contents
  • What is Commercial Tenant Screening?
  • How to Conduct Commercial Tenant Screening?
  • Best Commercial Tenant Screening Resources
  • Tips for Commercial Tenant Screening
  • Summary
  • Frequently Asked Questions (FAQs)

What is Commercial Tenant Screening?

Commercial tenant screening is an evaluation process where landlords review and determine the best commercial tenants for their property. 

If you do not screen your applicants, you may end up renting to a company that does not pay on time and fails to maintain your rental property.

How to Conduct Commercial Tenant Screening?

Here are the steps you should follow when screening your commercial applicants:

1) Review your potential tenant’s lease application

Send your applicants a blank commercial lease application form and ask them to fill it out. After you receive the completed forms from them, review the information on the application and see if their business is worthy of your space. 

If you think they would make a good tenant, move on to the next step. If not, tell the applicants that you will not continue with their application.

2) Verify the company with the state

Every state has a Secretary of State’s office or a similar department to look up an entity and make sure it is currently in good standing. 

If applicants’ companies are not in good standing, they may not be able to pay rent on time. 

Accordingly, you should decline applications from entities that are not in good standing with their state.

3) Get the company’s business credit score

The next step is to conduct a credit check through a business credit bureau such as Dun & Bradstreet, or Experian. 

Dun & Bradstreet is well known in the industry and assigns a business credit score called a PAYDEX score to companies.

When you run a credit check with Dun & Bradstreet, you will receive a PAYDEX score from 1 to 100 based on your tenant’s creditworthiness and past payment performance. 

4) Check the company owner’s credit score

After receiving the applicant’s business credit score, you should check the company owners’ credit score.

Unlike company credit scores, personal credit scores fall between 300 to 850, with 850 being the best score. 

Your applicants should have scores of at least 700 for consideration of your rental. Ratings below 700 suggest that the prospective tenant may not be able to deal with the financial and legal liability of renting a commercial property.

5) Perform background checks on the company owners

Ensure your applicants are who they say they are by running a background check on them. Landlords can conduct background checks through various websites.

IMPORTANT

While there are many background check websites to choose from, not all are equal.

Be sure to find a background check provider that is Fair Credit Reporting Act (FCRA) compliant. If the vendor is not FCRA-compliant, you cannot use the check for screening purposes and you might find yourself in trouble with the law.

6) Contact the tenant’s references

Call your applicant’s references to verify:

  • Credit history
  • Rental history
  • Bank account balances

Have your applicant’s filled-in commercial rental application form with you as you make the calls. 

The applicant’s bank may want to see the signature and consent on the commercial lease application before revealing any information to you.

7) Get a personal guarantee from the applicant

If you are still debating whether or not to accept the applicant, consider getting a personal guaranty from them.

This guaranty requires the individual business owners to personally continue rent payment until the lease expires — even if their business fails and cannot pay.

8) Make your decision

After accepting an applicant, send the business owner or principal a commercial lease agreement to sign.

TIP

If you decide to reject an applicant, mail a tenant rejection letter and explain why you denied the application.

Sending a tenant declination letter helps protect you in a case where the applicant claims rejection based on discrimination. It is also a courteous business practice.

Best Commercial Tenant Screening Resources

Here are some of the best commercial tenant screening resources:

For business credit or PAYDEX scores:

  • Dun & Bradstreet
  • Experian
  • Nav.com

For personal credit scores and background checks:

  • Equifax
  • TransUnion
  • Experian

Laws about credit reports and applications

  • Credit and Your Consumer Rights
  • Fair Credit Reporting Act

Tips for Commercial Tenant Screening

Remember to keep the following in mind during commercial tenant screening:

  • Never discriminate against your applicants or their representatives based on:

    • Race
    • National origin
    • Color
    • Age
    • Sex or gender
    • Sexual orientation
    • Marital status
    • Military or veteran status
    • Disability
    • Religion
    • Receipt of housing subsidy or public assistance.
  • Adhere to all applicable state and federal laws regarding credit reports and applications.
  • Require all prospective tenants to complete and sign commercial tenant application forms. This helps protect you from discrimination lawsuits. 

Suppose you get sued for rejecting someone based on gender, religion, race, or other protected category. In that case, you can use these forms to show that you have written documentation for your selection methods.

Summary

Commercial tenant screening is key to getting the tenants you deserve.

By looking through potential renters’ business credit scores, personal credit ratings, background checks, references, and more, you can better determine whether or not an applicant will be a good or bad tenant for your commercial space.

TIP

Use our Commercial Lease Application Builder to kickstart your commercial tenant screening process.

Frequently Asked Questions (FAQs)

Does commercial tenant screening include a background check?

Commercial tenant screening typically includes a background check. We recommend you get background checks on all company owners to verify their identities.

What is a good business credit score for a commercial lease?

Business credit scores for commercial leases, known as a PAYDEX score by Dun & Bradstreet, range from 0 to 100, with 100 being the best score.

Here is a breakdown of the score ranges:

  • 0-49. High risk of late payment (average of 30 to 120 days beyond terms)
  • 50-79. Medium risk of late payment (average of 30 or fewer days beyond terms)
  • 80-100. Low risk of late payment (average of prompt to 30 days within terms)

Is a commercial rental application legally binding?

A commercial rental application is not a legally binding document to rent real estate, nor is it a contract. 

Commercial lease applications are investigative tools landlords use to gather relevant information about prospective tenants.

 

 

 

 

 

Jana Freer

Jana Freer

Real Estate Editor

Jana Freer is a Real Estate Editor with Legal Templates, where she creates and edits legal form descriptions and articles to help landlords and tenants better understand real estate processes. She...

Related Articles

  • Why Ask For a Personal Financials For a Commercial Lease
  • How to Lease Commercial Property: The 6 Step Process
  • Commercial Lease Application: Glossary of Key Terms
  • Lease Renewal vs. Extension: What’s the Difference?
  • Top Red Flags on a Tenant Background Check

In This Article

  • What is Commercial Tenant Screening?
  • How to Conduct Commercial Tenant Screening?
  • Best Commercial Tenant Screening Resources
  • Tips for Commercial Tenant Screening
  • Summary
  • Frequently Asked Questions (FAQs)
Legal Documents
  • All Legal Forms
  • Business Forms
  • Real Estate Forms
  • Personal and Family Forms
Popular Forms
  • Lease Agreements
  • Power of Attorney Forms
  • Eviction Notice
  • Living Will
  • Non-Disclosure Agreement
Resources
  • Legal Resources
  • Business
  • Real Estate
  • Personal & Family
  • Estate Planning
  • Financial
Company
  • Pricing
  • About Us
  • Careers
  • Contact Us
  • Partner With Us
Users
  • Account
  • Terms of Use
  • Privacy Policy
  • Do Not Sell My Personal Information
McAfee - Together is power.
Trustpilot
BBB Accredited Business

(855) 335-9779, Monday-Friday, 9AM - 7PM EDT

Facebook Twitter LinkedIn youtube Youtube

Copyright 2023 Legal Templates LLC. Legal Templates LLC is not a lawyer, or a law firm and does not engage in the practice of law. Legal Templates cannot and does not provide legal advice or legal representation. All information, software and services provided on the site are for informational purposes and self-help only and are not intended to be a substitute for a lawyer or professional legal advice. Use of this site is subject to our Terms of Use. Legaltemplates.net is owned and operated by Resume Technologies Limited, London with offices in London United Kingdom.”

Thank you for downloading one of our free legal templates!

Would you leave us a review?

We hope you've found what you need and can avoid the time, costs, and stress associated with dealing with a lawyer.

A review would mean the world to us (it only takes about 15 seconds).

Please check your download folder for MS Word or open tabs for PDF so you can access your FREE Legal Template Sample

Thanks again, and good luck!

Leave My Review