How to Decline a Rental Application: Valid Reasons & Denial Letter Tips

Declining a rental application can be one of the more challenging aspects of property management, but it’s necessary to ensure a good fit for both landlord and tenant. Whether due to financial concerns, past rental history, or other valid reasons, rejecting an application must be handled with care, professionalism, and legal awareness.

In this guide, we’ll discuss valid reasons to decline a rental application, tips for crafting a respectful and clear denial letter, and how to maintain transparency and fairness throughout the process. Handling rejections thoughtfully not only protects your property but also fosters a positive reputation as a landlord. Let’s get started!

Valid Reasons to Deny a Rental Application: What’s Okay & What Isn’t

If you’re working on finding tenants for your rental, you’ll inevitably run into applications you’d like to decline. But are you legally allowed to deny rental applications for your concerns? Here are 7 legit reasons that allow you to deny a rental application:

1. Poor credit history

A potential tenant’s low credit score or history of repeated unpaid debts or bankruptcies can be a sign of financial irresponsibility. It’s essential to communicate with the renter to understand if their poor credit history results from uncontrollable circumstances or their own actions. Either way, keep an open mind during the application process but focus on finding someone you trust to pay the rent on time.

2. Insufficient income

This is the most critical reason for denial. If you discover the applicant’s income isn’t sufficient to cover the rent price, it’s not a good idea to entrust your property into their hands. The general rule of thumb is requiring tenants to pay at least three times the rent, ensuring they have plenty of money to cover the monthly fees and unexpected expenses.

3. Negative references

It’s crucial to contact past landlords and ask for employer or personal references from potential tenants. This gives you critical information about the applicant’s rental history, behavior, and trustworthiness. If you hear negative feedback from references, ask clarifying questions and consider whether their comments are deal-breakers for you.

4. Prior evictions

If you discover that the potential tenant has been evicted from a past property for legal reasons, they may not be the best fit, especially if they’ve been kicked out of multiple places. Consider why they’ve been evicted; if it was due to unpaid rent or causing property damage, you could be allowed to decline their rental application.

5. Criminal history

While it’s illegal to have a policy against renting to individuals with a criminal record due to Fair Housing Guidelines, convictions related to violence, property damage, or other severe offenses need to be carefully considered on an individualized basis. Run a background check during the screening process for every applicant, ensuring you feel safe and comfortable to rent out your property to them.

6. Smoking or pet ownership

If the property has a no-pet or smoking policy and the applicant doesn’t meet these requirements, this could be a valid reason for denial. However, if the pet is an emotional support or service animal, denying the potential tenant is usually not legal. Study local and federal housing laws when in these situations.

7. Too many occupants

Having too many renters in your property, especially in a multi-family rental, can be a significant concern. This is especially true if it exceeds local rules or could damage your property’s shared facilities.

What Are Reasons You Can’t Decline a Rental Application?

Now that we’ve covered legitimate reasons you can deny a rental application let’s explore why you can’t say no to a potential renter. According to the Fair Housing Act, you cannot discriminate based on race, color, religion, sex, disability, familial status (i.e., having kids under 18 in a home), or national origin. When reviewing rental applications, you can’t deny an individual based on any of these factors.

State and local legislations may have additional laws, so keeping up-to-date with regional regulations is crucial when screening tenants.

How to Write a Rental Application Denial Letter

If you have a legitimate reason (that’s legal) for denying a rental application, the Federal Fair Credit Reporting Act (FCRA) states that the applicant must know if the denial is based on information found in their consumer report. In that case, if you’ve denied an application based on their credit report, credit score, background check, or eviction report, you are required to notify the applicant promptly. Even if you didn’t deny a rental application based on these elements, sending a denial letter is professional, and it keeps track of potential tenants for your property.

When writing a rental application denial letter, include the following factors:

• Your property’s address
• Formal greeting
• The name, address, and number of the reporting agency that provided the consumer report
• A professional, concise statement that the agency who provided the report didn’t make the decision to deny the applicant and can’t give reasons for why the decision was made
• Specific reasons for the denial (i.e., rental history, credit score, background check)
• A note that the applicant is allowed to dispute the accuracy of any reports
• A final disclosure that the applicant can receive a free copy of the report if they request it within 60 days
• Closing with contact information

Here’s a concise example of a rental application denial letter for a poor credit history:

Date:

Name:

Property Address:

Dear [Applicant’s Name],

We’d like to thank you for applying for the property listed above. However, we regret to inform you that your rental application has been denied based on these reasons: [specific reasons for denial like a low credit score].

The FCRA requires us to inform you where we received your credit report when considering your rental application. Your credit report was provided through Equifax Credit Information Service, P.O. Box 740241, Atlanta, GA 30374—2041. 1-800-685-1111.

You can receive a free copy of your credit report from the agency that pulled your report, but it must be obtained within 60 days of receiving this letter. If you think there’s been an error on your credit report, you can dispute the inaccuracy provided by the agency within 60 days of receiving this letter. 

If you have further questions, feel free to contact me. Thank you for your interest in the property, and I wish you the best in finding your new home.

Sincerely,

[Your Signature]

Denying a rental application takes work and effort. If you need help, reach out to a professional property management company to handle tenant applications for you.

3 FAQs About Denying Potential Renters

Here are a few answers to questions you may have about declining a rental application:

1. Can a landlord reject an application for any reason?

No, a landlord cannot reject an applicant for any reason. According to the Fair Housing Act, a landlord cannot deny a rental application due to characteristics like race, religion, national origin, sex, familial status, or disability. It’s important to study local, state, and federal laws regarding fair housing and ensure you’re following regulations.

2. Can you deny a tenant for criminal history in California?

Yes, a landlord can deny a tenant due to their criminal history in California, but it’s not always black and white. It’s often dependent on the type of offense. For example, if someone has a past of extensive property damage, it may be a legitimate reason not to let them in your property. But if they’re a registered sex offender, the waters can get a bit murky.

Other factors to consider are the nature and severity of the crime, how long it’s been since it happened, whether the offense resulted from domestic violence or mental disability, and evidence of rehabilitation efforts. When dealing with an applicant with a criminal history, consult with a fair housing attorney to ensure you’re complying with California law.

3. Does a landlord have to give a reason for not renting to someone?

Generally, the landlord doesn’t have to give a reason for denying a rental application—unless it’s due to the applicant’s consumer reports. As stated above, the FCRA requires landlords to notify applicants of a rental denial due to their report, such as a poor credit history.

Let TrueDoor Help You Find Reliable Tenants—And Deny the Ones That Aren’t a Good Fit

At TrueDoor Property Management, we value finding high-quality tenants for real estate investors. Whether it’s your first time renting out your property or you have an entire portfolio, our team of experts is here to ensure your investment is filled with the best renters. We conduct extensive tenant screening, ensuring applicants have positive references, a solid credit history, and can adequately care for your property. When we place tenants in your home or apartment, we prioritize top-tier, trustworthy individuals who will stay there for an extended period. And if we find tenants that aren’t a good fit for your place, we’ll handle writing a rental application denial letter (if needed) professionally and promptly.

Once we’ve found tenants for your property, we’ll handle rent payments, maintenance requests, and more, ensuring your space is taken care of 100% of the time. Working with TrueDoor makes rental ownership stress-free and seamless. With offices in the Inland Empire and Orange County, TrueDoor Property Management is Southern California’s 5-star management company with offices in the Inland Empire and Orange County. Contact us for an easy management experience starting today!