By John Nuzzolese — Many of us have had difficulty in rejecting interested rental applicants for our properties. Without a system to save you from legal entanglements, wasted time and aggravation, hurt feelings and embarrassment, you are going to be one unhappy and unsuccessful camper.
Having a legal and effective approval and denial system for your rental application process is essential if you are going to last in the landlord business.
Because every situation and applicant is different, it is best to have more than one method of rejecting an unwanted applicant. Unwanted applicants can vary in levels of unacceptability.
- Unacceptable (credit or other reasons)
- Unqualified, but can become qualified (co-signer or large deposit needed)
- Qualified, but you have someone else more qualified
3 Legal Ways to Reject a Tenant Applicant are…
1. The LPA Denial Letter
Ever have a hard time turning down applicants because they think it’s their right to have your property because they need or want it?
As long as your reasons are legal for not approving their application, (By not breaking any laws regarding discrimination, etc.) you should not feel obligated to accept a tenant you determine is not qualified.
For example, your decision to reject an applicant may be based on income, credit, stable employment, etc., while it may not be based on a person’s race, sex, religion, etc.
You can protect yourself with a denial letter to inform the applicant that their application was not approved. Check off the appropriate reason(s).
The LPA Denial Letter provides a checklist of 12 reasons to select for the rejection of the applicant. Some of these include:
- Rental price offer not accepted
- Unable to verify or insufficient employment
- Credit history (Adverse Action Letter to accompany)
- Tenant Lied on application
- Incomplete application
No applicant is happy to be rejected, but the LPA Denial Letter when needed, helps you manage your time more efficiently, rather than spending valuable time on complaining rejected applicants. It also gives the applicant a courteous, detailed explanation of why he or she was declined.
If you are rejecting mainly because you were not satisfied with what you found on the credit report… please read on.
If you reject an applicant because of negative information on his credit report, an Adverse Action Letter is required to comply with FCRA (Fair Credit Reporting Act) regulations.
The Adverse Action Letter includes the contact information for the consumer credit reporting agencies that played a role in the decision of rejecting the applicant based on the contents of his or her credit report. This contact information allows the rejected party to obtain a free copy of his or her credit report from the credit bureau(s) used to make the negative decision. This form is included in the download of the LPA Denial Letter.
One of the methods of not accepting a tenant I also consider is simply not rejecting them. From the outset, I feel it is important to make the applicant understand that there are other applicants also being considered and that we (management) will make our decision based on the best qualified application.
Often, it comes down to a decision of accepting the best of two or more rental applicants, all of whom are being considered until the money is paid and the lease is signed. If the one in “first place” doesn’t work out, we may then go to the “second place” for a lease signing, and so on. Isn’t it much easier for an applicant to accept the idea that they are “still being considered”, even if it is not for this particular rental for which we’ve already found someone else “more qualified”?
In cases that don’t look likely for an acceptance, I may tell the applicant that the competition for this rental is a little rough. “There seem to be a few extremely qualified applicants also being considered along with you. We’ll let you know if anything comes through for you, but it doesn’t look good at the moment. Just to be safe, keep looking.”
About the author:
As a Real Estate broker / investor in New York, John Nuzzolese has been involved with rentals and investment property since 1979. Besides owning and operating two real estate businesses, he is president and founder of The Landlord Protection Agency, Inc. , an organization specializing in helping landlords and property managers avoid the hurdles and pitfalls and expensive blunders common when dealing with tenants.
More information on The Landlord Protection Agency is available at www.theLPA.com
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