Whether or not to accept or reject a prospective tenant is fairly straightforward, especially if your process provides you with the right data about the prospect to make a good decision that is aligned with the best interest of the property.
Having said that, there are some helpful guidelines that are worthy of consideration.
First, the acceptance process.
This should be cut and dry, right? Someone qualifies for the property, you accept their application and they move in, done deal. But what if you have multiple applications and more than one person or family qualify? Good problem to have, but make sure it does not become a true problem. Do you legally have to accept the first qualified tenant that fits your criteria? Not necessarily, but you should be mindful of discrimination practices and obviously avoid them. As a landlord, or a representative of the landlord, you have the right to choose the most qualified applicant. However, consistency is key here as it makes the most sense to accept the first applicant who fits the qualification criteria for the property. This removes even the slightest appearance of discrimination.
What if you have to reject a tenant?
Let’s face it, there is no shortage of reasons why someone may not fit the qualification criteria to live in one of your assets.
Here are a few of the obvious reasons:
- Fail to meet credit criteria
- No references or bad references from previous landlords
- Income cannot be verified
- They are currently not employed and have no other source of income
- Eviction history
- Property does not allow pets and they have a non-service animal
Some other reasons to consider:
- Criminal history
- High debt to income ratio
- Smoking status (smokers are not a protected class)
What is important here is that the reason a tenant is rejected is as a result of their failure to meet the qualification requirements or because another qualified candidate has been accepted.
There are reasons why you can deny an applicant, but how you inform them should also receive consideration when it comes to your process.
The LPA Denial Letter is an option as it has a pre-formatted list which allows you to cite the reason for the denial.
Another option is to provide an Adverse Action Letter if the reason is related to an issue found on the prospects credit report.
You may also provide a Non-Rejection Letter which does not necessarily force to you to provide a reason for denial, nor is it a “rejection”. It simply affords you the opportunity to notify the prospect in writing that you have found a qualified tenant for the property.