A Tenant Rejection Letter is a document that informs a prospective tenant that their application was unsuccessful.
In a tenant rejection letter, the landlord lists valid and legitimate reasons for the denial, with the common one being a negative consumer report. The denied applicant can access the negative report by following instructions provided in the rejection letter. The letter is part of tenant screening and is shared by a landlord to comply with the law.
The main purpose of writing a rejection letter to a tenant is to inform them of their unsuccessful application. It is crucial that a landlord explains to a tenant in writing how they made a final decision on their application. For tenants, the letter gives them a chance to understand the decision-making process better.
Tenant Rejection Letter Sample
Types of Tenant Rejection Letter
Rejecting tenant applications is part of landlord duties, but the process must be lawful. To achieve the goal, you need to write a tenant rejection letter in the proper format and one that fits the purpose.
Some of the popular types of rejection letters are:
The LPA denial letter
The convenient way to reject a tenant is to send them a Landlord Protection Agency (LPA) Denial Letter. It’s easy to write because it has a list of reasons for rejecting the application. Landlords only need to check off the relevant reason for the rejection, such as credit history, insufficient employment, or income, among others. It is the best option for landlords to manage their time when dealing with several unsuccessful tenant applications.
Adverse action letter
Applicants with a negative credit report can be denied a rental space by a landlord. As per the Fair Credit Reporting Act Regulations, an Adverse Action Letter must be sent to a prospective tenant whose credit report has negative information. The letter elaborates on the reasons for the rejection and gives information on the organization that issued the negative credit report allowing the tenant to follow up.
The non-rejection rejection letter
Landlords handle several applications by tenants on a regular basis and approve them if they are a good fit. However, when more than one tenant is interested in rental space, the one that applied first gets priority. In such cases, the issuance of a non-rejection letter to the remaining applicant is appropriate. The contents of the letter can also include information on another available property and instructions on how to apply for it.
Common Reasons to Reject a Tenant’s Application
There are generally a few acceptable reasons to reject a tenant’s application.
Following are some of the reasons to reject a tenant’s application:
Poor store credit report
Tenants that are unable to keep up with monthly payments to stores are a huge red flag for landlords. If a prospective tenant has a large debt, judgment for an unpaid debt, or poor store credit, they are likely to have issues paying their rent. Therefore, landlords should always request store credit reports before approving a new tenant’s application.
Dangerous criminal record
Denying a tenant with an arrest record housing isn’t allowed by law. But, if the reason for their conviction is due to activities that can put tenants or the property at risk, the application can be denied. During the screening, landlords need to avoid using blanket terms such as “Any criminal convictions will be denied“. Such statements are discriminatory and go against the Fair Housing Act.
Suppose housing is denied based on publicly available information like an eviction search or criminal background report. In that case, the denial letter should contain information on where they can access a report copy. It is advisable to direct the unsuccessful applicant to the agency that provided the report plus the contact person.
Availability chances
Qualified applicants should be given priority when approvals for rental spaces are made. In most cases, the applicants that are a good fit for the property will be many, but only one can be chosen. Ensure that you communicate the reason for the denial is because the property is unavailable. Let them know their application was successful, but another applicant was chosen before them. If another vacant unit is available in a property managed by you, guide them on the steps to apply. Adhering to legal requirements and denying rental applicants as per the law is the best way landlords and property managers can protect themselves from discrimination claims.
Rental price offer not accepted
At times, the price offer proposed by the landlord and the one offered by a tenant does not match. In such instances, the application is denied because the tenant can’t pay the rent amount in full. However, the prospective tenant can haggle to reduce the cost and accept the offer in some cases.
Unable to verify or insufficient employment
Besides prospective tenants having no debt, they also need to have an income that covers their monthly rent. Landlords must verify that the tenant’s monthly income is sufficient and rent will be paid on time.
For example:
A tenant whose salary is three times more than their house rent is likely to make timely payments.
Prospective tenants with no debt are also likely to be good renters, but if their income is insufficient, the lack of debt is inconsequential.
Credit history (adverse action letter to accompany)
A tenant application may be rejected because of negative information on their credit history. Applicants with bad credit reports, excessive debt, or outstanding debt judgments usually point to financial issues that may make it hard to pay rent.
The rejection letter must be accompanied by an Adverse Action Notice which points the tenant to the reason for their unsuccessful application. The notice also includes contact information for the agency that provided the credit report for easy follow-up. By law, landlords must provide the Adverse Action Notice as per the Federal Fair Credit Reporting Act.
Pets
Property owners can deny an application because the prospective tenant wants to move in with their pets. Some of the reasons for restrictions on pets include destruction of property, excessive noise made by animals, or allergic reactions by other tenants in the building. The only pets that may be allowed are service animals that must be accompanied by proof that the applicant needs them for emotional support or to perform certain tasks.
Smoking
Landlords are allowed by law to reject applications from tenants that smoke cigarettes or any other type of tobacco product. Smoking is considered a fire and health hazard that can damage property or leave a foul odor. Rental properties that have no-smoking areas, indoors or outdoors, can go ahead and deny a prospective tenant’s application due to their smoking habits.
Tenant lied on application
Lying on an application or providing false documentation is likely to lead to rejection. When checked out by listing agents, information such as current landlord’s contacts, current income, or credit reports should be accurate. Prospective tenants that are honest from the beginning have a higher chance of getting their rental application approved.
Incomplete application
Prospective tenants are required to follow specific instructions before sending in their application for a rental space. The instructions include sending in necessary documents with their application to avoid rejection due to a missing document. Some of the documents for a “complete” offer include rental application, signed lease, credit check, proof of income, pet application, and driver’s license copy.
Insufficient references
Landlords rely on the information provided by soon-to-be tenants to verify whether the information provided is valid. If details such as your current landlord’s contacts do not match or they give a less than stellar report about you, the application can be denied. Ensure that you double-check the references shared with the landlord to avoid getting flagged.
A more qualified applicant
Property managers receive many applications from prospective tenants and need to make a decision based on their preferences. In some cases, more than one applicant may make the cut, but the most qualified one will be chosen. Most times, the qualified prospective tenant will have achieved the highest marks as per the criteria used by the landlord.
Negative rental history
Most landlords consider the rental history of a tenant before making a decision to approve their application. It is advisable for landlords to contact an applicant’s prior and current landlords for information on skipped payments. Tenants with a history of late payments, destruction of property, previous evictions, insufficient references, and violation of rental agreements are likely to be rejected. Some landlords may request for larger deposits or a co-signee before renting to tenants with bad rental history.
Debt-to-income ratio too high
The debt-to-income ratio is an important metric for landlords deciding which tenants are a good fit. If a prospective tenant’s ratio is above 50%, they have excessive debt, which may lead to rejection by property owners. Simply put, you are losing more than half of your income to rent, which may affect your ability to pay monthly rent in the future.
Note: If a landlord does not give reasons for rejecting a tenant’s application letter, the tenant can request a copy From TransUnion, Equifax, or Experian in writing. The request is usually made within 60 days after the application has been made.
How to Write the Tenant Rejection Letter
There are a few steps which if followed during the process of writing a tenant rejection letter can result in a properly drafted letter.
Follow the following steps to write a tenant rejection letter properly:
Date of documentation
Tenant rejection letters are formal documents that must have the relevant dates and salutations. Ensure that the letter has the current dates and name of the applicant. Double-check this part of the document before sending it to an interested tenant.
Property details
Landlords that have multiple properties need to indicate the correct details of the property when rejecting a client. You need to include the property details on the letter so that the tenant knows which property has rejected their application. The tenant has often sent out several applications, and a feedback letter with the right property details helps them eliminate it from their list.
Show gratitude
Although a tenant is not successful in getting a rental space in your property, they need to be let down gently. It is advisable to start by thanking them for choosing your rental property, among others, before stating your reasons for rejection. Ensure that the tone used in the letter is respectful and courteous.
Site the reasons of rejection
Tenants whose application has been rejected often want to know how the decision came about. The best way to help them understand is by listing the reasons for the rejection earlier on in the letter. The highlighted reasons should be valid and align with the Fair Housing Laws to avoid legal challenges in the future.
Attach supporting documents
Besides the tenant rejection letter, it is important to attach relevant documents to accompany it. The documents are key in assisting prospective tenants in understanding the reasons for their rejection. Some of the documents that you can attach include investigation documents from third parties that were used in screening and planning for a background check.
Observe brevity and conciseness
Adopt the KISS (keep it simple and straightforward) principle when writing a rejection letter to a prospective tenant. The letter should be written using simple and short sentences that highlight important aspects for the. If possible, let the body of the letter comprise three short paragraphs made up of three sentences each. Letters that are brief and go directly to the point are the best.
Provide the applicant with alternative
The reasons for rejecting an applicant are varied, with some having no recourse for the tenant. However, if the reason is due to lack of availability or low rental price, a landlord can suggest other properties that prospective tenants can be accepted.
Affix your signature
For a tenant rejection letter to be valid, it needs to be signed and a name affixed on it. Letters with signatures are considered official and are likely to be honored by the prospective tenant. If you don’t want to put your signature on the letter, it is okay to omit it, but your rejection will not be considered official by the recipient.
Dos and Don’ts of the Writing Procedure
There are certain dos and don’ts of a tenant rejection letter that one needs to follow to write a good tenant rejection letter.
These are as follows:
Dos
Do follow a business letter standard format
Formal letters follow a standard format, and tenant rejection letters should not be any different. When writing the letter, include essential sections such as addresses, current dates, relevant salutations, the content of the letter, closing remarks, and a signature area. If typing out the letter, use an acceptable font for official letters.
Do stick to your tenant screening criteria and standards
Guidelines for the tenant section should be applied across the board to avoid accusations of favoritism. It is advisable, to be honest about your criteria and choose your tenants according to them to avoid challenges in the future.
Do send the rejection letter
If you have decided to reject a prospective client, professionally send them feedback as soon as possible. Most tenants looking to rent appreciate landlords that give feedback as it allows them to cross them off the list and focus on other potential leads.
Do heed to the federal fair housing act
The Federal Fair Housing Act has both pros and cons for landlords and needs to be enforced as per the law. The act protects landlords when they enforce the right policies and gives them a chance to substantiate their case. However, inconsistencies in the law’s application may result in a lawsuit or loss in a court case by a landlord regardless of the strength of their case. Therefore, it is advisable for landlords to fully comply to avoid lawsuits from applicants who feel their application was rejected unfairly.
Don’ts
These are:
Don’t give any false hopes
When rejecting a prospective tenant, do your best, to be honest, and avoid making promises you can’t keep. If you plan to keep their application on file, inform them of the same but don’t lie to keep them happy and throw out their application soon after.
Don’t have invalid reasons for rejection
The reasons for rejecting a tenant are many, but they need to be valid for them to hold water. Some invalid reasons for rejection include race, sexual orientation, national origin, arbitrary discrimination, religion, and color. Rejection of applicants on the grounds of a protected class is a violation of the Fair Housing Laws and can result in charges filed against a landlord if found guilty of going against the Fair Housing Act.
Don’t mention the difficulty of the decision-making process
The ups and downs involved in the process of choosing a tenant are not important to a prospective client. Instead, focus on providing them with reasons for their rejection and wish them well in their search.
Don’t make poorly written content
Check your grammar and sentence construction on the rejection letter before sending it to a prospective tenant. Always aim to be professional in your letters so that prospective tenants can understand the content and feel valued as well.
Final Words
Rejecting prospective tenants is not easy, but the earlier you send the letter with all the relevant information, the better so that the tenant can request a written copy within 60 days from Transunion, Equifax, or Experian. Moreover, the landlords are encouraged to assist the rejected tenants in suggesting them suitable real estate openings.