Rejecting Prospect Tenant (Non Refundable Application Fee)

Rejecting Prospect Tenant (Non Refundable Application Fee)

Investor · King of Prussia, PA · Member since 2014 · 1k+ posts · 339 votes

Should my rejection letter read something like this:

We're sorry to let you know that the property at [address] is no longer available. At this time we've rented this property to other applicants. Thank you.

Do I need to add a reason why their application was declined? In this case it's income and employment is 3 months. 

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Curtis BidwellPro Member
Rental Property Investor · Olympia, WA · Member since 2014 · 777 posts · 744 votes
11y

Here's the content of our response form: Just check the box and send the notice! 

RENTAL APPLICATION REPLY

(Adverse Action Notice)

Date______________________

Attention: ___________________________________________________:

Thank you for your application(s) to rent one of our rental properties. We regret that we

were not able to rent to you at this time, for the following checked reason(s):

 The rental was committed to another party at the time we received your application.

 You indicated disinterest and/or declined our offer of the rental unit.

 You tentatively qualified, but the rental was given to another party with equal or

better rental qualifications, or to another qualified party that applied earlier.

 You needed to meet our conditions on rent, deposit, co-signer, use, or other.

 You did not provide requested documentation in a timely manner.

 Previous landlord/other references failed to provide needed timely information.

 We were not able to hold the rental until the date you were able to pay the deposit

and/or initial rent, assume tenancy, or meet other stipulated conditions.

 You did not meet requirements on pets, occupancy, smoking, cars, or other terms.

 You did not meet our standards for references, income, felony, credit, history, etc.

 Your application was denied based upon a written credit report with optional FICO

score; directions to receive a copy may be obtained by contacting us below.

 Your consumer/credit report did not contain sufficient information.

 You submitted an incomplete, inaccurate, unclear, or unsigned application.

 You did not provide a phone number, call back, or return our calls or emails.

 You did not submit the required screening fee.

 Other_____________________________________________________________.

Submitted Screening Fee:

 Since your submitted fee was used in the processing of your application, we regret

that we are not able to return any back to you

 Since your submitted fee was not used in the processing of your application, we are

returning/refunding your payment totaling $ _________________.

Federal and State guidelines limit us from giving further details other than name, address,

and phone number of any consumer reporting agency resulting in denial (by contacting us

below for a free report copy with right to dispute). Thank you for your consideration.

______________________________________________ _______________________

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  • Investor · Crosby, TX · Member since 2014 · 124 posts · 72 votes
    11y

    good question, any thoughts? What did you decide to do?

  • Real Estate Investor · Porter, TX · Member since 2013 · 2 posts · 1 vote
    11y

    I always tell potential  tenants upfront the basic requirements for getting into my rental. The income and job history for sure. I also make it very clear that any of the criteria we discuss verbally before taking the application fee will not change. I also make it clear that I am going to pick the tenant I feel meets all of my criteria the best. If they still choose to have the application processed and they are declined I always let them know why. Most likely It will be one of the criteria they were made aware of when we first met at the property for a walkthrough.

    I always try to discuss these points with them on the first phone conversation before we even meet at the property, I don't understand why so many still look at a property and waste money on application fee's  when they should already know they will not qualify.

  • Specialist · Harrison Township, MI · Member since 2015 · 54 posts · 23 votes
    11y

    IMO you should explain why their application is rejected, especially if you plan on keeping the non-refundable application fee. If I paid to apply and got the letter you wrote in response, I'd think you took my application knowing full well that the unit was likely taken, but wanted to collect my application fee anyways.

    If you're refunding the fee you probably have more flexibility.

  • Real Estate Agent/Property Management · Houston, TX · Member since 2014 · 1k+ posts · 827 votes
    11y

    I would just come out and say "you didn't meet our ____X rent income requirements. Anything else can sound a little hinky.

    And I don't understand why being on the job 3 months is a problem. Does this tenant not have any previous work history? Is he moving for a new job in your town? Is he a recent graduate with a new job?

    If you're going to insist on X number of years on the job, you're going to eliminate a huge chunk of your potential tenant pool.

  • Rental Property Investor · Durham, NC · Member since 2014 · 1k+ posts · 1k+ votes
    11y

    @Ayodeji Kuponiyi, if I took an application fee and did not return it, I would feel obligated to inform the applicant why they were denied. 

  • Laurel, MD · Member since 2015 · 101 posts · 30 votes
    11y

     It's bad enough they didn't get the house.  Shelter is a basic human need and they didn't hurt you by applying. So instead of coming here to ask how you should phrase your rejection letter designed to keep their money why not just return it.

    You wouldn't like it if it were done to you and you wouldn't like it if it were done to your child.

  • Investor · King of Prussia, PA · Member since 2014 · 1k+ posts · 339 votes
    11y

    @Account Closed the fee was used to run a backround check so I can't refund it back.

    @Randy E. some investors told me not to go into much details. I went through the criteria with them and when i ran a background on them, I found out they lied on their application.

    @Chris McDaniel I simply told them "thanks for your interest at 123 Main Street, unfortunately you're application was incomplete and you did not meet our criteria. Best of luck on your search."

  • Herndon, VA · Member since 2014 · 1k+ posts · 324 votes
    11y

    Income is a pretty clear one, so you can state that if you chose to do so.  One criteria where you are required to reveal is the reason is if it is based on credit.  

  • Investor · Austin, TX · Member since 2014 · 217 posts · 170 votes
    11y
    Don't do the background check until they meet all your other criteria. This way you can refund their fee having not already wasted it on a background check you did not even need.
  • Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    11y

    There is nothing wrong with charging a non refundable application fee.

    There is time and cost involved in processing a tenants application.

  • Rental Property Investor · Plant City, FL · Member since 2015 · 1k+ posts · 379 votes
    11y

    I would tell them why you are not accepting them.  How are they supposed to attempt to better themselves if they do not know why they cannot rent your property?  I agree not going into a lot of info and keeping it simple.  Lying on the application is a big deal to me, I don't like starting a relationship with someone with lies.  

  • Laurel, MD · Member since 2015 · 101 posts · 30 votes
    11y

    @James Wise That's  a cost of doing business as a landlord.

    Non-refundable application fees encourage two deplorable habits. Using it as an income earner which is just exploitative and deplorable and using it to run your application process like a beauty paegeant. Non-refundable means even if you didn't spend the time or money on the application you keep it.

    @Jason C. Exactly. 

  • Investor · Century, FL · Member since 2015 · 950 posts · 603 votes
    11y
    Originally posted by @Account Closed:

    @James Wise That's  a cost of doing business as a landlord.

    Non-refundable application fees encourage two deplorable habits. Using it as an income earner which is just exploitative and deplorable and using it to run your application process like a beauty paegeant. Non-refundable means even if you didn't spend the time or money on the application you keep it.

    It's also the cost of wanting to rent a house. It's a business, not a charity.

    If you think $40 is an 'income earner' then it's a hard income to earn. The house has to be advertised, 1 in 2 people won't show up for their appointments, only 1 in 3 will put in an application, so after spending 8 hours running around trying to earn $40?? Are you for real?

    Non refundable doesn't mean you keep the application fee if you didn't run it - as that's theft. Non refundable means that if you fail the application, then you aint getting the fee back.

  • Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    11y

    I disagree.

    A tenant who is denied after paying the fee has no-one to blaim but themselves.

    We have a lot of units so we do a lot of applications. We explain what the criteria is and time and time again tenants say their credit is great or their criminal history is perfect and they pay their fee. Great tenant is good to go so long as the reports reflect what they have told us.

    Then the reports come back....Multiple pages of accounts in collections or a criminal history.

    The idea behind the fee is

    A. To cover your costs 

    B. To screen out,the unqualified applicants immediately so they do not waste your time. Even with the application fee many clearly unqualified applicants apply hoping they will slip through the cracks.

    I imagine anyone doing a heavy volume would agree with me on these points.

  • Laurel, MD · Member since 2015 · 101 posts · 30 votes
    11y

    @James DeRoest

    If you can't absorb the time or the $40 to process  an application then you ain't got much of a business and a charity would be letting the house rent-free.

    On that note why don't we charge job applicants the cost of setting up and running their interview - after all it's the cost of running a job and most employers aren't charities either.

    Aside from that the last thing I need is some disgruntled applicant lobbing a brick through a  window in my property because they've had their money kept and been jerked off by some anodyne rejection letter.

  • Curtis BidwellPro Member
    Rental Property Investor · Olympia, WA · Member since 2014 · 777 posts · 744 votes
    11y

    Here's the content of our response form: Just check the box and send the notice! 

    RENTAL APPLICATION REPLY

    (Adverse Action Notice)

    Date______________________

    Attention: ___________________________________________________:

    Thank you for your application(s) to rent one of our rental properties. We regret that we

    were not able to rent to you at this time, for the following checked reason(s):

     The rental was committed to another party at the time we received your application.

     You indicated disinterest and/or declined our offer of the rental unit.

     You tentatively qualified, but the rental was given to another party with equal or

    better rental qualifications, or to another qualified party that applied earlier.

     You needed to meet our conditions on rent, deposit, co-signer, use, or other.

     You did not provide requested documentation in a timely manner.

     Previous landlord/other references failed to provide needed timely information.

     We were not able to hold the rental until the date you were able to pay the deposit

    and/or initial rent, assume tenancy, or meet other stipulated conditions.

     You did not meet requirements on pets, occupancy, smoking, cars, or other terms.

     You did not meet our standards for references, income, felony, credit, history, etc.

     Your application was denied based upon a written credit report with optional FICO

    score; directions to receive a copy may be obtained by contacting us below.

     Your consumer/credit report did not contain sufficient information.

     You submitted an incomplete, inaccurate, unclear, or unsigned application.

     You did not provide a phone number, call back, or return our calls or emails.

     You did not submit the required screening fee.

     Other_____________________________________________________________.

    Submitted Screening Fee:

     Since your submitted fee was used in the processing of your application, we regret

    that we are not able to return any back to you

     Since your submitted fee was not used in the processing of your application, we are

    returning/refunding your payment totaling $ _________________.

    Federal and State guidelines limit us from giving further details other than name, address,

    and phone number of any consumer reporting agency resulting in denial (by contacting us

    below for a free report copy with right to dispute). Thank you for your consideration.

    ______________________________________________ _______________________

  • Rental Property Investor · Plant City, FL · Member since 2015 · 1k+ posts · 379 votes
    11y

    @James Wise I don't do heavy volume and I agree with you 100%!  

  • Investor · Century, FL · Member since 2015 · 950 posts · 603 votes
    11y
    Originally posted by @Account Closed:

    @James DeRoest

    If you can't absorb the time or the $40 to process  an application then you ain't got much of a business and a charity would be letting the house rent-free.

    Here's the score honey, you want to rent my house, you pay me an application fee so that I can check you are worth renting to. Those are the rules. Suck it up.

    Can't afford $40? Probably can't afford the rent either.

  • Laurel, MD · Member since 2015 · 101 posts · 30 votes
    11y

    @James Wise

    I don't agree with the idea of running a business  in a way that punishes people who apply for what I am offering. That and a bunch of other things I guess are why we have a waiting list of applicants - referrals from existing tenants calling us up asking if we have a property we can rent to them - not even caring what side of town it is.

    If you have a process that explains your criteria it's not hard to turn that into stage 1 of the screening phase whereby people unlikely to qualify are identified and dissuaded from applying. 

    If despite explaining your criteria you keep processing unqualified applicants then (just like if you are an employer and keep getting unsuitable resumes) something you are doing isn't working and I believe one can do better than shrugging because you've charged  a non-refundable fee. 

  • Laurel, MD · Member since 2015 · 101 posts · 30 votes
    11y
    Originally posted by @James DeRoest:
    Originally posted by @Account Closed:

    @James DeRoest

    If you can't absorb the time or the $40 to process  an application then you ain't got much of a business and a charity would be letting the house rent-free.

    Here's the score honey, you want to rent my house, you pay me an application fee so that I can check you are worth renting to. Those are the rules. Suck it up.

    Can't afford $40? Probably can't afford the rent either.

     I am not your honey. If you can't absorb $40 you ain't much of a businessman.

  • Investor · Century, FL · Member since 2015 · 950 posts · 603 votes
    11y
    Originally posted by @Account Closed:
    Originally posted by @James DeRoest:
    Originally posted by @Account Closed:

    @James DeRoest

    If you can't absorb the time or the $40 to process  an application then you ain't got much of a business and a charity would be letting the house rent-free.

    Here's the score honey, you want to rent my house, you pay me an application fee so that I can check you are worth renting to. Those are the rules. Suck it up.

    Can't afford $40? Probably can't afford the rent either.

     I am not your honey. If you can't absorb $40 you ain't much of a businessman.

     If you can't afford $40, you ain't solvent.

  • Laurel, MD · Member since 2015 · 101 posts · 30 votes
    11y

    But it isn't $40.

    It's $40 times however many applications need to be submitted in order to get a house, some of which they will be rejected for even though they qualify because landlords have taken non-refundable fees and are running the process as a beauty paegeant.

  • Investor · Century, FL · Member since 2015 · 950 posts · 603 votes
    11y
    Originally posted by @Account Closed:

    But it isn't $40.

    It's $40 times however many applications need to be submitted in order to get a house, some of which they will be rejected for even though they qualify because landlords have taken non-refundable fees and are running the process as a beauty paegeant.

    I agree with your sentiment about the process being run as a beauty paegeant being wrong, but that's not what your ire was about.

    And although it's not just $40, but $40 per adult, considering each adult must have some sort of income these days, it's still not a large amount of money.

  • Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    11y
    Originally posted by @Ayodeji Kuponiyi:

    @Account Closed the fee was used to run a backround check so I can't refund it back.

    @Randy E. some investors told me not to go into much details. I went through the criteria with them and when i ran a background on them, I found out they lied on their application.

    @Chris McDaniel I simply told them "thanks for your interest at 123 Main Street, unfortunately you're application was incomplete and you did not meet our criteria. Best of luck on your search."

    Read up on FCRA (Fair Credit Reporting Act) to find out why your simple response to the tenant is inadequate.

  • Scottsdale, AZ · Member since 2014 · 659 posts · 536 votes
    11y

    I don't take more than one application fee at a time. As another poster stated, you should give your rental criteria to the prospect up front and discuss it with them.  They may be able to tell you what is going to come back. 

    It is possible that they will learn something from this in which case it would be worth the $40 for them.

    Some people will just hope that you will collect the money and not actually process the credit/background check.  In some cases people are desperate and individual owners are more likely than management companies to forego the actual processing.

    In any case, we are not wasting an applicants money.

    In all cases we will take the FIRST qualified applicant.  Not the most qualified.  You are setting yourself up for a major problem if you are found to be discriminating in ANY fashion.

    Take a class in fair housing.  It is very important for all landlords to understand the ruin that can happen to you if you are found to be in violation!

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