From a legal standpoint, do I have to do anything specific when I turn down an applicant. Should or can I tell them if I don’t think they have the income to afford the rent I am charging? Should I notify them in writing to have a paper trail? Thanks.
If you run their credit and your decision is based off that, you need to send them a letter telling them about their denial based off credit…just like if you applied for a loan and the bank denied you & sent you the letter with the credit reporting agency’s address.
If your denial is based off other factors, just make sure you’re not denying them based off any of the “protected classes” from Federal Equal Housing Opportunity laws.
If your denial is because you just found someone more qualified, you could just tell the applicant or generate a short letter telling them your decision.
Thanks for the reply. This really helps.
It may vary by state. I don’t have to give a reason, unless it is the credit report.
I never give a reason, because all that gets you is argument.
If you reject for credit, you do have to send a letter. That’s federal law. The form will be provided by your credit company.
One thing to check in your state, to see if this applies in your state. In Oregon, if I charge an application fee, I MUST have a copy of my written criteria on site. I get the applicant to sign a receipt for his application fee that states that he has been offered the opportunity to see my written criteria.
Occasionally, I get an applicant that asks why, and I simply tell them that they did not meet my written criteria. Then get off the phone. You don’t have to sit there and talk to them until they are happy.
If you are in Texas you have to give them in writing the reasons they can be rejected BEFORE you take their application.
You dont have to accept every applicant, even if they qualify credit and income wise. If you dont feel comfortable with them just decline them. Make sure it isnt for any thing that may be considered prejudicial, however
I have everything from lower income to upper-middle income rentals, but the vast majority are lower income rentals.
And I can tell you when you are dealing with lower income tenants, almost ALL of them have something bad that could affect them - so declining them is rather easy. Many almost expect it. It is not uncommon for those folks to have bad credit.
With my lower income rentals - here is what I tell people up front when I pre-qualify them… we do not care about your credit, but you need at least 3.5x the rent in documentable (non-cash) income, AND we look at eviction & criminal history on a case by case basis. E.G. I have one renter who is a lady who wrote a hot check and has a felony, who now can’t get a regular apartment anywhere, yet she makes over $50k a year and happily rents one of my lower income properties from me (~$600/mo) … and she put down about 2 months rent as a deposit which most lower income folks cannot do … she is a great tenant and always pays. However I don’t deal with people who have had any recent evictions.
I am straight forward with people, and don’t BS them. They respect that. If they qualify, great. If not - I tell them that too. End of story.
I have a good system in place now so evictions and non-payers have become very rare with my rentals.