Rental Application Denial Letter

A Rental Application Rejection Letter (Adverse Action Notice) is a letter from a landlord denying a rental application and detailing the reasons why. This rejection can be final, or it can specify conditions under which the applicant can get an acceptance.

Legally Acceptable Reasons for Rejecting an Application

While not every rejection of an applicant is valid, most reasons to deny a rental application are legal. These include:

• Inadequate Income – The most common reason to reject a rental application is doubt about the applicant’s ability to pay. Landlords often reject applicants who don’t have steady work, or whose income is too low. It’s customary to expect a minimum gross income of 3x the monthly rent.
• Poor Credit – Excessive debt is a reason to reject a rental application. So is a low credit score. Note that landlords must follow Fair Credit Reporting Act guidelines when rejecting an application after reviewing a credit report.
• Negative Rental History – No rental history, a bad reference, or previous fines and evictions are all valid reasons to turn down a potential tenant.
• Inaccurate or Incomplete Application – Landlords are entitled to reject a misleading application, or one which doesn’t provide all requested information.
• Miscellaneous Reasons – An application might get rejected based on criteria such as being a smoker or asking to have a pet in a unit that doesn’t allow for them.

Illegal Reasons for Rejecting an Application

While a landlord has broad discretion in choosing potential tenants, there are also invalid grounds to reject an application. These are some illegal reasons for rejecting an applicant:

• Protected Class Under the Fair Housing Act – Landlords cannot reject an applicant for being a member of any of the protected classes provided in the Fair Housing Act (FHA). These protected classes include race, color, religion, sex (including sexual orientation and gender identity), national origin, disability, and familial status (including families which have children).
• Arbitrary Discrimination – In addition to the protected classes under the FHA, many states also prohibit discrimination based on any arbitrary trait that isn’t related to being a good tenant. Under this standard, a landlord can’t reject applicants based on things like their personal aesthetics (e.g., tattoos, piercings, hairstyle, etc.) or occupation (e.g., law enforcement).
• Other Legal Reasons – The Fair Housing Act isn’t the only federal law protecting some renters. There are additional protections under laws such as the Americans with Disabilities Act and Title VI of the Civil Rights Act.
• Criminal History – A criminal conviction is a valid reason to reject a rental application, in general. However, this has to be a conviction; an arrest doesn’t imply guilt on its own. Landlords also aren’t allowed to reject applicants on the basis of a criminal act that’s expunged from the records.

A discriminatory rejection of a rental application carries serious legal consequences under federal law. If there’s any question about the validity of a particular rejection, it may be necessary to consult an experienced real estate attorney.

What To Include in a Rental Application Denial Letter

A Rental Application Denial Letter typically includes the following:

1. Date.
2. Applicant’s name and address.
3. Address of the rental property.
4. Summary of Rental Terms – monthly rent amount, security deposit, and the lease term for the property under application.
5. Professional and friendly greeting thanking the applicant for their interest. A rejection is bad news, but a kind tone from the landlord often heads off potential disagreement.
6. Clear denial of the application, along with a brief but specific explanation why.
7. A request that the applicant contact the landlord with any questions.
8. Landlord’s name, contact information, and signature.
9. Fair Credit Reporting Act Notice – Notice of applicant rights under this act, along with sources where the landlord obtained any credit information and similar screening material. This should include contact information for any agencies that provided the landlord a consumer report.
10. Fair Housing Act Notice – Notice of the types of discrimination prohibited in the rental screening process under the Fair Housing Act.

A landlord may sometimes want to include certain other items with their letter. These may include:

1. Right to Appeal – Some landlords have a policy that allows an unsuccessful applicant to appeal the denial. If so, details for this process will appear at the end of the rejection letter.
2. Acceptance on Condition – In some instances, a landlord refuses to take an application as-is, but allows the applicant to re-apply with additional demands. These demands might be things like additional references or a higher security deposit.
3. Supporting Documentation – It’s common for landlords to attach supporting documentation, such as credit reports, which formed part of the basis for rejection.

Proactive Measures To Avoid Applicant Issues

Here are a few ways to establish a proactive screening process that ensures fair and legal evaluations of applications:

1. Order of Operations – This means evaluating applications on a first-come, first-served basis. Doing this prevents an applicant from claiming they were skipped over preferentially for someone else.
2. Objective Evaluation Criteria – Landlords should have clear standards that hold equally true for all applications. For example, a landlord might reject all applications below 600 credit score or that have a bankruptcy within a certain time frame.

How To Send a Rental Application Denial Letter

To send a rental application denial letter, deliver the letter using a signature confirmation service like certified mail, especially with the restricted delivery option. It also means keeping a copy of the letter filed, together with the proof of delivery and any other relevant information.

Sending a Rental Application Denial Letter the right way is important in case of any dispute with the applicant.