Renting property to a tenant will be risky for you as a landlord. There are a lot of situations where the tenants can cause a lot of problems by suing you for any damages, ruining your property, and getting involved in any criminal activities in your property.
Therefore, you may want to do proper screening and choosing the right tenants for your property. By selecting the right tenant for your property, you can protect your investment securely.
You may also want to deny some rental applications for any reason. Denying a rental application will be legal, as long as you have a valid reason to do so.
Some legal reasons to make a rejection letter
When you want to deny any rental applications, you may want to take a look at some possible legal reasons behind your decision. We are going to share some valid reasons to deny a rental application. As a landlord, you may want to consider using some of these reasons.
Insufficient income-to-rent ratio
You are allowed to reject a rental application for people who cannot earn enough income to afford to rent your property. Generally speaking, you can require the tenants to make at least 3 times the monthly rent for being able to live in your rental property.
For example, your rental cost is $36,000 per year, then your tenants need to prove that they can earn about $120,000 per year or more for renting your property.
You can ask for any documents as evidence for the applicant’s income, for example, letter of employment, deposit statement, etc. If they don’t have enough income-to-rent ratio, you can deny their applications immediately.
Bad credit score
You are allowed to set a minimum credit score for the applicants to start renting your property. It can be used as a reliable indicator that can determine the ability of your tenants to pay your monthly rental fee.
Credit score can be used as an indicator of their financial history. The law permits all landlords to use this credit score for determining if they are going to accept or reject any tenants’ applications.
Eviction and unpaid balance from the previous rental properties
As a landlord, you are allowed to deny applications from people with unpaid balances at the previous rental properties. When the applicants are pursued by some collection agencies looking for collecting their money for paying their previous balances. It is completely legal for you to deny any applicants with a long history of eviction.
➡LEARN MORE: How to Serve a Cease-and-Desist Letter
Invalid rejection reasons
You need to know that you are allowed to deny applications based on legal reasons. However, there are some invalid rejection reasons that you cannot use. There are some aspects that you will never be able to use for making your decision.
The Fair Housing Laws will forbid you from using any discrimination-based details for denying any applications, for example, race, age, color, handicap, religion, national origin, familial status, gender identity, etc.
Write the rejection letter
Once you decide to reject the application, you can start writing the rejection letter. There are some important details that you need to include; for example, details of the applicants, reasons why you reject the application, etc.
Things like, for example, insufficient income, incomplete information, insufficient employment history, adverse rental history, or poor credit score can be useful information for you to use in the rejection letter. Here is the example of the letter for declining the tenant’s application.
Mail the rejection letter
Once you complete it, you can mail the letter to the tenants. Make sure that you include a copy of the consumer’s rights under the Fair Credit Reporting Act, especially when you use credit score as your screening process.
You must provide this information to the applicants for rejecting their applications. Then, you can save your delivery proof with you, so you can use it in the future.