How to Reject a Tenant Application
Keeping Excellent Records is Key
Some of our landlord friends might look twice at this title. “Why would you reject a tenant in this market?” And that’s true in many places. Not only are good tenants hard to find—any tenants are hard to find. Even in this economy, every landlord should have a minimum set of qualifications, and a way to deal with applicants who fall below them.
The Fair Housing Act (FHA) prohibits discriminating against tenant applicants on the basis of race, religion, gender, disability, family status, or national origin. Your state may have additional protected groups—and landlords must be familiar with their state and local laws. But there are several legitimate grounds for rejecting an application:
1. If a rental property applicant does not meet your minimum income standard, you may reject them.
2. A poor credit history means you can legally reject a tenant’s rental application.
3. If your rental property cannot accommodate the number of people applying to live there, you may reject them. For example, if a family of five applies to live in your one-bedroom apartment.
4. Foreclosure: while more Americans than ever are defaulting on their mortgages, you may reject an applicant who has a foreclosure in their credit history.
5. Eviction: prior evictions or poor rental history are grounds for rejection.
6. Criminal record: If an applicant has been convicted of a crime (not just arrested), you probably can reject them.
Two important tips when rejecting an applicant are consistent procedures and good recordkeeping. Screen all tenants to avoid claims of discriminating against any single person. Credit checks and tenant background checks will help you decide whether to approve or reject each application—and save you money, too!
Notify the applicant in writing, stating the reason for rejecting the application. Be ready to back up your reasons with proof. Keep all paperwork on file and provide the applicant with a copy of the credit report.
Until the market improves, you might be tempted to waive standard procedures in favor of anyone who will pay rent. But nobody knows if a tenant applicant will actually do so. Be safe, check credit history and criminal backgrounds, and wait for the best possible tenant.