Can a landlord refuse to rent to someone? Absolutely. However, there are limitations on why. Therefore, it’s important to understand a valid rental application denial reasons versus those that can get you into legal trouble. You got into property investment for the returns, not for the legal problems. To help you protect your investment, here’s a look at the reasons why you can reject a tenant and the reasons why not, as well as other tips for getting the best tenants into your properties.
Reasons to Legally Reject a Tenant
While there are rules and regulations in place that guide what landlords can and cannot do, the list of reasons to deny a rental application is longer than the list of reasons why a landlord cannot reject a tenant. Here’s a look at some of the most common rental application denial reasons:
- Limited Income: If a prospective tenant doesn’t have sufficient funds to safely make his or her monthly rent, rejection should be a no-brainer. Most landlords have in place a formula that calculates debt-to-income ratio, and most have a threshold in place at which they will reject a prospective tenant
- Poor Credit: If your prospective tenant has a history of late payments, debts falling into collections, evictions and more, it’s more than fair for you to reject them. In fact, your prospective tenant should expect it.
- Bad References: You can always ask prospective tenants for references as they seek to lease from you. When you call them, you should absolutely take into account what those references have to say. If you get any indication from a reference that the prospect is in any way not a good fit for your property, you can safely reject them.
- Smoking: There’s no law that says you must accept a smoker on your property. If you’re dealing with a prospective tenant who smokes, you’re well within your rights to reject the application.
- Pets: The same goes for pets as for smoking — you don’t have to allow a tenant who wants to bring a pet with them. However, it is important to understand the differences between service animals and pets.
- You Found a Better Fit: When landlords have multiple applications for the same property, they have the liberty to choose the best fit – whether that is due to willingness to pay a higher rent, a better credit score, or more references. You may reject an application if someone else applies that you think will be a better tenant.
When You Cannot Reject a Tenant
Most of the reasons why a landlord cannot reject a tenant are related to illegal discrimination. For example, it’s illegal to reject a tenant on the basis of gender, age, race, religion and nationality. Another area of importance is physical or mental disability. You cannot discriminate against a prospective tenant on the basis of physical or mental disability, which includes a history of drug addition or alcoholism. You cannot reject a tenant based on whether or not they have children, and many states also protect marital status, gender identity and sexual orientation.
An Effective Screening Process
The best way to ensure you steer clear of any legal issues is to have a thorough screening process in place. Know how you will evaluate applications and the decision criteria you will apply to each one. Using a standard process will help you make the best possible decisions, secure top tenants and ensure you stay out of any legal trouble related to your acceptance and rejection decisions.
Get Comfortable Saying No
It’s important to find a comfort level with rejecting a prospective tenant. No one likes to say no, and no one wants to crush a tenant’s dreams. However, you have an investment to protect, and you must do whatever you can to secure that investment. The Landlord Protection Agency offers a number of resources, including the standard LPA denial letter, which you can use to deliver the bad news to prospective residents.
Choose Harrisburg Property Management Group
When you’re wondering how to screen a tenant application, turn to the experts at Harrisburg Property Management Group. We help property investors and landlords throughout central Pennsylvania make the best possible tenant decisions. We offer comprehensive services, which means we can help throughout the process — from marketing to screening to leasing to maintenance and more. When you have a property and you want the returns without the headaches, secure a trusted management partner like Harrisburg Property Management Group.
Contact us today about tenant screening and comprehensive property management services.