Be Careful when Rejecting a Tenant Application

By E-Renter Tenant Screening
Posted on April 2, 2010 under Landlord Paperwork and Forms, Landlord Tenant Lawsuits, Tenant Screening & Background Checks | Be the First to Comment

Our last post contained a warning to landlords that what you say can come back to haunt you. In other every day activities, like accepting or rejecting new tenants, landlords must also take care to know and follow all applicable laws—because it protects you and your business from liability.

Take discrimination. The Fair Housing Act is very clear on what constitutes discrimination: denying housing to an applicant based on race, gender, family status, country of origin, religion, age, sexual orientation, or disability. Still, depending on how a rejection is handled, there is always a chance that a discrimination claim could be filed by a rejected tenant.

How can landlords avoid such claims? First, make absolutely sure that you have a rock-solid reason for the rejection—and back it up with paperwork. Second, communicate the reason to the applicant. Don’t just say, “I found a better tenant,” or “I rejected your application.” The tenant could make up his own reasons for the rejection, including his race or religion.

Establish your minimum standards for approving tenant applications, and apply them to every single applicant. Treating everyone equally is a cornerstone of good landlord practices. Accept the first qualified applicant for a rental unit, after applying your standards to each interested party.

Full disclosure to all applicants up front is a good idea. Your lease application should convey your standards, as in the following examples:

• That each adult who will live in the rental unit must fill out an application and be approved.
• That a minimum income level is required to rent the unit.
• Employment history will be checked, and a minimum of six months at the applicant’s employer is required.
• That previous rental history will be taken into consideration, including timely rent payments, keeping property in good condition, and fulfillment of previous leases.
• That a tenant credit check and criminal background screening will be conducted on all applicants.

If you have additional requirements, add them to the list. And of course, your application should state that you do not deny the right to rent or lease property based on race, gender, family status, country of origin, religion, age, sexual orientation, or disability.

With this information up front, applicants will know what basis they can be rejected on. When you do reject a tenant applicant, be sure to explain your reasons in writing, and supply a copy of the credit report, as required by law.