Should You Make Potential Tenants Aware of Reasons for Denial Upfront?

Question

I am in the process of buying my first multifamily property and have began to investigate screening techniques, applications and the like. One question that came to mind when dealing with potential tenants and discrimination issues would be if there is any benefit to outlining the reasons a tenant will not be approved on the application? By example would it benefit Landlord's to include a list of reasons an application will be denied without exception so long as all of those reasons conform to Fair Housing?

Example:

"Applicants WILL be denied for any of the following reasons without exception:

Past Evictions

Any Felonies or Criminal Record

Credit Score Below ____

No Rental History

No or Bad Landlord References

etc..."

Just curious, has anyone else had any experience in doing this? Can anyone think of reasons that this is a bad idea or may be unlawful in some jurisdictions?

Best,

Zachary S. Harrell

John Thedford · Answer

Give it to them up front. Make sure you charge an application fee. If potential tenants are not qualified and know they will lose their application fee they probably won't waste your time or their money. Here is a quick list of my general advertising qualifications:
Monthly income must be x or higher
No criminal history
No evictions on your credit report
X dollars application fee
3 references
Stable employment of 1 year or more
No smoking on the premises
Pets on a case by case basis
Once you lay this out they know what you expect! That makes it easier for everyone IMO.

Account Closed · Answer

I agree, too.  I'd put my criteria in an ad, then when they call, I'd go over the criteria again and ask if they think they'd qualify before setting an appointment to show the unit.  Really cut down on the time I spent dealing with applicants.

I'd rephrase your criteria, so you don't turn off good applicants, though.  It's a turn-off (to show my age) to read a bunch of No this and No that.

So for what it's worth, I'd phrase it more like a simple check-off list that won't offend anyone who is able to say, yep, I qualify.

Such as what others have said above.  If I said No, I included it in my final sentence, "Sorry, no co-signers, pets or smoking." That kind of thing.

By the way, I'd add no co-signers to your list.  It helps screen out the ones who want to move, but have someone else pay the rent.  If you get students who call, and you're okay with students, what I did was say that students may have someone else paying their rent, but I still did not want a co-signer on the contract.  This exception to having their own verified income was only for students in good standing.  And if you don't have Mommy as the co-signer on the contract, you don't have to deal with Mommy, which is rarely fun :-)

Bryan N. · Answer

I always tell them that I don't want them wasting their money.  So, if they can't meet X,Y,Z requirements then don't apply.  It works and saves me hassles.

Zachary H. · Answer

To everyone that replied, thank you very much for all of the feedback.

It looks like I will certainly include that in my application and use it as an additional pre-screening technique. I appreciate everyone's views and ideas on how to structure the criteria as well. You guys are great!

Best,

Zachary S. Harrell

Fred Heller · Answer

Here in Texas landlords are required to disclose tenant screening criteria as well as reasons why an applicant may be declined before the applicant pays the application fee.

The rejected applicant has the right to demand a refund of the application fee if they are rejected and the screening criteria were not disclosed at the time of the application.

Dawn Anastasi · Answer

If you lay it out in advance, you'll get people that don't apply because they will self-eliminate.  Or they will come to your showing then read the requirements, and make up some excuse why they won't be applying (the place is "too small" for them...)

Tim Watts · Answer

Congrats on the multi family property!

I agree.  I have a disclosure that lists my minimum criteria.  That might be a better way to put it.  You must meet these minimum standards.  I also think in some areas it is a requirement.

As @Dan Perrott mentioned... it is a powerful tool to screen out tenants.  I've had potential tenants come in with their check and very excited to fill things out, and as they read the requirements, they find there is something at home that they need to get and I never hear from them again.  I don't have to waist time looking into criminal history, credit, meeting their dog(s).  There are no surprises and it sets expectations for anyone and that is a great way to start the tenant / landlord relationship.

Account Closed · Answer

Hmmm I guess you have all been perfect throughout your entire lives and  I wonder how many of you would pass your own criteria.

I rent to tenants in challenging neighbourhoods. I tell them their backgrounds will be thoroughly checked and all the areas that will be investigated before they apply but the only thing that will amount to an automatic disqualification is a past eviction. Everything else we will evaluate based on the circumstances and on a case by case basis.

I invite them to self disclose their baggage a priori - here's the deal. Tell me what my investigation will uncover and empower me (not you) to decide whether I can deal with it but anything you hide and my investigation discovers will automatically disqualify you.

Many of these people are struggling to make it. Everybody needs a roof over their head and although it does not necessarily fall upon me to provide it I think it's obnoxious to use an application fee  as a punitive deterrent to a person seeking the primary basic human need of shelter. Regardless of what mistakes people have made  in the past, only they, not you know whether they have changed. So I charge an application fee but if I find I am going to decline before running a credit check I return the fee.

Here's another reason to do that. $35 (or whatever you application fee you charge)  is not worth acquiring someone with a grudge who now knows that I have a vacant property

Ralph Pena · Answer

you got the right idea. Best to have everything in writing so no one can say you've discriminated against them.

Steve Babiak · Answer

There will still be some who apply who have a reason for automatic denial - they are willing to gamble that the landlord won't check them out ...

But the answer is still yes - that way you are operating in an ethical fashion; those who have a reason for automatic denial should recignize that they are better off going elsewhere, and if they don't they can't say you never told them up front about why they would be declined automatically.

Should You Make Potential Tenants Aware of Reasons for Denial Upfront?

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