Real estate investors know how critical tenant screening is to the success of their venture. Denying a rental application can be fraught with legal peril if the denial is done improperly or for improper reasons. Learn how to say no to a tenant application.
Reasons a Landlord Can Deny an Application To Rent
Bad credit or an insufficient income-to-rent ratio that indicate the tenant will be unable to pay the rate can be a reason to deny an application. A history of recent evictions and excessive debt may also indicate the prospective tenant will be unable to meet the rent for the property.
A history of criminal convictions is not in itself reason to deny a rental application. In fact, denying an application based on prior convictions may be illegal under fair housing laws, as convictions disproportionately affect minorities. However, evidence that an applicant persists in criminal activity or would be a danger to other tenants is an appropriate reason.
Sex, religion, race, color, disability, national origin, and family status are all attributes that cannot be used to deny a tenant application. Age may fall under “family status,” and cities and states may have laws prohibiting discrimination based on sexual orientation. Gender identity may fall under “sex” or be an expressly protected category in the applicable city or state.
Denials based on criminal activity cannot be based on mere arrests. If a background check turns up convictions, the landlord must show a “substantial, legitimate, nondiscriminatory” interest served by denying the application. A policy denying an application based on prior convictions must make a distinction between past crimes that present a “demonstrable risk” to safety and property, and criminal conduct that does not indicate such a risk.
How To Say No
Saying no to a tenant application must be done carefully. Property owners should always decline an application in writing, politely. The denial should thank the applicant for their interest, and express regret that the application cannot be accepted. The letter should specify the reason the applicant is being denied. If you wouldn’t put the reason in writing, it’s probably not a legitimate reason. Silence on the matter implies you have something to hide.
If the denial was based on a credit report, property owners must include an adverse action notice that provides the name, address, and phone number of the credit reporting agency that supplied the report. The notice must explain that the reporting company didn’t make the denial and can’t do anything about it, and notice of the right to dispute the accuracy of the report and to receive a free report (if requested within 60 days).
Property owners can save themselves the headaches and discomfort of denying a rental application by engaging a professional property management company. A property manager will handle marketing, interviewing prospective tenants, processing applications, and sending denial letters, if necessary. In the metro Atlanta area, Excalibur Homes provides Cumming home property management services, surrounding areas, and the city itself.