This section is from the book "Practical Real Estate Methods For Broker, Operator & Owner", by Thirty Experts. Also available from Amazon: Practical Real Estate Methods for Broker, Operator, Owner.
First of all be sure to secure a former landlord as a reference, for here you obtain the best information as to responsibility and respectability, and in most cases the reference is not prejudiced by the fact of the landlord's being a personal friend of the prospective lessee.
There are, of course, cases where a landlord's reference cannot be relied upon. Where the landlord and tenant have been unable to agree, an unsatisfactory reference may be received, and a prospective tenant should not be refused on this fact until you are thoroughly convinced by other references that you are negotiating with an unsatisfactory party. Most tenants, particularly in the case of private house lessees, will refer you to their clergyman, doctor or lawyer. As a rule, these references should be avoided, and the name of some bank or person with whom your tenant has transacted business should be required.
As a special warning! If your tenant's reference proves unsatisfactory, so that you decline his application, above all things, do not state for what reason. Simply say: "Your application for such and such property is declined." Suits for defamation of character have been tried on the statement of an employee that an application is declined because the prospective tenant is a gambler or disreputable. Don't forget you might be compelled to prove it. Beware of the married woman who has to sign a lease in the absence of her husband, because the husband is a traveling man and cannot be reached. Have the landlord approve the references you have looked up, or, better still, if possible, get him to look them up before you have your lease executed.
Leave nothing out of your lease about which there is a chance of the slightest misunderstanding. Make a list in writing of any repairs or alterations that may be agreed upon and have the same signed by both parties and let it accompany the lease.