Tenant screening is a very important process because it helps you to find the person who is going to take the best care of your rental property. However, many new landlords are surprised to learn that there are many legal rules involved in accepting and denying tenants. Fair Housing Laws will require you to treat all tenants equally and not discriminate while rejecting them. By following a few simple steps, you can protect yourself from any lawsuits and ensure that all prospective tenants are treated fairly.
Are There Legal Reasons to Reject a Tenant?
It is important to note that certain reasons for rejecting a tenant count as discrimination. You cannot reject tenants due to their age, race, gender, or ethnicity. These are all protected classes, and the person will have grounds for a lawsuit if you reject them for belonging to one of these categories. Technically, any reason for rejecting a tenant outside of the classes protected in the Fair Housing Law is legal. The most commonly given reasons for rejecting tenants are that they have insufficient income, a past history of evictions or late rent, a bad credit report, or a history of engaging in illegal activity. It is also legal to reject a potential tenant who has a pet or smokes, since both of these actions can damage a property. There are many other possible reasons to reject a tenant, and you can talk to a lawyer if you are uncertain whether or not a reason is legal.
Are You Required to Give Written Notice?
The Fair Credit Reporting Act requires you to provide an adverse action letter if you are rejecting a tenant because of their credit report. This adverse action letter allows applicants to know which credit reporting agency reported the bad score to you. This is the only time that a written denial letter must be sent to a tenant. You are legally required to include the name, number, and address of the credit reporting agency you used, a statement saying that the reporting agency did not make the decision to reject the tenant, and a notice that the applicant can dispute the information if inaccurate.
What Is the Best Way to Reject a Tenant?
Though you are not required to send a written notice of tenant rejection at any other time, it is a great way to protect yourself against any future lawsuits claiming that discrimination happened during the tenant screening procedure. A denial letter does not need to provide a reason to reject a tenant, instead you can just politely say that you ended up choosing a better qualified applicant. However, some applicants can be pushy and demand more information. Though you are not legally required to, it may be the easiest way to deal with a difficult person.