As a landlord, every time you open the home for a new tenant, you will have to reject a few applications. This is a natural part of the industry, and almost every home gets more than a few applications, no matter what city or even the type of home you are offering for rent. With the housing market as tight as it is right now, rental demand is higher than usual and the number of tenants you will need to reject will likely increase. Tenant screening is a necessary part of the process to choose a stable and reliable new resident of your investment home.
However, when rejecting a tenant’s application, it is vital that you follow the right procedures – or risk a fair housing lawsuit.
The Fair Housing Act for Rental Homes
The Fair Housing Act dictates that all people have a right to fair and equal consideration for housing opportunities. This means that landlords, in particular, are not permitted to make decisions based on a protected status with a history of bias and housing discrimination.
You cannot choose or reject a tenant (or even appear to) based on the following criteria.
- Race or skin color
- National or ethnic origin
- Familiar status
In order to stay safe from a potential lawsuit, your tenant turnover process must carefully remove these factors from your decision-making process. Let’s explore how to protect yourself from lawsuits while politely rejecting a tenant’s application.
1. Define Your Tenant Criteria Before Listing
What makes a great tenant for your property? Here are a few examples of things you can look for:
- You can define a stable person with the right income and credit score.
- You can approve someone based on their work schedule or whether they want to bring pets.
- You can even say that you would favor a gardener hobbyist to enjoy the flowerbeds over an equally financially stable person.
- You can choose someone you think would live more quietly.
By defining non-biased criteria ahead of time, you can carefully judge each application based entirely on your pre-determined merits.
2. Avoid Charged Language in Your Listing
Be careful not to cross any lines when listing your home for rental applications. Most landlords know that it’s unreasonable to market for only attractive young women or to state in all-caps that the house is not disability-friendly. That would be gauche. But watch out for subtle mistakes, like describing the house as ideal for a family with several kids. This opens the door, unfortunately, to accusations of bias if you reject anyone without kids. Remember, fair housing goes both ways.
3. Remove Names from Applications Being Considered
Before you look at the applications, use a program to remove things like names and risky details. Hiring managers actually use this trick to ensure non-biased resume selection when choosing who to call for an interview. Use this trick to ensure that when you are reviewing rental applications, you can only consider non-protected details like the number of people in the household, their total income in regards to the rent-income ratio, and whether they have any pets.
4. Beware Small Talk Infractions: Be Careful Never to Ask or Discuss Protected Details
Now here’s the really tough one, especially for friendly landlords who like to get to know their tenants. You cannot ask about or discuss any of the protected details of an applicant’s life until you’ve made your final decision. When you’re chatting on video calls, email, or meeting in person, you can’t ask about their spouse or kids. You can only ask “how many” people are in the household and ask that each adult sign the lease.
You can’t ask where an interesting accent originates from, or whether they’ll be shopping at the ethnic grocery down the street – even if you shop there. We know this cuts a lot of the usual friendly chit-chat out of your options, so consider getting creative and keeping the discussion on things like schedules and pets.
5. Rejecting the Tenant: Polite and Non-Specific
Finally, when it comes time to politely tell each non-selected applicant that you will pass on their tenants, proceed with caution.
For most landlords, the best approach is a simple, yet polite and compassionate email – that mentions no details. Draft a letter you can send to each rejected applicant. Something like “Thank you for your interest in the property. There were many great applications but only one could be chosen. We wish you luck in your house search.”
Do not say anything personal. Barely mention that someone else was selected since it’s not good news. Instead, consider offering a few links to other available homes or rental investors in the area to help in the next stage of their home search.
Work With Tenant Screening Specialists
The single best way to cover yourself when you must reject tenant applications (and select one application to reside) is to work with a tenant screening service. Tenant screening specialists provide all the information you’ll need to choose your best tenant.
This way, your process is handled by people who know tenant screening with professional objectivity and personal bias can’t even be suggested to play a role in each tenant turnover decision.
Ready to streamline your tenant screening and Fair Housing safe tenant rejections? So are we!