Unless your area has a special rule, our property mgmt team accepted the first qualified applicant and notified the other applicants that they were not the ones chosen and told them that their application would be kept on file for future available units, or informed of why they did not qualify.
@Sal M. Assuming you are not licensed and did not need to issue disclosure?...from onset I mean.
It depends on the property, and your state-specific fair housing laws...this may not even be an issue. If you disclosed that the application fee was non-refundable up-front, that's not an issue. I personally don't charge an application fee, because of personal reasons...I screen and then let the selected tenant complete the criminal/credit/background check through an independent party that collects the fee. No need to collect application fees from renters up front...if everyone did this renters would spend hundreds of dollars just applying for rental units.
To your question, it makes sense to keep things semi-formal but "canned" You don't want to site any specific reasons related to possible fair housing or discrimination. Again, if you're just renting your unit as an individual this may not matter. I send out something to the effect of "Thank you so much for your interest and application. We have elected to go with another candidate at this time. Best of luck in your search...Sincerely"
Thanks for the responses. I want to clarify that this is an SFR, not an apartment.