Adverse action notices

11 Replies

I have just posted my first rental and am accepting applications. I would like help clarifying when it’s necessary to send an adverse action notice or not. If it pertains to something on a credit check this notice needs to be sent? Would I send via email or to an address listed? What if the denial is for something unrelated like income or pets etc? Will this notice need to be sent or some other type? Also I am using cozy to do all this. Will this have a prompt of some sort that I can send out or will I need to send this notice if need be outside of the cozy platform? Thank you!

@Brandy Carter Welcome to BP. I make it a practice to never deny anyone not verbally and certainly not in writing, on any grounds. I tell every applicant there are others with whom I am working, and we have a conversation. Most never make it to the application phase-they get rejected, but never really-smoking, pets, too many, whatever, gone.... Those that do get processed further I take their application and go from there. When applicants are rejected I just stop talking to them, sometimes I tell them the place got rented to another applicant who was further along in the process. 'Why' is never discussed. We never show the place until we have pretty much decided this person could be a finalist. Everybody wants to schedule a showing-no. All the best!

Don't send  an adverse action letter; don't verbally state the applicant was rejected. 

As mentioned above, if asked,  just state the unit was rented to someone else.

@Brandy Carter you're getting bad advice. You should never attempt to build your business on lies or breaking the law.  Is that how you would want to be treated? I believe treating people with respect, honesty, and within the confines of the law is a better way to build a business.

An Adverse Action Letter is required any time an individual is rejected for information found on the credit report. If it is based on something else, like a bad Landlord reference, then you do not have to provide an Adverse Action Letter but you should notify them they've been denied.

@Brandy Carter

Brandy, follow Nathan’s advice closely.

I, like all of you, attempt to be very open to every applicant but when I go as far as to take an application and they pay a small fee and take a half hour to complete that application, there are laws as to how you communicate the results of a denied application due to credit. Properly denying a applicant is just as important as handling the application, due diligence and lease for an approved applicant. Be sure you know your state and federal laws and stay compliant.

Good luck.

Does adverse action need to be mailed certified like others? Or can it simply be emailed to the applicant? What if the renter is using a realtor to communicate through? Can I send it through him or do I still need to contact the applicant directly?


We're in California. We list a brief qualification criteria in our rental ads which includes 3 times the monthly rent, have no evictions, clean background check, no violent criminals, and have good credit history and 650+ credit score.

I have seen examples of Adverse Action Notices that list a bunch of check boxes for reason of denial such as Unable to verify required minimum income, eviction filing or judgement, no credit file, criminal record, delinquent past or present obligations, does not meet minimum required Credit Score etc. Does one need to be this specific?

As Nathan advised above "If it is based on something else, like a bad Landlord reference, then you do not have to provide an Adverse Action Letter but you should notify them they've been denied." I realize that the letter is required for compliance with FRCA but is it desirable to issue a letter if it is something other than credit report related?

We begin the process by sending those who inquire on the property a "tenant profile" which essentially lays out the criteria for accepting a tenant. Nowadays, having written criteria is important. Don't ever tell a prospect that the unit isn't available or is already rented if it isn't. If they don't meet the criteria in the tenant profile, most will self screen. I do have some that will still proceed with an application and then their credit score comes back as 520 when our minimum is stated as 600. By this point, we're having conversation via email if not phone and if they don't qualify I just tell them. The screening service I use will send out acceptance or denial letters and I sometimes use those but usually write my own.

This FTC site has good summary with examples. It states that Adverse Action Notices may be delivered electronically and also emphasizes that "you must securely dispose of the report and any information you gathered from it".

One of the examples is
A landlord who makes it a practice to approve an application if the
prospective tenant shows an adequate income or has a favorable credit
report, is dealing with an applicant who has an inadequate income and a
bad credit report

What if the reason for declining application is inadequate income and not the credit report? Is a notice still required?

Further, the source of income verification is not the credit reporting company but rather the tenant background check company. Should the applicant be referred to the background check company?