How to inform a prospective tenant they did NOT get approved
Rental Property Investor · Park City, UT · Member since 2016 · 678 posts · 531 votes
After screening prospective tenants and making a selection, am I obligated to let the applicants who did NOT get approved know why they didn't make it? Not sure if it's best to "say nothing"....be vague....or tell them specific reasons. I had two applicants that invested a lot of time in the process and had to choose one. Have not yet let the applicant who didn't get the property know but need to today.
As long as you are a responsible individual and do not discriminate against the most prominent classes you can operate your business any way you choose. As a private landlord the least of your concerns should be "fair housing" regulations. Protecting your business will not get you in hot water.
A applicant would first have to file a complaint, the housing gestapo would decide if a investigation should take place and most likely, for the type of infractions most private landlords do it will never be pursued. The order you process applications is not worth the bother to be investigated.
Regarding your question about notifying applicants I give the same answer to everyone denied.. "I am sorry to have to inform you but you have not been accepted as a tenant."
That answer gives them nothing to complain about and if they ask why I simply say it is not my policy to provide that information.
As with screening a standard policy is mandatory and the less the information you provide the less they have to complain about. It is not a applicants business to know how I screen or determine who does and who does not meet MY requirements. They may have been rejected because I did not like their personality.
There's nothing wrong with saying "the rental unit is no longer available". You don't have to give a reason why you chose one tenant over another. Simply wish them good luck finding another rental property.
Sometimes I feel bad having to turn down someone but when I tell them they do not meet our criteria many applicants tend to take this better than I do. Perhaps they've been through this before.
Some landlords will say "if you don't hear from me then you didn't pass the screening requirements" but that seems rather harsh.
I do send the application back to these folks because it includes their social security number. I will include a simple check list on why they did not meet the criteria for renting; with our tenants this is usually because of history of evictions or inadequate income or a very large number of accounts in collections .
Our screen out criteria regarding evictions, inadequate income and/or lots of accounts in collections is mentioned in every ad we post and discussed with each applicant prior to giving them an application. Yet you will still have applicants that are willing to waste the application fee (it's only $15 per adult) going through the screening process.
Thanks @Gail K.. My application is $40 and done online. The situation is not as black & white as "you did not meet the criteria". There were just some weird things. For example, she was able to meet the income qualification only because of child support. But the child support appears to be coming from her fiancé. She initially told me he would not be moving in (no immediate plans to be married). But I find that hard to believe, so I made him apply just in the event he wants to be added to the lease in the next 12 months. When I verified his income his job doesn't even cover the amount of the child support. There's something really wrong here.
So I found a better tenant and approved her last night. The prospective tenant I described above has been very diligent providing me documentation, contacting references to help me get in touch with them, etc. She's fully vested in this property...and yes, I feel bad that she's $80 into this.
Seriously 2 approved, did you let the 2nd applicant know you were processing a first?
Legally in my state, you can not take another application unless a unit is available. If application is pending next applicant can submit a application pending, but you can't run it till previous applicant was either denied, if approved then you tell 2nd applicant sorry can't run it no longer available I'll return your fee and application.
You need to accept the FIRST applicant that was approved or you could be facing fair housing issues.
As far as response to applicant, easy to state your application was declined, per our rental criteria could check a box, for credit, criminal, rental history, or whatever. just keep the response form uniform for all.
Whoops sorry I should have stated it is FEDERAL LAW which includes Texas.
Review below:
The Fair Housing Act prohibits discrimination in housing on the basis of:
Under the Fair Housing Act, the following activities are illegal:
This Federal Law.
@Deanna McCormick Technically, the applications came through in tandem. Applicant #1 submitted first. I had not approved her. Because of my concern I asked that her fiancé also complete an application as I am considering them jointly. His application was submitted last night.
Applicant #2 submitted their application a couple days ago.
In both cases, the unit was still available. With an online application I don't know how you can prevent multiple applicants. Sure you can disable the link or terminate the listing. But until someone is approved why would you do that?
Applicant #1 was never "approved". This is not a situation where she was approved and then I changed my mind and opened it back up.
As far as on line application, first submitted via time it was received is it's status.
I've worked with similar situations and sometimes a applicant was sitting at my desk filling out a application and unknown to me corporate had a online application in the works. this was able to be monitored having a central corporate office generate the submissions to the credit check company in the order received.
I'm just pointing out for your information and others what guidelines should be followed.
$10.000 fine for violation is not something to risk and people are renter smart.
California now requires a formal reply to any application that is denied.
As to taking them FIFO: When is any application complete? If it is incomplete, then that does not restrict us from taking others. We the missing data becomes available, then the applicant can be reviewed at that time.
During the vetting process, comments from prior landlords may get delayed or may never arrive from a voice mail message you leave - - does that freeze your review process - - IMO, never. Same issue in verifying employment.
I always took the stance that until ALL the data was available for a complete review, I didn't HAVE an application. Keep a written log for every application you receive, note when the CR, employment info and landlord comments were receive and the date you reviewed the information for accept/deny.
Keep point is DO EVERYONE OF THEM EXACTLY ALIKE and your log is the proof of your compliance.
Thank you @Deanna McCormick. I appreciate you sharing the guidelines and your experience.
Of Course, Was a good question to raise, I think the general questions of some of the followers that have rental properties need more instructions and information on Fair Housing Laws and rental criteria processes.
It's to easy to say I'm gonna rent it out!
Wish you the best
I only give out apps at an "open house" that I hold for each property. I do not charge an app fee. I simply tell each applicant that I will only contact the person that I am offering the property to. If you do not hear from me by a specific date and time then the property is either no longer available or you did not meet the requirements. I don't see anything wrong with this approach. I do not have "showings" by appointment to avoid wasting my time with no shows. This process has always worked for me. Anyone have any thoughts on this?
Thanks @Gail K.. My application is $40 and done online. The situation is not as black & white as "you did not meet the criteria". There were just some weird things. For example, she was able to meet the income qualification only because of child support. But the child support appears to be coming from her fiancé. She initially told me he would not be moving in (no immediate plans to be married). But I find that hard to believe, so I made him apply just in the event he wants to be added to the lease in the next 12 months. When I verified his income his job doesn't even cover the amount of the child support. There's something really wrong here.
So I found a better tenant and approved her last night. The prospective tenant I described above has been very diligent providing me documentation, contacting references to help me get in touch with them, etc. She's fully vested in this property...and yes, I feel bad that she's $80 into this.
Tony, not sure if you ran a credit report on them but if you based your decision on a credit report that was processed for them you need to send them an Adverse Action letter per FCRA rules:
@Tony Castronovo you do realize that you have been given a long list of rules, regulations, and advice and have been cajoled or scared into a false conclusion right? You really should understand the difference between what is legal and what is just recommended as guidelines as two separate things. For instance ugly people are not currently as a enumerated protected class, so you are perfectly within your right to tell a renter "I'm not renting to you because I don't like your face," "you are too fat", or "your breath stinks" or whatever arbitrary factor you want as long as it doesn't violate a protected class or a specific law. Now in practice you dont want to be this seemingly random in your selection criteria because it gives the appearance you could be discriminating (which is legal) against a protected class (which is not legal), so it's a good idea to have some criteria you can equally apply that wouldn't give the appearance your violating local statues. The vast majority of states do not require you take the first "qualified applicant". Many large apartment complexes just follow this kind of policy so they dont give the appearance of discrimination and they turn over units so fast it makes economic sense as well. Most states also have different criteria for small landlords vs. professional landlords with many properties.
In summary I would just ask you think for yourself and dont make fear based decisions against your own self interest just because someone has a political agenda or is a de facto apparatchik
of the state. If we all get kowtowed through fear of the state into giving away our rights as individuals we do collective harm to our freedoms and regulation will become even more onerous.
@Jaymie S. I like the approach of an open house. I have done that too. I think the situation I am posing here is....what happens if you do begin to process an applicant but don't have a complete picture (missing reference check results, etc) and then the candidate qualifications start to weaken. Would you (could you) take an application from another candidate?
My interpretation of what folks are saying here and what I understand is that if you treat everyone with the same criteria (you can't approve someone for which you denied a previous applicant) and process applicants in due order then it is ok to take on multiple applicants. If this were a job posting I would be taking multiple applicants, conduct multiple interviews simultaneously without rejecting each one before moving on to the other. But of course I couldn't reject a candidate for something and hire someone else who failed the same criteria/standard.
As long as you are a responsible individual and do not discriminate against the most prominent classes you can operate your business any way you choose. As a private landlord the least of your concerns should be "fair housing" regulations. Protecting your business will not get you in hot water.
A applicant would first have to file a complaint, the housing gestapo would decide if a investigation should take place and most likely, for the type of infractions most private landlords do it will never be pursued. The order you process applications is not worth the bother to be investigated.
Regarding your question about notifying applicants I give the same answer to everyone denied.. "I am sorry to have to inform you but you have not been accepted as a tenant."
That answer gives them nothing to complain about and if they ask why I simply say it is not my policy to provide that information.
As with screening a standard policy is mandatory and the less the information you provide the less they have to complain about. It is not a applicants business to know how I screen or determine who does and who does not meet MY requirements. They may have been rejected because I did not like their personality.
I think that the OP is OK to deny the first applicant because the first application had red flags with regard to income but I would have recommended that he deny (formally & in writing) applicant #1 BEFORE beginning to process applicant #2. Also you should send a denial letter that specifies the reason for denial such as "unverifiable information" with regard to the income discrepancy. This denial letter should reference a credit reporting company where they can get a free copy of their report and it should tell them their score, etc and where you pulled the report if credit was a factor in the denial.
I know what it feels like to be accused of a Fair Housing violation because it has happened to me and I didn't fret over it because I knew I had done nothing wrong but it did take over a year to clear my name. The threat of someone claiming Fair Housing violation is real for all of us landlords and property managers and I have been down that road so I will advise you from my own personal experience it's a road you don't want to travel on.
@Account Closed
Actually "standing up like a man" is the sort of policy in this business that is most likely going to end up in front of a judge. The overpowering scenes of entitlement that our society now has is fuel on the fire.
Be responsible, screen with a eye on protecting your business and disseminate as little information to rejected applicants as legally possible.
Hi all. Thank you so much for the great responses. Clearly, there are some differing viewpoints here. All of this information and perspective has been a big help. I feel like I handled the situation well and also have some checks and balances setup for the next tenant based on what I learned here and further research. Thanks again!
I had 22 completed applications for a 3 hour open house on a SFH that I recently rented. Do you suggest I spend an entire day trying to contact all these people to let them know that I am not renting to them? @Account Closed LOL
I should send a letter to 22 people? Are you being sarcastic?
@Darren Budahn You are on the right track. I saw a presentation by a leading real estate lawyer and he said you should never give reasons for a denial. Giving reasons just gives the potential for claims against you. Give no reasons and they have no leverage. Keep everything as bland as possible and say as little a possible. The attorney in question does lots of work for the big corporate REITs. I am sure this is the best advice and is the practice they follow.
I'll just leave you to your own reality John
Yeah I would hate for a judge to read me the "right" act. What % of your posts fade off into complete incoherence? The over/under is about 30%
I usually just say we found someone else. Not that you were bad, but they just gave me the deposit faster or something like that. If something came up where they lied on the application, I will call them out on that. They usually know that is coming and I never hear back.
'Thank you for your interest, the rental you applied for has been leased'.