Do you deny applicants.....?

Question

I just responded to a post with regards to "income source" as being excluded as a reason for a rental denial, but it is rooted in a fear of "perceived" illegal discrimination.

I noticed that immediately the advice is to (essentially) avoid denying, and take other applications so you can hopefully approve someone else who is more qualified. I've heard this before in the past, and it always revolves around this "perceived" fair housing violation.

I personally think that processing applications that way is more likely to put you in hot water for a fair housing violation than anything else, here's why:

The way I look at it is you have shown that you believe them to be qualified since you never denied them, but chose to willingly ignore the qualified applicant in favor of someone who came along later. They might not have been qualified in reality, and yet you willingly chose not to deny them? If a tenant realized this and took "me" to court, I'd see very little strength in "my" argument before a judge that they weren't qualified but I never denied them. I'd rather justify my legitimate reason for denial, than defend against the "perceived" discriminatory practice I engaged in.

Feel free to tell me I'm "Coo Coo for Cocoa puffs" or point out what I'm missing, but what does everybody think of the above reasoning?

Account Closed · Answer

You both make some good points, but it's not always so black and white. If someone has a really bad application, then I definitely will tell them they are denied.

However, if their app is not great, and they still have a slight possibility of being accepted (but probably won't be), I don't deny them. I tell them I am still taking applications, which is exactly what I do. I hang onto them, just in case I decide later to rent to them.

If some time goes by while I'm waiting for better applicants, usually people just find another place and I don't have to deny them. Many never even call me back.

If I truly haven't made a decision for sure one way or the other on someone, I don't see the problem with telling them that I'm still taking applications, because that's what I'm doing.

I don't think this is misleading them or hiding from them. It is no different than interviewing people until you find the right person for a job opening.

Adam Johnson · Answer

@Matt Devincenzo you make a very important point here.  What we do (housing) has an inherent risk because of the potential violation of fair housing laws.  How we handle this risk will play a lot in determining our fate.

It is important to remain consistent in how these situations are handled.  It is also my opinion that attempting to avoid the issue can be more problematic than simply facing it.  I also read the thread that Matt is referring to which could be a hot spot.  However, based on the information that the applicant couldn't not show sufficient CURRENT income, the landlord wanted to deny the application.

I have been in very similar situations and probably will be again.  I have found that trying to hide from the issue presents far more exposure than simply facing it head on.  You either qualify or you don't.  Delaying response to the applicant, avoiding phone calls, giving misleading answers, etc., this all exposes you far more in the future if you find yourself in court than simply handling it as the professional you should be.

Like many more general situations in life, there can be a "perceived" discrimination in many situations.  By nature, I don't discriminate.  I base my choices in all situations based on the facts presented.  Are they the most qualified when looking at numerous applications?  Are they qualified when looking at only one?

Base your decisions on facts and do so consistently and you will have far less risk.  Trying to dodge the issue by misleading the applicant in any way will only make your case much worse should you find yourself in court.  Being a professional is not always easy.  It is much easier to hide from the facts in this situation than it is to face the facts.  I don't like telling people "no" and at times it can be uncomfortable.  As time goes by, I find it is easier to get through.  Be a professional, this IS a business, so run it like one.  Don't delay in saying no.

If the application can't be approved based on the current and verifiable information, tell the applicant that they are denied.  Don't try to "hide" from them because you don't have the nerve to tell them they were denied.  This can be awkward and uncomfortable at times.  Stick to the facts, even if the applicant wants to take it "there" and start playing emotions.  The conversation could start getting emotional and very problematic if the applicant mentions discrimination and you respond to it.  I have said the same thing 10 or more times - "...based on the information provided on the application, I am not able to approve your application at this time...".  It can be painful to keep repeating yourself, but it is a consistent message.  When it happens that emotions start elevating, I keep an even tone and at some point simply wish them the best of luck, state that this is a business decision based on the information provided, and end the conversation.  Sometimes I have not choice but to hang up but I NEVER raise my voice or buy into the emotion.

Matt, I don't think you are "Coo Coo for Cocoa Puffs".

Matt Devincenzo · Answer

Account Closed it is the implementation of that which is important. Personally if I receive an application from a "weak" prospect, but they otherwise pass muster they are conditionally approved and I tell them as much. Then the screening process to weed them out is placed on them.

I let them know they check out and that they can rent the unit, however until I receive the deposit to hold, I will still be accepting and processing applications. In my experience these weak prospects have difficulty performing and often back out at that point. However ALL my approved applicants are told the exact same thing. My holding deposit is equal to the full security deposit and is credited for that purpose on lease signing. If they come through with the money then weak or not the unit is theirs. If I receive another approved applicant prior to their paying the money I give them a call and tell them I have another approved applicant and if they want the unit their window of opportunity is closing.

Adam Johnson · Answer

Account Closed started this new thread to comment on how to handle such touchy situations.  I would generally agree with your comments.  I am sure that you have found yourself (or eventually will) in a situation where the perception can become distorted by certain pieces of the application.

Here is another example: a mixed race couple apply for a rental unit, show strong verifiable income, have long-term jobs, no evictions.  Initially seem like a good fit.  Landlord pulls a credit/background history and the credit history is horrible with vehicle repo's, numerous accounts in collections, etc.  Landlord A in this situation always pulls the credit/background history for ALL applicants and denies the application based on the information.  Landlord B sometimes pulls this history, sometimes doesn't, depends on whether they are in a hurry or not to rent the apartment.  Landlord B is in a very bad spot if they deny the application because the perception COULD be, if the application is denied, the denial was biased due to other factors.

If Landlord B simply dragged his/her feet, avoided phone calls, waited for more applications to come in, and/or never gave the applicant a straight answer, the PERCEPTION could also be something other than what it was intended to be.

If Landlord A did the same thing (dragging feet, etc), it is less likely that it would be perceived wrong if reviewed by a court, but it could possibly be.  However, since Landlord A was consistent in how applications were reviewed, he/she would have a better argument, in my opinion.  Even so, in my opinion, Landlord A would be wise to be straight forward and deny the application openly rather than trying any funny business because that reduces the chance of there being a false perception.

I am a landlord and I know exactly what you are describing.  It can be tempting to "keep options open" if you have an application that might be future "maybe", even if it is a "no" right now.  However, again in my opinion, I think it is best to be consistent and base decisions on facts.  If it is a "no" today based on the facts, then it should be a "no" tomorrow based on the same set of facts.  When exceptions start getting made or you become inconsistent in how you make decisions, your exposure to false perception as well as possible lawsuits is much higher.

These are all my opinions, not to be mistaken for legal advice.

Adam Johnson · Answer

@Matt Devincenzo - good call on asking for the deposit.  I have used that with some success as well.  It is usually sometime around that point that marginal applicants say something to the effect of "...about the deposit, can I make payments or something?  I don't have any money..."  It doesn't always work out that way, but it is fairly common.  At that point, I simply state that the entire security deposit must be put up as earnest money for me to hold the apartment.  If they don't have it, I tell them to contact me when they do.

I have had that backfire before though, which makes it very difficult.  I tried this on an applicant that didn't fully qualify and they came up with the deposit.  In the end, I think it is good to have a consistent approach.  As time goes by, I find that nearly all of the marginal applicants I have approved turn into future headaches/evictions.  I prefer a little longer vacancy over making a future headache.

Jeff S. · Answer

They are talking about using child support and spousal support IMO for qualifying plus in our state section 8.

Do you deny applicants.....?

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