Some states require landlords to explain their selection criteria Depending on the state, landlords may be required by law to provide applicants with certain information about how they select their tenants. In both Texas and Washington, for instance, landlords have to give applicants a written explanation of their selection criteria—and the reasons that an application might be denied. Choose your state from the dropdown menu at the top of the page for more information.
1. Ability to pay the rent
If you set clear and objective financial requirements for a tenant and the applicant doesn't meet these requirements then you're in the clear. This applies to income, employment savings and credit score. Keep in. mind, however, that if you use any financial data that you get from a credit report you're required to send an adverse action notice to the applicant, telling them in writing why you rejected their application.
FICO score can be one of these requirements, but the Fair Credit Reporting Act requires you to tell the applicant in writing that you rejected their application because of their credit score.
2. Personal preferences that don't violate the fair housing act
The Fair Housing Act shields people from housing discrimination based on race or color, religion, national origin, familial status, disability, gender and potentially more depending on your state. As long as your personal preferences aren't in clear violation of fair housing then you're free to reject an applicant for whatever you want. For example:
- Any kind of pet as long as it's not a service animal
- Smoking habits or anything else that might affect others' health
- Not enough references or rental history
- They move too often
It is relatively easy for your preferred policy to be perceived as discriminatory in some way, even if you don't realize it, which is why it's important to be extremely objective about your reasons for rejecting rental applicants.
3. Conviction of a crime that would threaten your property
Although people with criminal or housing court records are not technically a protected class under the Fair Housing Act, this is a legal grey area and you may put yourself at risk of lawsuit for rejecting applicants based on criminal history. For example, in 2014 the owners and manager of a 900-unit rental complex in New York City were sued in federal court for their policy of never renting to people with criminal records. The plaintiff argued that this disproportionately affected black and Latino men, and was therefore illegal under the FHA. The case was settled in 2019, with the landlords agreeing to pay over $1 million.
To protect yourself, set a clear and objective policy related to criminal history and apply it equally to every tenant. A blanket policy against all convictions of any kind is likely to be perceived as discriminatory.
4. Too many occupants as long as none are children
If a group of college kids applies to live together in your one bedroom apartment unit then you can reject them on this basis. The only situation where number of prospective occupants is not a valid reason to reject a tenant is if those occupants are children of the applicant. In this situation, rejecting based on this factor would be classified as a rejection based on familial status. This is illegal according to the Fair Housing Act.
Whatever your reasons for denying an applicant, you should put them in writing the day that you become a landlord and share your written policy with everyone who applies to your rental, along with the reason that they were in violation of it. We recommend that you have your policy reviewed by an attorney who is familiar with all of the fair housing body of law, including a recent rule that says you're violating fair housing if your policy has a discriminatory effect even if it isn't motivated by a discriminatory intent.
The information provided on this website does not, and is not intended to, constitute legal advice.
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