June 20, 2017

In a previous post, we shared our tips for how you can improve the number of applicants interested in your rental property by marketing to millennials. Having a larger number of applicants means improving your odds of finding the ideal tenant for your property.

However, when you have a huge array of applicants to choose from it also means you will need to reject some applicants. If you are uncertain of how to reject or accept applicants, read on for tips on the best way to handle the screening process.

Start With Consistent Screening

Once you have marketed your property and you have garnered interest in the unit, it is time to start your screening process. You can begin with the in-person showing, during which you can have a face-to-face interaction with potential applicants to determine if they will be a good fit going forward. For those who are interested after the showing, you can direct them to an application. Be sure you treat every applicant the same during the screening process, in order to abide by the Fair Housing Act. For solid leads, ask them to fill out an application and follow up by screening them. It is wise to have anyone over the age of 18 who will be residing in the property fill out the application. Screening will allow you to gather important information about the applicant, such as their credit history, a background check, and any evictions on their record. All of the information you gather on your application and through your screening report will help you determine who should be accepted and who should be rejected.

Valid Reasons To Reject Applicants

While you might be in a hurry to fill your vacant property, it is important to find a responsible tenant. When you become too lax and do not screen tenants properly, you can wind up with a worse situation than a vacant rental unit. It is important to follow local regulations in regards to tenant rejection, and you should always consult with a local attorney when in doubt. The following are a few valid reasons you might reject an applicant.

  • Smoking Habits: If you decide you wish to make your unit a non-smoking property, you have the right to reject an applicant due to their smoking habits. Many landlords want to avoid the smell of smoke in their home, as it tends to linger in carpets and walls even after thorough cleanings. Contrary to many people's belief, smokers are not a protected class.
  • Pets: If you decide that you are going to disallow pets, you can reject an applicant due to their pets. However, keep in mind that service animals and pets are not the same things. Be sure you understand the legality of pets versus service animals before you reject an applicant based on their animal.
  • Bad Credit: When you get to the screening process, one of the important reports you should pull is a credit report. Depending on what standards you have decided upon (usually landlords look for a credit score of 620 or higher), you can reject an applicant based on a bad credit report. If you do reject an applicant due to credit, make sure you follow the guidelines for informing them of your decision and providing them with a chance to access their credit report.
  • Insufficient Income: One of the criteria you should determine for your rental is the amount of income you will be requiring from your tenants. If someone applies and they do not meet your income requirements, this can be a valid reason for rejection.
  • Lack Of References: During the application process, you should ask for references from potential tenants. Speaking to a previous landlord is particularly helpful. If someone cannot produce any quality references, it might be a good indicator you should move on to a different applicant.
  • History Of Evictions: To screen tenants as thoroughly as possible, it is a good idea to use a screening report that includes an eviction history. If a tenant has evictions on their record, this could be a valid reason for rejecting them.

Abiding By The Fair Housing Act

While there are valid reasons for rejecting an applicant, you must be sure you are not discriminating against protected classes when you reject an applicant. It is important to set up your criteria for a good tenant and stick to that criterion for every applicant. You cannot discriminate against an applicant for any of the following reasons:

  • Race
  • Color
  • National origin
  • Religion
  • Sex
  • Familial status
  • Disability

Be sure you also follow any local regulations for additionally protected classes. For example, in some areas, marital status is a protected class. Look into the regulations for your specific area to be sure you are abiding by the law.

The Process Of Rejecting Applicants

While it is never fun to dole out rejection or be on the receiving side of rejection, it is an important component of the landlord process. The best way to handle rejecting applicants is to communicate in a clear and timely manner. Don't hoard applicants. Let them look for another home if your property isn't going to work out. During the application process, it is also good to let interested parties know that multiple people will be applying for the property. If they are aware that they are not the only people applying, they will be more prepared to handle potential rejection. If you deny an applicant based on something in their screening report, be sure you abide by the Fair Credit Reporting Act guidelines for rejection. This act ensures that consumer report information is accurate and private. Follow the notification guidelines, as outlined by the Federal Trade Commission. It should also be noted that the U.S. Department of Housing and Urban Development has issued new guidelines on how information about an applicant's criminal records should be fairly used. While those with a criminal past are not a protected class, landlords must be careful when denying on a criminal background that the criminal charge does not unfairly target a protected class. This is an extremely complex and gray area, which you can read more about here. You should consult with a local attorney when uncertain about whether or not your rejection will be unfairly affecting a protected class.

Accepting Applicants

Once you have rejected the applicants that are not right for your property, you can move on to the fun part: accepting applicants. Notify applicants you plan on accepting as soon as possible. They are probably looking at other rental properties as well, so the faster you make your decision the better.

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