How To Properly Reject A Rental Applicant
As a landlord or property manager, rejecting rental applicants is sometimes necessary. However, it's crucial to handle this process carefully to avoid potential discrimination lawsuits and other legal issues. Here's a comprehensive guide on how to turn down an applicant properly with solid reasons.
Establish Clear Screening Criteria
Before you even begin accepting applications, it's essential to establish clear, objective rental criteria:
- Minimum income requirements (typically 3 times the monthly rent)
- Minimum credit score (650+)
- Clean rental history (no evictions or late payments)
- Stable employment history
- Criminal background check requirements
Apply these criteria consistently to all applicants to avoid any appearance of discrimination.
Document Everything
Keep detailed records of all interactions with applicants, including:
- Application submission date and time
- Screening results
- Communication records
- Reasons for rejection
This documentation can serve as evidence of fair practices if you face legal challenges. This documentation should be kept for a minimum of three years but seven years is recommended.
Valid Reasons for Rejection
When rejecting an applicant, ensure your reasons are based on objective criteria:
- Insufficient income
- Poor credit history
- Negative rental references
- Eviction history
- Criminal background (as permitted by local laws)
- Incomplete or falsified application
- Inability to verify information provided
The Rejection Process
- Review applications in order: Consider applications on a first-come, first-served basis to avoid claims of bias.
- Make a prompt decision: Once you have all necessary information, decide quickly to avoid keeping applicants in limbo.
- Prepare a formal rejection letter: This should be professional, concise, and clearly state the reason(s) for rejection.
- Provide an adverse action notice: If your decision is based on information from a consumer report, you're required by law to provide this notice.
Writing the Rejection Letter
Your rejection letter should include:
- Date
- Applicant's name and address
- Property address
- Clear statement of rejection
- Specific reason(s) for rejection
- Your contact information for any questions
Here's a sample template:
[Date]
[Applicant's Name]
[Applicant's Address]
Re: Rental Application for [Property Address]
Dear [Applicant's Name],
Thank you for your interest in renting [Property Address]. After careful consideration, we regret to inform you that your application has been denied due to [specific reason, e.g., "insufficient income relative to the rental amount"].
If you have any questions regarding this decision, please don't hesitate to contact us at [Your Contact Information].
Sincerely,
[Your Name/Company Name]
Additional Best Practices
- Fair Housing Education: Stay updated on Fair Housing laws and attend relevant training sessions.
- Consistent Policies: Apply the same screening criteria and processes to all applicants.
- Professional Screening: Use reputable tenant screening services to obtain accurate credit reports, criminal background checks, and eviction history.
- Avoid Discriminatory Language: Never use language that could be construed as discriminatory in your ads or communications.
- Consider "First Qualified" Policies: Some jurisdictions require offering the property to the first qualified applicant to prevent discrimination claims.
- Maintain Professionalism: Always communicate politely and professionally, even when rejecting applicants.
By following these guidelines, you can protect yourself from potential lawsuits while maintaining a fair and professional rental process. Remember, the key is consistency, documentation, and adherence to Fair Housing laws. Alternatively, you can employ a professional property management company to worry about finding the best tenant for your property.
