Finally I closed my first investment property and looking for tenants right now. I recently received an application but the person had bad credit + more then 4 civil court records (everything related to evictions). So my question is, when I reject an applicant
1) Do I have to give reason?
2) Do I need to have a reason? Or can I reject for just because I don't like the attitude?
I know it is my property and I can say no to anyone, but I remember reading somewhere that I cannot reject for no reason. Is it true?
There is something called Protected Class. Meaning you cannot refuse to rent someone based on Race/Ethnicity, Age, Family size, Gender, Sexual Orientation, or Marital Status. If any potential tenant makes a claim that you discriminated against them because of one those reasons, its an automatic $10K penalty. You don't want that.
You CAN discriminate against Credit history, Eviction history and Criminal background. So use that as your reason to reject a tenant and give them the report when they ask why was I rejected. If you don't give a reason, you are leaving it in the air for the person to make up their own assumptions about why they were rejected, and most times they assume its because of those categories in the protected class.
So do your due diligence on each potential tenant and keep documentation of their background reports, so when they come with their lawyers, you have something to back you up. COVER YOUR ***.
You may reject a applicant based only on a feeling, attitude even their appearance. You do not have to give a reason and should not ever provide a reason unless your state regulations require you to give one.
If you are not discriminating you should not worry. If you are discriminating make sure you have a valid non discrimitory reason to back up your rejection.
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