Rejecting a rental application requires property owners and managers to balance professional courtesy with mitigating legal risks. A polite, professional, and compliant rejection process is necessary to establish a defensible paper trail. Navigating this communication successfully protects the business from claims of unfair housing practices and ensures all applicants are treated consistently.
Understanding the Legal Requirements for Application Rejection
The Federal Fair Housing Act (FHA) prohibits discrimination based on race, color, religion, sex, national origin, familial status, or disability. Landlords must ensure rejection criteria are never based on these protected characteristics, which state and local laws may expand to include factors like source of income or sexual orientation. Inconsistent application of screening policies can create the appearance of unlawful discrimination.
When a denial is based, in whole or in part, on information gathered from a third-party screening service, the Fair Credit Reporting Act (FCRA) requirements are activated. This federal law mandates that the landlord provide the applicant with an Adverse Action Notice. Adverse actions include outright denial, requiring a higher deposit, or demanding a co-signer.
The Adverse Action Notice must include the name, address, and phone number of the consumer reporting agency that supplied the report. The notice must inform the applicant that the agency did not make the decision and cannot explain the reason for the denial. It must also explain the applicant’s right to obtain a free copy of the report within 60 days and their right to dispute the accuracy of any information. This notice is mandatory for any rejection tied to credit, criminal, or eviction history reports.
Documenting Objective and Consistent Rejection Criteria
Before reviewing any application, a landlord must establish predetermined, written, and objective standards applied to every prospective tenant. These established criteria act as the only permissible justification for rejection and are the strongest defense against claims of discriminatory practice. Consistency in application is paramount; no exceptions should be made for one applicant that would not be offered to all others who fail to meet the same standard.
Acceptable objective criteria often include a minimum income-to-rent ratio, such as requiring gross monthly income to be at least three times the monthly rent. Other quantifiable standards involve setting a minimum credit score threshold or clear policies regarding prior evictions or outstanding debt. The written criteria should specify exactly what constitutes an unacceptable history, such as a conviction for a crime that poses a threat to property or other residents.
The rejection must be based solely on the failure to meet one or more of these documented, non-discriminatory criteria. For instance, if the applicant’s credit score falls below the pre-published minimum, that is the objective reason for rejection, not a subjective feeling about the applicant’s references. This practice provides a clear, verifiable reason for the decision, proving the screening process was fair.
Essential Components of a Polite Rejection Notice
The rejection notice should deliver the unfavorable news with professionalism, maintaining a courteous and respectful tone. The message should begin with a polite opening that thanks the applicant for their interest and the time invested in submitting materials. The letter must then clearly state the decision to deny the application in the opening paragraph.
The communication should avoid emotional language and focus instead on the factual outcome of the review process. Landlords should avoid providing specific, personal details about the applicant’s file unless the rejection is based on a consumer report, which triggers FCRA requirements. When the FCRA applies, the notice must clearly list the specific reason for the adverse action, such as a low credit score or a documented eviction.
If the FCRA is not a factor—for example, if the application was incomplete or the property was rented to another candidate—the notice should refer the applicant to the pre-published, objective criteria. This approach allows the applicant to understand the reason without the landlord providing an individualized explanation that could be misinterpreted or challenged. The notice should conclude by wishing the applicant well in their housing search.
Best Practices for Delivery and Timing
Efficiency in communication is a professional courtesy that benefits the landlord by closing the application file quickly. Once a final decision is made, the rejection must be communicated without unnecessary delay, allowing the applicant to move forward with their housing search. Prompt notification demonstrates respect for the applicant’s time and reduces the period during which they might feel unfairly delayed.
The most effective and legally sound method of communication is written correspondence, typically via email or a physical letter. Sending the rejection in writing is mandatory for proper record-keeping and provides tangible proof that the notification occurred. This written documentation ensures the landlord can demonstrate compliance with legal notification requirements should the decision ever be questioned.
For Adverse Action Notices, ensure the delivery method is documented, such as using certified mail, to prove the applicant received the legally required information. Regardless of the medium, the written notice serves as the official record of the decision and must contain all information necessary for courtesy and legal compliance.
Managing Applicant Follow-Up and Record Keeping
After the rejection notice is sent, disappointed applicants may follow up with calls or attempts to appeal the decision. In these situations, the landlord should maintain a strictly professional demeanor, keeping any conversation brief and polite. The best practice is to refer the applicant back to the written rejection notice and the pre-published screening criteria, which serves as the objective basis for the decision.
A landlord must avoid engaging in a detailed debate or offering subjective justifications, as this can undermine the consistency of the written criteria and create risk. If the applicant believes there is an error in their consumer report that led to the denial, they should be directed to the consumer reporting agency, as outlined in the Adverse Action Notice. The landlord’s role is to stand by the application of the objective standard.
Thorough record keeping of the entire application process is a necessary risk management practice. Landlords should retain the rejected application, all screening reports, correspondence, and a copy of the final rejection notice for a legally defensible period. Since the statute of limitations for filing a federal fair housing claim can be up to two years, keeping these records for a minimum of two years from the rejection date is a widely accepted best practice. Retaining the documented screening criteria in effect at the time of the denial is also important to prove the application of standards was consistent and non-discriminatory.