Rejecting Potential Tenant and Enumerating Reasons Why

[Julie O'Connor]

I notified a potential tenant via text that their application was denied after the $35 tenant screening service revealed an active, open bankruptcy (<6 months) (as well as two prior dismissed bankruptcy filings), a recent eviction filing and judgment (<6 months), two collection actions, and a prior but old criminal conviction (non-violent offense). The reason I cited was the ongoing bankruptcy.

I realize I need to send an Adverse Action Notice under FCRA as well.

My question is: should I cite *all* the above reasons in the Notice, or just stick with active bankruptcy I already gave as the reason?

The applicant is unhappy about getting rejected and about the $35 cost. They have sent multiple responses indicating that I wasted their time and money, because they did disclose the bankruptcy on the application and verbally stated it was after a job loss. They stated they were currently working and had income that was good and verifiable (approx. 5x monthly rent). 

My takeaway at the time was that the bankruptcy was in the past and resolved, so I was surprised to see it was so recent.

However, they said nothing about a prior eviction (they said they left their apartment after losing the job), nor the criminal record, even though the application has space to disclose anything negative that a background check might uncover.

[Marcia Maynard]

Do what's necessary to be in compliance with the landlord-tenant law for your jurisdiction. If an adverse action notice is required, then send it with the minimum amount of information you can. 

In our state we have a standard Adverse Action Notice that we can use. It lists possible reasons for denial and you just check all that apply. Easy. Our state also requires us to inform prospective renters in writing of our rental criteria, prior to accepting an application fee. Doing so helps prevent this kind of situation.

You may want to review how well you communicated your rental criteria to the prospective tenant during your pre-screening. Also, did you ask them point blank about any of this prior to their filling out the application? I do, and if the tenant tells me honestly about their problems from the past and they are grounds for me to deny them, I let them know right then. I never say "no" or tell them not to apply, but I use a few key phrases, such as.... "That would be a deal breaker for us." and/or "It appears you don't meet our minimum criteria to rent." Then they can move on and not waste their time and money, nor ours.

When you need to relay bad news in a formal manner, don't text or email. This also goes for any other serious communications. A brief telephone call letting them know the status of their application followed with a formal letter/notice about the denial works better.

I would note both the recent eviction and the recent bankruptcy as reasons for denial, in accordance with your rental criteria. Also, false or misleading information on a rental application is also a solid reason for denial.