As a landlord you will receive hundreds of applications when a property becomes vacant. You will have your own list of standards and requirements for a prospective tenant and with that list comes the opportunity decline an application. Though it is within your right to select a prospective tenant, you have to keep in mind that the Fair Housing Act prohibits you from discrimination. Even though you might not purposely discriminate when declining an application, the tenant may not agree. Therefore, you should consider the legal reasons you can reject a tenant and never veer from that when accepting/rejecting applications.
Smoking – If the prospective tenant is a smoker and you run a smoke-free property, it is within your rights to reject the tenant’s application.
Pets – If you have a no-pet policy and the tenant has one, you can reject their application. Your no pet policy needs to be specific on the type of pets or if it is all pets that are not allowed on the premises before using that as a reason to reject a prospective tenant.
Income – As a landlord, you have the right to set income restrictions for prospective tenants. Typically this will require you to set a limit similar to that of mortgage underwriters, which can include 28 to 31 percent of the prospective tenant’s income. For example, a tenant who makes $1,000 a month can be rejected if the monthly rental payment is more than 28 to 31 percent of his monthly gross pay.
Criminal Record – Some criminal records can be used as an automatic rejection, but before rejecting an applicant for a criminal record flag you need to check with your state laws. In some cases, a tenant can only be rejected for a felony and being rejected for anything more minor could be considered discriminatory under the state’s Fair Housing Act.
Once you know your reasons are legally just, provide the tenant with a written letter stating the reason for the rejection and citing the Fair Housing Act. By doing so you are letting the tenant know that they are not being discriminated against and that you are within your rights to reject their application due to specific circumstances.