Disabled rental applicant sues landlord for discrimination

[Thomas Balielan]

Hi, fellow rental owners,

Recently got a disabled rental applicant who applied for my house on Zillow. I specifically mentioned on my listing no pets. They also wrote no pets on their application. They are a marine veteran couple who moved from the east coast to California. They were very eager to rent my house. Even though we never meet each other. They only send a relative to my open house to a video showing my house. They have 600+ credit scores and a decent income. They claimed that they can work remotely and live close to their family. So their company on file is in Maryland. Once I send them the lease contract to sign, the guy finally told me he actually has a service dog because he is disabled at the last moment before he sign the lease, and asked if I can change my contract since I wrote no pets on my contract. 

I have a bad feeling. It is very obvious that they used a trick to set me up. Because both my listing and their application indicate no pets. I declined their application and canceled the lease signing. He got mad right away. He said I discriminate against a disabled veteran. His service dog is not a pet and he doesn't have to mention that. Now he is threatening me with a fair housing lawsuit.

Does anyone have a similar experience? The fair housing department can't just take his word for this. They need to have evidence to prove that. I didn't even ask about his disability and gave him the lease to sign after he shows me his disability income from the military. I just don't like that he hid the dog's information till the last moment. He planned this and clearly knows what he is doing.

Now I rented my rental to another family with no animals and a better credit score.

What should I prepare if the fair housing department reaches out to me later?

Thank you all.