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Why would a rental application be denied?

Most of the valid reasons for a denial will arise when you check references, run a background check, and look into an applicant’s credit report. However, you can save yourself some time by rejecting applications that are incomplete (unless it’s an honest mistake and they provide the information when asked) or which don’t authorize a credit report or background check.

You can also deny an application that provides false information, which you may not realize until you start digging around. In order to ensure that your tenant screening processes are not discriminatory, it is best to work with a lawyer

Depending on your rental market, you might receive a massive stack of applications for each vacancy on your property and will want to whittle it down to a manageable amount. Your ad should indicate the basics, such as occupancy and whether pets are allowed, in order to limit the number of unqualified candidates applying in the first place.

You can also ask questions in the application that address issues you’ve already mentioned in the ad. These types of “softball” questions can help you quickly reduce your pile of applications before you spend time calling references or conducting background checks:

  • How many people, in total, are planning to live in this rental unit?
  • Do you have any pets?
  • Are you a smoker?
  • Do you run a business out of your home?

Generally speaking, you may deny applicants who own pets (unless they have a service animal), who smoke or vape, who operate certain types of home businesses, or whose occupancy would exceed legal limits. Just as you may prohibit the use of tobacco products on your property, you may also restrict the use of cannabis and deny applicants who want to consume it on the property. This includes medical cannabis, which is not recognized by federal law. 

Other legal reasons for denying a rental application may be discovered during the background check, by accessing their credit report, or by calling references. These reasons may include:

  • Unsatisfactory references – You typically may deny their application if past landlords don’t give you confidence, their employer suggests that they’re one slip-up away from being fired, or personal references give you reason for pause. 
  • Spotty rental history – Ask for their approval to run a rental history report, which will indicate any evictions and authorize you to ask their past landlords questions about their history, including late payments.
  • Frequent moves – There are many valid reasons why someone would move frequently, but it also could indicate that a prospective tenant isn’t stable enough to fulfill the terms of the lease.
  • Poor credit report – It’s generally not reasonable to insist on a spotless credit report, but past bankruptcies or an extremely high debt load could be red flags.
  • Insufficient income – You should ask about income on the application, and also follow-up with their employer. If you’re unable to verify their income or it’s simply insufficient for the rental amount, then you usually may deny their application.

If you need help determining how to screen tenants without breaking the law, ask a lawyer.

Can you deny housing because of a felony, past arrest, or other criminal record?

It depends. The federal Fair Housing Act (FHA), which governs all states, prohibits discrimination against rental applicants on the basis of arrests or charges that don’t result in a conviction. Depending on your state, there also may be local laws that apply. For example, in some cities, landlords aren’t allowed to perform a criminal background check. To understand what specific guidelines apply to your tenant screening practices, talk to a lawyer.   

What are protected classes and how do they apply for tenants?

A protected class is a group of people that qualify for legal protection from discrimination or harassment based on a common trait. Protected classes may be defined at the federal or state level. 

The FHA and other federal regulations prohibit discrimination by landlords or property managers on the basis of these characteristics:

  • Race and color
  • Religion
  • National origin
  • Gender 
  • Familial or marital status
  • Age 
  • Disability (actual or perceived)
  • Participation in a government subsidy program (such as Section 8)   
  • Sexual orientation or gender identity (applicable to property owners that receive HUD funding or have a HUD-insured loan, although LGBTQ individuals may be protected under state laws, as well)

Note that there may be additional protections at the local level. If you are unsure about protected classes, or if a prospective tenant claims that you’ve discriminated against them on the basis of any of the above, it is important that you contact a lawyer.

Does this mean I’m free to discriminate against those who are not part of a protected class? 

Not necessarily. You can’t deny applications simply based on your own whims. You must have a compelling reason for denying a rental applicant, such as a lack of financial resources or negative references. As a landlord, you may decide to exclude prospective tenants who smoke because you want to decrease the risk of property damage—but you may not discriminate arbitrarily, for example, against all people who have long hair or those who are shorter than six feet tall. 

Be picky about your tenants, but do so legally

It’s your property and your investment, so you don’t have to rent it out automatically to the first person who fills out an application. You’ll want to make sure they’re the right fit and that they will pay rent on time, but you need to do it legally. If you have additional questions about tenant screening or other landlord-tenant concerns, ask a lawyer.

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.


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