If you’re a landlord, you know rental application rejections are part of the process. While it’s never fun to deny a tenant, you always want to make sure your property is in good hands. That said, you can’t reject an applicant for no good reason. Being fair, professional, and compliant throughout the process is crucial. Today, we’re reviewing why you might deny an applicant, when you can’t deny one, and how to legally handle rental application rejections.
Contents of This Article:
- Why Do Rental Applications Get Rejected?
- When Can You Not Reject an Application?
- How to Legally Handle Rental Application Rejections
- How to Write a Rental Application Denial Letter
- Thoroughly Screen Tenants With BMG
Why Do Rental Applications Get Rejected
Rejecting rental applications is part of the rental process. Whether an applicant has a criminal history or prior evictions, there are several reasons why you may want to choose someone else for your rental property.
That said, landlords and rental property managers in Washington, DC, must follow the Fair Housing Act and any relevant state rental laws and regulations when making a decision. Rejecting a tenant for no good reason can land you in a lot of legal trouble.
However, there are plenty of reasons you may be able to legally reject an applicant, including the following.
- Inadequate Income
- Poor Credit History
- Prior Evictions or Bad Rental History
- Bad References
- Incomplete Information
- More Qualified Applicants
Inadequate Income
You’ll want to choose a tenant who can pay their rent each month. To evaluate this, landlords should require tenants to provide proof of income to verify that they can afford the cost of rent. Most landlords require a tenant’s income to be at least double or triple the monthly rent. If you’re reviewing an application and notice that the tenant doesn’t make enough money to pay the monthly rent, you may deny the application.
Poor Credit History
Credit scores can indicate a tenant’s financial history, making or breaking their chances of finding an apartment. After all, evaluating an applicant’s credit history can tell you more about their spending habits and whether or not they can put money toward a monthly rent payment. A fair credit score is around 650, but every landlord has their own requirements. You can legally deny their application if it’s anything less than you require.
Prior Evictions or Bad Rental History
A prior eviction or poor rental history is a huge red flag for most landlords. If you’re screening a tenant and come across a prior eviction, unpaid rent, or extensive property damage, you’re probably hesitant to rent to them. In this case, you can require a co-signer, ask for additional references, or require more money upfront before renting to them. If they can meet your requirements, it’s up to you whether or not you want to move forward with their application.
Bad References
Most landlords ask tenants to provide references with their rental applications. Whether they’re former landlords or employers, speaking to references can give you a better idea of an applicant’s character and rental history. If you contact an applicant’s references and you have any reason to doubt their ability to pay rent or keep your rental well-maintained, proceed with caution. You may want to ask for a co-signer or a larger security deposit.
Incomplete Information
Filling in all the information on a rental application is crucial in deciding whether or not the applicant is a good fit for the property. If the applicant’s application contains missing or inaccurate information, it could be a red flag. Instead of going back and forth with them to get the missing information, you may want to move on with someone else’s completed application.
More Qualified Applicants
If your rental property is in high demand, you’ll likely get a ton of applications to sort through. If several applicants compete for your property, you can be selective about who you choose to live there. However, you must be fair and compliant with Fair Housing Laws. That said, if you’re choosing between renters, you should select the candidate that best meets your criteria.
When Can You Not Reject an Application?
While you can pick and choose between renters, you have to comply with Fair Housing Laws throughout the entire process. The federal Fair Housing Act prohibits discrimination of any kind, ensuring that everyone has equal access to and opportunity to rent. That said, the FHA probits rental application rejections based on:
- Race
- Color
- National Origin
- Religion
- Sex (including gender identity and sexual orientation)
- Familial Status
- Disability
Additionally, while you can request a background check, you also cannot deny a renter based on arrest records. However, you can deny an application if they have a history of dangerous criminal activity that may put you, the property, or the neighborhood at risk.
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How to Legally Handle Rental Application Rejections
Denying a rental application isn’t always a quick and easy decision. Landlords must thoroughly evaluate all applicants, consider their findings, and communicate their decision regarding whether or not the application is approved or denied. Here are a few steps on how to handle legal rental application rejections.
Set Your Criteria- Before listing your rental, determine your renter criteria. How much will you charge for rent? What’s the minimum credit score you’ll accept? Outline your expectations in your rental application.
- Review the Application- Review each application carefully to ensure it’s filled out completely. If information is missing, you may disregard it altogether. If you haven’t requested additional information already, ask for the tenant’s contact information, references, income, etc.
- Run a Background Check– Once you have an applicant’s information, you can run a background check on them. Look out for prior evictions, criminal records, or other legal trouble.
- Review Their Rental History- Ask each applicant for contact information for previous landlords and contact them. This can give you a better perspective of who they are as renters.
- Run a Credit Check- A credit check can tell you more about the applicant’s credit history, up to 10 years back. Look for red flags like missing payments, overcharging accounts, or other financial hiccups.
- Check Their Employment History- It’s important that your tenant has a job and can pay rent. It doesn’t hurt to check their current employment status and request proof of income through pay stubs or bank statements.
- Make a Decision– Once you’ve gone through your entire screening process, you have the information you need to decide whether or not you’re going to rent to an applicant. If you decide not to, reviewing FHA guidelines is important to ensure you have a good enough reason to reject them.
How to Write a Rental Application Denial Letter
If you decide to reject a rental application, make sure you do so in writing. The best way to break the news to applicants is by writing them a detailed and respectful rejection letter. In the letter, express your appreciation for the applicant’s interest and politely explain why you declined them.
Here is an example of a professional yet polite way to deny a rental application.
Date
Applicant’s First and Last Name
Address of Rental Property
City, State, and Zip Code
Dear [Applicant},
We appreciate your interest in the property located at [property location], and thank you for your application. We regret to inform you that we’ve chosen to decline your rental application for one (or more) of the following reasons:
[e.g., poor credit history, insufficient income, criminal background, etc.]
If you have any questions regarding the status of your rental application or our decision, please don’t hesitate to reach out.
Sincerely,
Landlord or Property Manager
Thoroughly Screen Tenants With BMG
Every landlord wants to find tenants who will pay rent on time and care for their properties. However, not every applicant you get will be able to meet your expectations. This is why it’s important to know how to navigate rental application rejections without breaking the law.
If you need help finding tenants who fit your expectations, work with a property management team! Bay Property Management Group thoroughly screens each tenant to ensure they meet each rental owner’s criteria. Contact BMG today to learn more about our full-service management throughout Baltimore, Philadelphia, Northern Virginia, and Washington, DC.