Legal Reasons to Deny a Tenant Application
January 29, 2024
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When Is It Acceptable To Deny A Tenant?
The tenant screening process is designed to weed out candidates who will pose a risk to the property, other tenants, or your rental business. However, that doesn’t mean landlords can deny tenant application for any reason.
There are several laws that protect tenants from discrimination. The Fair Housing Act prohibits landlords from denying potential tenants based on their race, color, nationality, religion, sex, familial status, or disability. Some states add additional protections on top of these seven—for instance, landlords in Michigan cannot discriminate against renters based on age or marital status, while California law extends protections to veterans, tenants who speak a different primary language, and several other populations.
So, what can you legally deny a tenant application for? Can prospective tenants be denied for owning pets? What about having a prior eviction? Can an apartment reject you for misdemeanors? In this article, we’ll discuss the possible legal reasons to deny a tenant for rental housing.
General Principles for Fair Housing and Handling Tenant Screening Report Results
Every landlord should be aware of a few general tenant screening principles, both to help you identify quality candidates and avoid lawsuits.
Landlords should only deny applicants if they have evidence that the tenant would not be able to fulfill the requirements of the rental contract (e.g., unable to pay rent, would not take care of the property, pose a risk to other tenants, etc.). The evidence should be specific and objective such that you can justify your decision with a concrete reason. For example: “The applicant’s credit score did not meet my minimum of 650” or “The applicant was previously evicted for nonpayment.”
You should NOT deny a tenant based on any inherent quality or characteristic of the applicant that you simply dislike (e.g., their appearance, accent, beliefs, practices, lifestyle, etc.). Doing so is discriminatory and illegal and could result in a costly fair housing lawsuit.
To maximize transparency and fairness, landlords must apply the same screening criteria and procedures to every applicant identically. If you run a credit check on one tenant, you must do so for all applicants. It may be helpful to use a tenant scoring system to ensure you’re applying screening practices fairly to all applicants.
What Can Disqualify You from Renting an Apartment?
Many tenants and landlords alike wonder what can disqualify you from renting an apartment. Here are 11 legal reasons to deny a tenant application and send a rental application rejection letter.
1. Insufficient Income
Insufficient income is one of the most common reasons landlords deny rental applicants. If an applicant does not have stable or sufficient income to afford to pay the monthly rent, they won’t last long as a renter. Denying an applicant for this reason is perfectly justified. In fact, it’s very common to set an income minimum (e.g., Tenants must make at least three times the monthly rental rate per month).
Another reason to legally deny a tenant is if their income cannot be verified (they can’t provide a W2, paystub, or other proof of income). If an applicant claims to have sufficient income but can’t provide documented proof of it, they likely never had that income in the first place.
2. Poor Credit
Poor credit history is another common reason landlords deny applicants. Credit checks are standard procedure for most rental businesses, and it is typical for landlords to look for minimum credit scores to verify the tenant has a habit of on-time payments. The rest of the credit report is used to examine an applicant’s current debt obligations—even if an applicant has enough income, outstanding debt may limit them from making rent payments on time.
3. Criminal Convictions (In Most States)
If a tenant has been convicted of a crime, this is (usually) also appropriate grounds for denial. There are several types of criminal background checks including national, state, and county, and each has pros and cons. However, if one of these checks returns a prior conviction on an applicant’s tenant screening report, denying that tenant’s application is a legal and justified move…most of the time.
A few states have laws that restrict the use of criminal background checks during screening. For example, several states prohibit landlords from viewing records of certain criminal convictions that occurred more than five years ago, while others prevent landlords from running criminal background checks until a conditional offer of acceptance has been issued. Be sure you know whether any laws of this type apply in your state or city.
Can an apartment reject you for misdemeanors?
In short, maybe. It all depends on the landlord’s specific policy and the laws in your state or city. In most states, denial based on your criminal record is allowed—and that includes misdemeanors. However, your state or city may have a specific law that prohibits discrimination based on misdemeanors, or a landlord may decide not to consider them during the screening process.
4. Prior Evictions
A prior eviction is a dealbreaker for many landlords. An eviction due to nonpayment is clear evidence that a tenant may not pay rent on time, while one based on a lease violation shows that the tenant previously violated the terms of their lease and could do so again. In fact, According to TransUnion data, 21.7% of tenants who were ultimately evicted in the sample had a prior eviction on their record. Denying a tenant based on their eviction record is legal and could protect your business from a costly and lengthy court removal process.
5. Weak References
Many landlords will request a reference letter from an applicant’s previous landlord or property manager. This is to determine if the tenant treated the property well, was considerate to neighboring tenants, followed all rules, etc. If an applicant’s previous landlord reports negative habits like late payments, negligent care, or aggressive behavior, this is a valid reason to send a rental application denial letter.
Cigarette smoke can discolor paint, damage a property, and bother non-smoking tenants. If your rental property is smoke-free or located within a smoke-free community, denying a tenant who smokes is reasonable and legal. However, note that this policy must apply universally to all tenants and applicants. Landlords cannot enforce a no-smoking policy on a case-by-case basis.
Similarly, to smoking, if you have a ‘no pets’ policy at your property, denying an applicant because they own a pet is legal. Your ‘no pets’ rule is just like all other rules at your rental property, and if a tenant isn’t willing to or can’t agree to them, they must find another property.
An important exception: Landlords cannot deny a tenant for owning a service or emotional support animal (ESA). Service dogs are necessary due to a disability and have been trained to perform specific medical or accessibility tasks for their handlers. Emotional support animals are not trained but provide comfort and companionship to their owners, usually to help manage or treat a mental illness like PTSD, depression, or anxiety. The HUD has specific rules about these types of animals, and it is illegal to deny a tenant for owning one, regardless of your community-wide pet policy. However, as a landlord, you are allowed to ask for documentation of the tenant’s disability-related need for the animal from a medical professional.
8. History of Late Rent
The easiest way to predict whether a tenant will pay rent on time every month is to examine their prior success in doing so. This information could be obtained by asking for a reference letter from a previous landlord, and it is a perfectly legal basis for denying an applicant. Late payments have a direct impact on your rental business’s success and ability to operate, especially as evictions due to nonpayment can cost thousands in legal fees.
9. History of Lease Violations
In the same vein, a history of lease violations suggests that a prospective tenant might not make a good addition to your rental community. Of course, your decision may depend on the nature and severity of the violation—a few noise complaints on the weekends differ drastically from major property damage or illegal activity. However, prior lease violations in general are a valid reason to deny a tenant.
10. Falsified Information on Rental Application
Falsified information on rental applications is more common than you might think. Rental applicants may try to subvert your requirements by falsifying bank statements, pay stubs, W2s, or even credit or criminal information. A tenant could apply to rent your property under a fake name and identity, or they could simply lie about a question on your rental application (e.g., number of occupants). Either way, once you find out that a tenant has participated in rental application fraud, you have grounds for immediate denial (or eviction if they’ve already moved in).
11. Refusal to Consent to a Credit or Background Check
According to the Fair Credit Reporting Act (FCRA), landlords must get explicit permission from a prospective tenant before running a credit or criminal background check on them. Most landlords will have a question on their rental applications asking the prospective tenant if they consent to a credit and criminal background check. If an applicant does not consent, you cannot run these checks (and could face legal fees if you run them anyways). Subsequently, if credit and criminal history are part of your screening criteria, this means you won’t have enough information about the applicant to determine if they qualify to rent your property. Refusal to consent to one of these checks is a legally justifiable reason to deny the applicant.
Illegal Reasons to Deny a Tenant Application
There are some reasons that are never a justifiable basis for denial or eviction. These are the seven federally protected classes, including:
- Nationality or national origin
- Sex or gender identity
- Familial status (including pregnancy, children, etc.)
In some states, the following additional classes are protected by state fair housing laws:
- Veteran/military status
- Marital status
- Source of income (participation in a Section 8 or government subsidy program)
- Genetic or medical information
- Sexual orientation
- First or primary language
- Citizenship/immigration status
- Status as a victim of domestic violence
Housing discrimination based on any other arbitrary reason is also illegal, such as denying a tenant based on the car they drive, their tattoos, or the neighborhood they used to live in. A tenant who feels they’ve been discriminated against based on an arbitrary reason or one of the membership classes listed above can file a complaint with a fair housing agency, who will start an investigation. A subsequent lawsuit will undoubtedly damage your wallet and your reputation, so landlords should be exceedingly careful to ensure that their policies are objective and fair.
Understanding tenant screening laws is crucial for landlords to maintain a lawful rental application process. It is essential to be well-versed in the legal reasons to deny applicants to avoid housing lawsuits and save yourself the time and trouble of dealing with underqualified tenants. By adhering to fair housing laws and considering factors like credit history, rental references, and criminal records judiciously, landlords can make informed decisions that not only protect their interests but also promote fair and inclusive rental communities.