You’ve posted your rental listing and have received multiple applications, but only one can move forward. One applicant will receive the good news on the approval of their application, but the rest will need to receive a rental application denial letter. The letter will inform them why their application was denied politely.
A rental application denial letter, also called an adverse action letter, states that the applicant has been denied and what screening reports influenced the decision (if any). We discuss everything you need to know about turning down applicants and provide a template for your convenience.
It’s important not to reject applicants without a fair and legitimate reason, as this can be viewed as discrimination. An unfair rejection could result in legal trouble, so it’s essential to understand the Fair Housing Act and the local landlord-tenant laws of your state, especially as they relate to rental applications.
However, this doesn’t mean you have to accept any tenant who applies. You can establish parameters for accepting or denying applicants based on acceptable reasons, such as income requirements, a minimum credit score, rental history, or employment. Setting these criteria and sharing them in your listing can make it easier to identify which applications you won’t accept and reduce the number of unqualified applicants you encounter.
Here are some common and acceptable reasons to reject a prospective tenant’s application.
Landlords commonly run credit checks on prospective tenants to get a sense of an applicant’s financial history. A low FICO Credit Score (below 580) could suggest that the applicant isn’t financially responsible and struggle to pay rent on time.
If the prospective tenant has a credit score slightly lower than what you require, it may be worth requiring a guarantor or co-signer to get their application approved. However, you can also deny them and move on to the next application.
To check an applicant’s credit score, you can request a credit report from the top three credit bureaus like Equifax, Experian, and TransUnion. With Avail, you can request a TransUnion credit report for a one-time fee that you or the tenant can cover. This will include a credit score, tradelines with balances, debts, inquiries, and collections.
Rent payments are the primary source of income from your rental business, so you’ll want to ensure tenants can pay rent consistently. You are within your legal rights to decline a tenant who can’t afford to rent the property. As a general rule, most landlords expect their applicants to make at least three times the monthly rent to be considered.
You can verify an applicant’s employment and income by contacting their employer. However, if an employer cannot verify the details you need due to legal reasons, you can request several documents to verify a potential tenant’s income. These include pay stubs, a W-2, or a tax return, to name a few.
Be mindful of fake documents when requesting verification. Because they can be easy to fake, it’s smart to confirm the applicant’s employment, check that the numbers total the reported annual income, and request additional info from the human resources team if possible.
Another easy way to see if a tenant will be a good fit for your rental is by verifying their rental history. This involves contacting the applicant’s previous landlord to confirm the rental history on their application.
After confirming that the applicant rented the previous property listed, ask the landlord if they had any problems renting to the tenant. This could involve paying rent late, evictions, property damage, and other lease violations. You can legally reject the tenant’s application if you come across any red flags.
If you prefer to automate the process, you can perform a landlord reference check with an Avail application. Once prospective tenants provide the contact information of their previous landlords, our system will email the landlord reference with a questionnaire to fill out. They’ll be asked questions on their experience with the tenant and also issues to know of.
A rental application form ensures you’re treating all applicants fairly and lets you request the necessary information to help find your next tenant.
You can request many details on your application form as long as you adhere to local landlord-tenant laws. Some applicants, such as international renters, may not be able to provide common forms of identification like a social security number. In this case, you can substitute your requirements for a credit reference, landlord reference, or bank account statement instead. However, if a tenant fails to provide the requested information, you can reject their application.
Ensuring that your application is easy to fill out can make it more likely that you get all the information you require. With an Avail rental application, you can decide what information you’d like to request and have the form emailed directly to prospective tenants with easy-to-follow instructions to complete the application online.
To learn even more about your applicants, you add custom questions to your application by upgrading to an Unlimited Plus account.
There are additional legal reasons to reject a tenant’s application, such as smoking if you don’t allow it on your property, having filed for bankruptcy, or if the tenant does not agree to your lease terms.
After familiarizing yourself with local landlord-tenant laws, the most important thing you should do is to thoroughly screen applicants. Doing so will ensure that any reason for rejecting a tenant is legally sound.
In addition to any recess specified in local ordinances, the US Department of Housing and Urban Development has specified illegal reasons to reject a prospective tenant’s application in the Fair Housing Act. These include:
Rejecting a tenant based on any of these factors is considered housing discrimination and is illegal. Arbitrary discrimination is also considered illegal and refers to refusing to rent to applicants for reasons like how they dress or for having tattoos. When screening tenants, it’s best to keep these factors in mind to avoid legal trouble.
Rejecting a tenant’s application isn’t fun for either party, so you should aim to be professional. Instead of just telling the tenant you won’t be moving forward with their application and expecting them not to question your decision, it’s best to send a rejection letter to give them more information.
The Fair Credit Reporting Act (FCRA) requires landlords to inform a rejected applicant of any information gained through a consumer report, such as a credit report from a credit bureau. Your rejection letter is a great place to include this detail and inform the applicant of their right to see the information being reported about them and correct inaccurate information.
Here’s an example of a rejection letter that you can use to politely and professionally decline a rental application:
Thank you for submitting an application for the property listed above. We regret to inform you that your rental application has been denied due to the following reasons:
The Fair Credit Reporting Act requires us to tell you where we obtained your credit report when it’s used in making a decision towards your application. Your credit report was provided through:
Additional Information on Your Credit Report:
You have the right to obtain a free copy of your credit report from the credit reporting agency that was used to pull your credit report. The copy must be obtained within 60 days of your receipt of this letter. If you believe there has been an error on your credit report, you can dispute the accuracy or completeness of any of the information provided by the credit reporting agency within 60 days of receiving this letter.
If you have any questions regarding the status of your application, feel free to reach out to me directly. Thank you again for completing an application, and I wish you the best of luck.
While ignoring applicants you’ve rejected may be tempting, it’s courteous and professional to notify them once you’ve made your decision. Being prompt and communicative can reflect well on you as a landlord, and notifying applicants that their application was rejected and why can help protect you from allegations of discrimination.
Furthermore, remember that if you base your decision on the results of a consumer report, the FCRA legally requires you to notify the applicant.
Rejecting tenants is a challenging part of being a landlord, but Avail Online Tenant Screening allows you to get a comprehensive view of applicants. Choose the specific reports you’d like to request for a one-time fee and review the information directly from your account so you can feel confident in your tenant selection.
Log in or create an account today to get started. To review local landlord-tenant laws, explore educational articles, or access rental document templates, visit the Avail Resources page.
