Hey BP, I'm fairly new to the RE investing and landlord business. I recently closed on my 2nd property and am in the process of screening potential tenants. I have an applicant who is the most qualified by means of credit score, income, no evictions, no criminal history, no pets, no smoking etc. She has communicated over the phone and via e-mail very professionally with me. In my application I require two previous landlords contact information. I reached out for information on this person and found out she is a nightmare tenant/ person to get along with. Her current and previous landlords had very little good to say and also informed me she is currently in a lawsuit against her current place, which is why is she moving out. Both parties said she had threatened multiple lawsuits against them over small and very manageable problems that could be resolved without a lawsuit. On top of that there was more negative information shared about this applicant. 

This is a concern to me and I do not want to rent to this person after her horrible reviews. As she seems like the type just looking for a way to sue, I want to be sure I deny her application legally. I'm thinking the less information the better in the denial letter? A simple document stating she has been denied and a more qualified tenant will be selected? Reimburse her application fee?

Just want to make sure I navigate this situation the correct and legal way so I don't end up as one of her lawsuit victims. Any tips, tricks, do's/do not's are appreciated!  

Red Flags are red flags. Why take that risk when there's no shortage of Tenants?

I'm not a lawyer, but references from past landlords is a valid screening criteria. Found this article that may help:

Avail - Approving Tenants the Right Way

Don't do it. Just like @Nathan Fisher said, red flags are red flags. You don't want to be stuck with her, especially right now. 

Just commenting to bump this up. The OP knows not to rent to her. He just doesn't want to get sued. I would hope that if he used the same criteria and documented his reason (I might email myself my reasoning for rejecting/accepting anyone - in separate emails this time) it would be enough. If it is on 90% of applications across the country I would assume it can be used as criteria.

Curious to hear from someone with actual knowledge of the law.

Well if you aren't going to listen to the landlord references I don't think there is much reason to check them but it sounds like you know what to do and are just looking for how.  You are lucky the past landlords were honest, especially the current one as they are likely to want to get rid of her asap and part of that is her finding a new place.  This is a sue happy tenant and will be with you as well, when rejecting a tenant I always state less is more and never give a reason.  Hopefully you have other applicants and just go with one of them.  This may be one I would just ghost if your state allows but if not just text them that you have denied their application and leave it at that.  If you have another tenant lined up I'll also add that I have already accepted another deposit, doesn't get much more final than that.  I also wouldn't reimburse application fees, if you do for this tenant what is your excuse for not doing it for the rest.  

@Jason Smith: Good call. Im sure OP knows what to do and wants to do this carefully. I wouldn't be surprised if the tenant shows her true face the moment you deny her application based on the concerns raised by the landlord. Please keep us updated.

Thanks for the replies!

She received her notice of tenancy denial this morning and took it well (I think). In the notice I kept it short and brief, nothing much more than informing her she has been denied and wishing her the best in finding a place to live. 

@Ryan Tall

Thanks for sharing this info it helps us out. One thing I’m curious of (and I realize this post is a bit old) is how do you even find reviews about a Potential rent applicant in the first place? I didn’t know this was a thing. But certainly it helps. I understand how you could apply for say a background check or something but do you just say for example, google their name and see what pops up? Also who is writing these reviews? Neighbors? Other landlords?

I know these are silly questions but I wasn’t sure. Thanks!

@Ryan Tall

Oops this post isn’t old I misread the date didn’t mean to say that...

Originally posted by @Ryan Tall :

Thanks for the replies!

She received her notice of tenancy denial this morning and took it well (I think). In the notice I kept it short and brief, nothing much more than informing her she has been denied and wishing her the best in finding a place to live. 

Glad it worked out.  In the future, I would suggest you consider adding to your applicant screening criteria something along the lines of the following:

"Applicant should have favorable rental history with positive references from previous landlords."

A clearly stated screening criteria such as that, which is applied fairly and uniformly to all applicants, is totally acceptable/legal to use.  Of course, you still have to make sure the information you receive and base your decision on doesn't violate any protected Fair Housing categories.  For example, if one of the prior landlord references were to mention an applicant's family member was physically disabled and then, for that reason alone, you decided not to rent to them because you didn't want to potentially have modify your property to accommodate the disability.  That wouldn't be okay.

On the other hand, if the prior landlord told you the applicant was a nightmare tenant because they had loud/disruptive parties, destroyed the property, and paid rent late every month (or not at all).  Well, then you'd be well within your right to deny them because that's certainly not a "positive reference" and none of those things are protected categories.

Hope that helps.  And good luck with your tenant search!

Originally posted by @Daniel Fitzroy :

Thanks for sharing this info it helps us out. One thing I’m curious of (and I realize this post is a bit old) is how do you even find reviews about a Potential rent applicant in the first place? I didn’t know this was a thing. But certainly it helps. I understand how you could apply for say a background check or something but do you just say for example, google their name and see what pops up? Also who is writing these reviews? Neighbors? Other landlords? 

Typically you would check with the applicant's landlord, AND their previous landlords.  You'll often get the best/most honest information from the previous landlords since they no longer have a relationship with the applicant.  (A current landlord COULD be tempted to lie and say that a bad tenant is a great tenant, so that you may be inclined to rent to them and take their problem off their hands.)

Anyway, when calling current/previous landlords, here's a list of questions you can ask:

Top 10 Questions to Ask a Past Landlord When Screening Applicants

@Kyle J.

Ok that makes sense thanks for the response. Are you able to get in touch with a potential renters previous landlord/ current landlord through a google search or via their application to your apartment hypothetically speaking?

@Ryan Tall

I denied an attorney on one of my properties. Good income, bad credit, and a google search revealed numerous personal lawsuits against anyone he could have, including his university. I had to tread lightly on this one. A search revealed in Pa, you are supposed to send notice of intent to deny a rental. This is what I did and all was fine.

All you have to say to avoid lawsuits is "sorry unfortunately we have decided to not move forward with offering a tenancy agreement" and then dont reply if they press you for a reason

@Ryan Tall

Good previous LL references can be one of your criteria.

That’s a no for me dawg.

Just say “we’ve reviewed your application and completed background screening, unfortunately you do not meet our requirements for placement.” I wouldn’t refund the application fee either.

@Ryan Tall one word ...RUN

If you have multiple landlords talking like this about a former tenant this is a HUGE red flag. Pass. 

@Jason Smith great to focus back on the original question, which is how does the owner deny the potential tenant without breaking the law. Every state has different laws and some are more tenant friendly. Here in Tennessee, we actually have different state laws for different groups of counties. Check with a lawyer first but a simple, “thank you for your application. Unfortunately you did not pass our screening process. We are unable to present you with a lease agreement at this time.” If she asks why, refer her to your lawyer. I Don’t know if she is part of a protected class but the owner has a valid reason to deny. However, you don’t want to throw the other landlords under the bus or they may not be forthcoming next time. My personal belief is if we are going to be in this business, we need a lawyer on retainer. It is cheaper than you think and just part of the cost of business.

@Ryan Tall Congrats on your second property! I'm just speaking for Washington State, but our law has outline how to proceed in all of this. Before we screen a potential tenant, we have to show them our "rental screening criteria." It can range from a couple of things like good credit and no evictions, or be as detailed as you want. Mine is 2 pages and includes getting along with past landlords and neighbors. As you see, that is a huge and important part of the screening process. If I deny a tenant after they apply, the State tells me that I must send them a written letter with a reply.

Here's my advice to you: join your state rental housing coalition group. We have a couple in Washington www.rhawa.org and www.walandlord.org. The couple hundred dollar a year membership provides me with all the forms needed to proceed in a situation like yours. They guide me through the process with the right steps and fillable forms along the way. All the best!

@Ryan Tall sounds like you handled it well. We say up front that good landlord references are required. If they get bad references, they get denied for bad references. If they throw a fit, I tell them they knew the standard when applying. I never disclose what a previous landlord said. That would violate the landlord code.