You receive rental applications from prospective tenants regularly and encounter the challenging task of screening applicants to decide who will be the best tenant for your rental property. Deciding to deny a rental applicant who will not meet your requirements or expectations can be difficult. Still, it is necessary in the tenant screening process for a successful and profitable rental business and maintaining a peaceful living environment for all residents.
It is also important to comply with the Fair Credit Reporting Act (FCRA), which outlines the legal obligations of landlords when denying rental applications based on consumer reports, such as low credit scores.
In this article, I will discuss the valid reasons for denying rental applications for your property. Federal, state, and local laws, along with best practices in the industry, form the basis for these reasons. By following these guidelines, you can make informed, fair, and legal decisions regarding tenant screening and selection.
Why Fair Screening in Rental Applications Important for Landlords
Fair screening in rental applications isn’t just a legal requirement. It’s a strategic cornerstone that underpins responsible property management. A 2021 report by the National Low Income Housing Coalition highlights that fair screening can expand the applicant pool by 46%, leading to faster rentals and potentially less vacancy time. Here’s how it benefits landlords:
Risk Mitigation: Fair screening acts as a shield against financial and property-related risks. Evaluating factors like income, creditworthiness, and rental history helps predict a tenant’s ability to pay rent on time and care for the property responsibly. This minimizes late rent payments, reduces the likelihood of evictions, and protects your investment from potential damage.
Tenant Quality & Retention: When you screen fairly, you attract qualified tenants who value transparency and responsible practices in rental agreements. By focusing on objective criteria, you avoid discriminatory practices that can alienate good tenants. This leads to attracting individuals who are more likely to respect the lease agreement, maintain the property well, and stay longer, reducing vacancy rates and ensuring consistent rental income.
Enhanced Reputation & Community: Fair screening fosters a positive reputation for your rental business. By evaluating tenants based on relevant factors and treating them with respect, you contribute to a harmonious rental housing community. This leads to positive word-of-mouth referrals, attracting responsible tenants, and fostering a sense of connection and responsibility.
Legal Compliance & Peace of Mind: Fair housing laws are complex and ever-evolving. Implementing a fair screening process ensures compliance with local and federal regulations, safeguarding you from potential legal issues and hefty fines. This provides peace of mind and lets you confidently manage your property.
Top 15 Legal Reasons to Reject Prospective Tenant Application
While choosing the right tenant is important, it’s vital to remember fair housing laws and avoid discriminatory practices. Denying an applicant based on these factors is illegal and can lead to serious consequences. Here are common legal reasons to deny a tenant, but remember to consult with a lawyer for legally compliant tenant screening:
1. Insufficient Income or Poor Credit History
One of the most common reasons you can deny rental applications is if the applicant doesn’t meet the income requirements or has a poor credit history. As a landlord, you want to feel confident that the tenant can afford monthly rent without issue. Most landlords require the tenant’s gross monthly income to be at least 2-3 times the monthly rent amount.
If an applicant’s income is too low or their credit report shows late or unpaid bills, bankruptcies, repossessions, or judgments, it raises a red flag that they struggle financially and cannot pay rent on time each month. Protecting your rental income is important, so denying applicants with financial risks is understandable. Always check credit and income thoroughly before accepting a tenant.
Recommended Article: How to Run Credit Check on Tenant
2. Previous Evictions or Unpaid Rent
Prior eviction or reports of unpaid or past-due rent are major red flags that indicate a poor rental history and should result in a denied application. An eviction is a formal legal process that damages a renter’s record and shows that they failed to comply with a prior lease agreement. Landlords want tenants who honor their lease obligations.
Reviewing an applicant’s rental history helps uncover if they have a pattern of not paying rent on time, violating the terms of their lease, damaging prior rental properties, or being formally evicted by a previous landlord. These issues indicate that the renter is a financial and compliance risk that is not worth taking as a landlord.
Recommended: How to Check for Evictions
3. Criminal or Background Check Issues
As a landlord, it is within your rights to perform criminal background checks on applicants and deny those with problematic criminal histories. Felonies, sex offenses, and crimes involving violence, theft, or property damage are all valid reasons to reject a rental application.
Additionally, any concerning issues uncovered during background screenings like Drug-related convictions, past or present civil judgments, past evictions, or unlawful detainer filings are grounds for denial. The safety of other tenants and protecting your rental property should be the top priority.
4. Incomplete or Inaccurate Application
Incomplete rental applications that are missing required documentation or inaccurate information are an automatic denial for most property managers and owners. Submitting an incomplete application shows a lack of attention to detail and responsibility, characteristics you don’t want in a tenant.
Always be thorough in completing applications with truthful and verifiable information. Make sure to include all requested documentation like photo ID, proof of income, and contact information for previous landlords. Filling out applications should be a tenant’s first impression—a sloppy, careless, or dishonest one is not a good sign.
5. Too Many Occupants
Exceeding the maximum occupancy limits for the home is a common rental application denial reason. List the number of permitted occupants clearly in all rental listings to avoid misunderstandings. Overcrowding poses health, safety, and legal issues landlords want to prevent. It also increases normal wear and tear on a property.
Tenants should only assume extra occupants can be added later with permission from a property manager. Strict occupancy policies ensure fair use of living space and reduce disputes over unauthorized residents. Include these guidelines on all applications for transparency with applicants.
Also Read: Is There Really A Difference Between Tenant Vs. Occupant
6. Pets When None Are Allowed
If your rental property is pet-free but an applicant proposes to bring their dog or cat without permission, that rental application should be denied. Pets introduce damages, allergens, noise complaints, and liability risks landlords try to avoid when accommodating animals is not feasible.
Clearly state your pet policies upfront so applicants understand beforehand. Deny any that ignore stated pet restrictions to maintain consistent rules for all tenants. Consider pet deposits and additional monthly rent for approved companion animals to offset wear risks.
[Also Read: How to Conduct Pet Screenings For Rentals]
7. Incomplete Documentation
Requiring documentation like recent pay stubs, valid driver’s licenses or state IDs, social security numbers, and contact info for previous landlords helps verify applicant identities and background claims. Incomplete documentation leaves gaps that raise doubts about the truthfulness of an application.
As a landlord, only accept applications that provide all requested verifying records. Incomplete documentation makes thorough screening impossible, leaving landlords vulnerable to tenancy issues with unknown risks. Always request specific documents and deny any missing required materials.
[Also Read: Can Landlords Ask for Bank Statements for a Rental Application]
8. Invalid References
Positive landlord references help prove an applicant’s reliability as a tenant. But invalid contact info, inactive phone numbers or email addresses for past property owners are red flags. They make verifying the applicant’s claims and rental history impossible.
Dead-end inquiries to unusable contacts sour an application immediately. Request current, accurate reference information from applicants. Deny any with invalid details so prior tenancies remain fully verifiable through screening. Good applicants provide upfront, operational contact details.
9. Too Short of Notice or Occupancy Date
Landlords need sufficient time for processing rental applications, tenant screening, move-in paperwork, transferring utilities, and complete move-out cleanup between tenants. Accepting occupants with short move-in notice periods or occupancy dates does not leave time for proper procedures.
Set clear notice period guidelines on applications to avoid rushed occupancy transitions. Applicants must allow processing periods suitable to complete move-in/out tasks. Deny those unable to provide landlords sufficient lead time to prepare properly between tenancies at the property.
[Also Read: Tenant vs. Occupant: What’s The Difference]
10. Failure to Schedule Showings Promptly
As a courtesy, landlords provide contact info to schedule showings for interested applicants. But failing to view the unit within a reasonable timeframe after expressing interest shows a lack of seriousness or urgency. Last-minute scheduled showings and delays are inconvenient.
If applicants do not promptly set up showings within a couple days of contacting you, their interest level in renting the property is questionable. Timely unit viewings prove applicants are serious renters ready to sign leases shortly after applying. Reject applications dragging to schedule initial viewings.
11. Providing Incomplete Contact Information
Incomplete contact info, such as missing phone numbers, email addresses, or physical addresses, is a headscratcher on rental applications. They prevent landlords from easily reaching out to discuss the application process or background verifications. Good rental applicants will provide all communication options clearly.
Deny applications that leave you unable to connect promptly if needed. Thorough, legible contact details reassure landlords that applicants can be located for necessary discussions or issues throughout tenancies.
12. Not Complying with Landlord Rental Terms
The landlord has the right to legally deny the tenant’s application if the tenant does not comply with the landlord’s rental terms like rental price, tenancy period (e.g. 6 months, 1 year), move-in date, or other rental terms.
If the landlord can be flexible with the tenant, then there won’t be a problem. Data shows that approximately 30% of landlords are willing to adjust terms based on tenant circumstances, such as employment status or rental history. Otherwise, the landlord can reject or deny the tenant’s rental application. According to a 2022 survey, around 40% of rental applications are denied due to non-compliance with stated terms.
13. Filed for Bankruptcy
The landlord needs to know the tenant’s financial condition. The landlord can ask tenants about their prior and current financial condition to determine whether they can pay the rent. If the tenant has filed for bankruptcy in the past, it means they are financially unstable.
However, if they show another legal source of their present income, then it is on the landlord’s call if they want to reject or accept the tenant’s application. Surveys show that over 60% of landlords consider current income more significant than past financial issues.
14. No Rental History
If the tenant has no previous rental history, they lived with their parents or in a dormitory. They can also be from other states or have already owned a house. So, logically, the landlord can deny their rental application if they want.
However, if the tenant has sufficient earnings and a co-signer, it is said to be safe to rent to them, but still make sure to check other things.
15. Moves Frequently
If the tenant has a previous record of moving frequently, the landlord can deny their rental application. For example, tenants who move more than three times in five years are often seen as high-risk. A frequently moving tenant might have previous criminal records or a bad credit score. Research shows that approximately 25% of frequent movers have prior criminal convictions, which can concern landlords. However, don’t apply the blanket rule to all. You can have a cross-check.
Does A Landlord Have To Give A Reason For Not Renting
As Nolo.com mentions, landlords are not obligated to disclose a reason for rejecting a tenant application. However, it is important to provide a rental application denial letter, especially when consumer reports influence the rental decision, as required by the Fair Credit Reporting Act. Even so, some might offer general feedback to help applicants improve their chances in the future. You can have qualification standards to choose qualified tenants. But, for denials based on a tenant screening report, federal law mandates informing the applicant.
Once more, don’t forget to remember that the Fair Housing Act protects against discrimination based on protected class factors that are considered illegal. Thus, get a detailed understanding of what landlords are not allowed to do preventing yourself from illegal reasons for denial.
Illegal Reasons to Deny a Tenant Application
- Age
- Race
- Religion
- National Origin
- Colour
- Sex/Gender identity
- Familial Status
- Marital Status
- Sexual orientation
- Mental or Physical disability
Final Thoughts
Carefully screening applications and thoroughly understanding valid denial standards protects landlords from risky tenants while complying with fair housing laws. Document all denial reasons in writing for your rental files in case applicants appeal decisions. With clear rental criteria and consistent screening practices, you can make objective tenant selection choices to find responsible renters for housing success. Avoid blanket denials or unlawful biases, as you get each application individually based on merits and drawbacks.
FAQs on Rental Application Denial Reasons
Am I required to provide a reason for denial?
Yes, landlords in the U.S. must disclose the factual basis and legal reason if an application is denied under the Fair Housing Act. Simply saying 'denied' is insufficient without an explanation.
Can I deny applications for having pets?
Yes, if your rental agreement stipulates the property is pet-free or only allows small pets with an additional deposit. Denying pets when none are permitted avoids damages from unauthorized animals and is legal as long as you do not unlawfully discriminate against applicants due to disabilities or support animals.
Can co-signers help with denials for low-income or credit?
Sometimes. Co-signers provide an extra guarantor to fall back on for rent payments should the primary applicants struggle. But landlords are still within rights to deny applications co-signers cannot fully remedy concerns over like criminal backgrounds, prior evictions, or incomplete screening submissions. Co-signers don't override all risk factors.
How far back can rental history be checked?
Most property managers and landlords verify rental history for the past 5-7 years to confirm consistent, on-time payments and acceptable prior tenancy terms. Anything longer becomes difficult to validate. Focus screening on the most current and relevant rental periods.
What is the process for applicants to dispute a decision?
Applicants have the right to request a reconsideration if they feel factual errors were made. Landlords should maintain thorough file records and respond professionally to any applicant appeals. The decision can then be reconsidered or stand upon re-reviewing all application details.
When can a landlord refuse the consent?
Landlord can refuse the tenant consent or rental application when tenant have a bad credit score, criminal history, incomplete information, and so on.
Can landlords deny applicants for having too many occupants?
Yes, you can absolutely deny the rental application if it exceeds your maximum occupancy limits, which is a valid reason for denial.
