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Your Landlord Resource Podcast
Your Landlord Resource Podcast
Best Practices for Denying Rental Applications
As self-managing landlords, one of the toughest parts of the rental process is saying “no” to an applicant. In this episode, Kevin and I break down how to deny a rental application while staying compliant, ethical, and professional.
We cover the legal side, including Fair Housing laws, the Fair Credit Reporting Act, and why an Adverse Action Notice is required when denials are tied to credit or background checks. We also explain the differences between straight denials, conditional acceptances, and partial denials—and when each applies.
We’ll share how to create clear written criteria, apply them consistently, and protect yourself with documentation. You’ll also learn the common mistakes landlords make when denying applicants and how to avoid them.
Denying an application isn’t fun, but it’s a necessary part of running your rental business. With the right systems, you can handle it fairly, confidently, and legally.
🔗 Links & Resources Mentioned
Denial Letter Resource Pack. 3 Denial/Conditional Acceptance templates to use to create your own personal Denial Notices.
Listen to Episode 106: The Benefits of Being a Digital Landlord
The Fair Housing Institute, 15% OFF with code YLR2025
Learn more about Turbo Tenant, Avail, Buildium, and AppFolio.
Tenant Screening Software we recommend: SmartMove, TenantAlert, & RentPrep.
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So I think it's important to drive the point home that consistency is key. You need to create your policy and apply them in the same way to every single applicant. You know, try to see your policies or criteria as anchors in your business, not barriers to keep the bad people out. Those criteria are designed to avoid bias and keep fairness at the forefront of your application process. Actually, not only the application process, but your business as a whole. Consistency is key on how you handle maintenance requests or if tenants ask for permission to do something. You need to handle the process the same for everyone, or as best you can. You know, think of it this way. Ethics goes beyond the law, and fairness means transparency, respect, and professionalism. So do your best to create a culture of integrity, because that will certainly help to reduce liability and build trust amongst your tenants.
Welcome to Your Landlord Resource podcast. Many moons ago when I started as a landlord, I was as green as it gets. I may have had my real estate license, but I lack confidence and the hands-on experience needed when it came to dealing with tenants, leases, maintenance, and bookkeeping after many failed attempts. Fast forward to today, Kevin and I have doubled our doors and created an organized. Professionally operated rental property business. Want to go from overwhelm to confident if you're an ambitious landlord or maybe one in the making. Join us as we provide strategies and teach actionable steps to help you reach your goals and the lifestyle you desire. All well building is streamlined and profitable rental property business. This is Your Landlord Resource Podcast.
Stacie:Hello. Hello landlords. Thanks so much for listening to the Your Landlord Resource podcast. I'm your host, Stacie Casella, and I'm sitting here with my co-host and partner in crime, Kevin Kilroy.
Kevin:Hey there, you guys, glad you're all here. We have a good episode for you today with a lot of great information about the best ways or I guess, practices rather, to deny an application that a prospective tenant has submitted. Stace, you got any good stories about denying an applicant?
Stacie:You know, nothing really juicy actually. I have to say that I have never really had to deny anyone specifically, which I know is really odd. But, we have had to offer many people conditional acceptances, which we're gonna go over in a little bit. And I'm not trying to toot my own horn here, but we are pretty strict about making sure that our applicants have a very clear understanding of our criteria before they apply. And we do not have applications up on a website, you know, our own or anyone else's. You know, like on Zillow or on a, a landlord software like Turbo Tenant. We use Zillow, but we do not use the auto applications that they have available. And we went over this in the last episode, but the basic reason is because applicants will apply with the hope that the landlord will be desperate enough to just take'em on because they have someone who's interested. And once that application comes in with that app fee, the site where they have submitted it will run their credit background and the criminal and eviction if you have opted for those. But honestly, you know, we have a set procedure and it works for us. And the bottom line, before someone applies, we pre-screen them. We wanna make sure that they have a credit score at or above minimum. We ask if they smoke, we ask if they have pets, why they're moving. What else?
Kevin:Well, I, I think the most important part is if their income is sufficient. I think we use either the two and a half times net or three times gross. And we also ask if they can pay the security deposit before move in as well. Now after we have asked them to confirm these, we will then allow them to either apply or set up a showing. So if you think about it, we likely have denied many people before they even attempted to apply.
Stacie:Yeah. And once we implemented that pre-screening procedure, we cut our showings way down as well as the people who wanted to move forward with applications. And come to think of it, we get a crap ton of people who reach out wanting more information. And we have an auto message that essentially thanks them for their interest in our unit, number X at ABC Street. And then we ask a bunch of questions that will tell us pretty much if they qualify to run our unit. And we will let them know if we can move forward with an application or showing once we get that response. And I'd say 75% of the time, we don't even get a response.
Kevin:I mean, total radio silence. Which can be frustrating as hell too, because we don't put our units on the market until they're a hundred percent ready. We want prospects to be able to view the unit clean and ready to go so they can imagine themselves living there. Plus, because Stacie is such a stickler about the units being clean, these prospects will have a better understanding of our respect for the property.
Stacie:So sorry about that. It was kind of a long-winded way of telling you why we don't have any applicants to deny.
Kevin:Yeah. Well, you know, it's good for them to know and maybe what we do will help them scale down on the applications they receive.
Stacie:Yeah, it's true. I hope so. But don't misunderstand us. Just because we do not deny applications, that does not mean that we don't know all about the law behind it. We are ethical and fair and consistent when it comes to accepting and processing our applications. And we know the timelines that landlords should follow and the notices that you have to use versus ones that are recommended.
Kevin:You know, we are professional property managers and hold our real estate licenses, and the last thing we want is to lose our license because we messed up on denying an applicant. We've taken many courses and we stay up on fair housing laws, so we do have the background to discuss this. So today we will talk about all the information we know and why it matters.
Stacie:Yeah, for sure. Why properly denying an applicant matters is important too. I mean, and I hate to state the obvious, but it protects landlords from lawsuits in claims of discrimination. It also ensures consistency, which in itself protects you in case someone claims you treated'em differently. And it shows professionalism in how you operate your rental property business. Because if you have to conditionally accept someone or partially deny them, the way that you respond and communicate your findings will build trust with applicants and even more so if they become your tenants.
Kevin:Absolutely right. I mean, we've actually had tenants who have come back after moving out and they text us or they tell us what great landlords we were when they were living there and how they wish they could have stayed.
Stacie:Yeah. And you guys we're not doing anything special here. We simply operate in a professional manner. We do semi-annual inspections, our prompt on our maintenance requests. We communicate clearly and we keep our properties looking and operating well, and it, it really is as simple as that. Now, I will say that it has taken us several years to create systems around doing these tasks efficiently and effectively. Made mistakes that we've had to learn from. Nothing grave, or that was a threat to us legally. But you know, just listening to others on how they do things, finding what works for us and for our properties, and adapting procedures to changing times and laws and, and tenant bases. Because what works at one property doesn't always work at another. Our properties are in different locations, in different markets, so we have to work around those. I mean, the concepts are the same, but our criteria and forms of communications may vary, and that is because of laws and ordinances differing between those locations.
Kevin:Right again. And speaking of laws, why don't we start off with the Fair Housing guidelines for denying applicants first, and then we can go on from there.
Stacie:Yeah, that's a good place to start.
Kevin:Okay. So a quick background on Fair Housing with regards to denying applicants. Fair Housing laws, which stem from the Fair Housing Act or FHA, prohibit discrimination in housing based on certain protected characteristics. These laws aim to ensure equal access to housing opportunities for everyone regardless of their background. And the protected classes cover, race, color, religion, sex, national origin, familial status, and disability. The FHA and similar state and local laws forbid discrimination in various housing related activities. But in keeping with what we will be discussing today, landlords cannot refuse to rent a property, offer different terms, or deny access to housing based on those protected characteristics. But wait, there's more. While the FHA protects against discrimination based on the seven characteristics I just mentioned, some states and localities have expanded the list to include additional protected classes, which may include sexual orientation, gender identity, marital status, source of income, age, immigration status, and military or veteran status. Now enforcement of these fair housing laws are handled by federal, state, and local agencies, including investigating complaints and taking legal action against violators. Of which on the federal level,. enforcement comes from HUD or the Department of Housing and Urban Development. So just based on these laws, denials can never be based on the characteristics of those seven protected classes, which again, are race, color, religion, sex, national origin, familial status, and disability. And honestly, if you did not know this already, we highly recommend you take a course and get certified on Fair Housing. You can do this by going to the Fair Housing Institute and selecting their basics of Fair Housing Course, which I believe is$99. And we'll tell you right now, we get nothing but goodwill for this, but you can use the code YLR 2025 for 15% off any course. We will link all that info in the show notes for you as well. Now quickly, I wanna circle back to Fair Housing Laws at the state and local level. Somewhere likely through either a real estate course company or your local or state level housing association, you should be able to learn about those laws. You can certainly search online and essentially ask what are the fair housing laws for, and then enter your city, county, and state. And it should pop up if your area has its own laws or if they follow the guidelines of HUD on a federal level.
Stacie:And you guys, this is important because some states have added protections based on income, veteran status and criminal backgrounds. So you need to know this before you create your criteria or qualifying standards for your rental property. But one of the biggest reasons landlords deny an applicant is because of what their credit report spits out, which leads to more laws and protections from the Fair Credit Reporting Act. Now, it's not saying that you can't have criteria, noting a FICO score, because we do that and we have different levels for different properties. Much like I mentioned before, your local rental market will determine what your criteria needs to be set at, so you can be competitive while still protecting yourself and your rental property. But when it comes to the Federal Credit Reporting Act or the FCRA, if your denial is based on a credit report, landlords are legally required to provide an adverse action notice. And we'll talk more about those later, but essentially, an adverse action notice informs the applicant about the reasons for the denial and their rights, including the right to obtain a free copy of the credit report and dispute any inaccuracies.
Kevin:Again, we will be talking more about this later, but we will be offering a free download of a template that you can use of an adverse action notice and other denial notices as well.
Stacie:Right. You know, there's not much to'em, but they include the lingo that must be noted on an adverse action notice, so it might be a good download if you don't already have this in your forms arsenal.
Kevin:So really the big issue with denials in using these adverse action notices stem from if you deny someone based on credit findings. So let's work through this with a scenario. Let's say you have a minimum FICO criteria set at say, 600, and someone believes that they have that score or higher and go ahead and applies to your rental unit. The credit background check is run and you decide to deny them because it comes in at 550. Now, this Federal Credit Reporting Act is not a direct issue for landlords, it really is just a step in the process that forces the landlord to deny with proper language in their notice. Letting the applicant know that their application was denied based on findings in their credit report that was pulled. It notes the credit reporting agency and that tenants have 60 days to contact them and dispute the findings. Again, this makes no difference for you when denying them, this is simply just a form providing them with information so that the denied applicant can resolve the issue on their behalf before being denied by someone else later on.
Stacie:Exactly, because here's the deal. Some people get their credit messed up and it is not of their own doing. You know, my brother was a junior to my dad, exact same name, just a different social security number. And because my parents co-signed on my brother's first home loan, geez, like way back in the early nineties, and somewhere along the line, the bank transposed their social security numbers. And when my dad went to pull credit for something many years later, it pulled up as my brother's credit, not my dad's. Which made a lot of sense because my brother was buying all kinds of stuff and everyone was giving him credit lines because they thought he was my dad. And you can only imagine what a mess that was to clean up. Another one is someone having their personal information stolen and not knowing, which is something that has happened to me. I had my identity stolen about 20 years ago and just did nothing about it until I started to receive denials for credit cards in the mail that I never applied for. Target, Home Depot, Nordstrom's all came within two weeks of each other, and this was years after someone stole my identity. So now I have a lock on my credit, which makes it a total hassle when I have to apply for credit. But at least I'm protected by the credit agencies and the IRS, who has to send me a personal pin number every year to file my taxes. So much fun. Thank you so much to those jerks out there who did that. But the bottom line is that there may be reasons beyond the applicant's control they have no idea that are even going on. If you just told them, sorry, we denied you because your credit score did not meet our minimum requirements, they could assume it came up at 599 and they moved on. So this adverse action form gives them the opportunity to look into their credit background and work with the credit agency should they find any discrepancies.
Kevin:Yeah, I mean, I wasn't around for that credit mix up between your dad and your brother, but I know that even years later when I came into the family, it was still an issue.
Stacie:I mean, yeah, it, it took years and years to clean up.
Kevin:Uh, yeah. I, I mean, I can imagine it did. Okay, now we wanna take a few minutes and discuss some other issues that may lead to application denials because of a bad credit report. And one of those being a criminal record. Now let me start by saying that no one is a protected class just for having a criminal record. However, the way you use criminal history and screening can violate Fair Housing Act protections if it creates disparate impact. Which disproportionately affects certain racial or ethnic groups. So this would be if you had a blanket ban that said anyone with an arrest record would be denied. The reason behind this is that certain racial and ethnic minority groups are disproportionately arrested. So such policies effectively exclude a greater percentage of individuals from those groups from housing opportunities. You also should not do that because someone being arrested is much different than someone who has been convicted. And if they are convicted, what was the crime? Because people can get arrested for shoplifting. They can be arrested for drunk driving. They can be arrested for indecent exposure. None of which are crimes severe enough to be considered a threat to your property or other tenants. So our advice, and what HUD requires landlords to do, is to consider the following points about someone's criminal record. First, what was the nature of the crime? Because violent felonies or crimes that directly threaten the safety of others like arson or sexual assault, can carry more legal justification for a denial. I mean, the seriousness matters, right? A misdemeanor for shoplifting conviction is not the same as a felony assault. Minor nonviolent offenses like loitering or disorderly conduct are not good grounds for denial. Also, how long ago it happened matters. You need to know how recent the crime was. A crime where someone is convicted 10 years ago or longer without any new offenses, is also not a valid reason to deny an applicant.
Stacie:Yeah, and especially if they have completed or have evidence of rehabilitation. So think of completing probation or treatment program, or they have a long record of stable housing and employment since that offense. You know those are suitable reasons to move forward with the background check.
Kevin:Exactly. And you noticed how Stacie did not state suitable reasons to accept them as a tenant. She said suitable reasons to move forward with the background check. After you this information, you still need to conduct checks on previous landlords, income and personal references. What we are discussing today is why not to have blanket bans on criminal records and that all crimes need to be evaluated on an individual basis. With all that being said, HUD does say that landlords can deny applicants if they have been convicted of a crime that poses a demonstrable risk to the safety of other residents or the property. So this would be battery, assault with a deadly weapon, murder, or crimes that involve physical harm to others. Drug manufacturing or distribution convictions qualify as well. As of course do burglary, arson, or vandalism, especially if they involve damage to the rental property or neighboring units. Now again, each conviction needs to be evaluated on an individual basis. And if it's been over 10 years or whatever time you state in your qualifying standards, or if they have completed some sort of rehabilitation, you can move on with your background checks. But if they were convicted of breaking and entering and murdered three people, regardless of time passed or rehab, I believe you're okay to deny that applicant.
Stacie:Okay, listen, you know what we're saying is that not all crimes and criminal offenses can be measured the same. We highly, highly suggest that you take the time to create a written policy for evaluating criminal records before you start to screen potential tenants. You know, for instance, you are okay to have criteria that states no felony convictions within the last seven years, or no methamphetamine manufacturing ever. And apply that policy consistently to every single applicant. You know, we discussed this in our last episode actually, that if you can provide the applicant with your qualifying standards that shows all of your criteria for acceptance and have them sign it, or at least agree to it over email or text, then you're good to go. As long as you do that with every single applicant, you're just fine. Now, if you find yourself in the position where you have to deny an application because they have a criminal record that violates your qualifying standards, you would document your reasoning on a professional courtesy application denial letter, which does not need to comply with Federal Credit Reporting Act requirements. Just make sure to note the nature, severity and recency of the conviction, and why it directly impacts the safety of other residents or the property.
Kevin:And you guys, along with the adverse action notice we are offering as a free download, we do have a sample of this letter as well. It's actually just a basic form letter, and if the denial is due to a criminal record, you would need to add all the information that Stacie just mentioned. Okay. Now with all that we have discussed about criminal records and how you have to be mindful of blanket bans, we have to again remind you to stay on top of the current local laws for the city where your rental is located. Because some cities like Seattle, Portland, and San Francisco have fair chance housing laws that go a bit deeper than HUD and limit how landlords can even ask about criminal history. Which means you would have to go ahead and process their entire application to make sure there was not another reason to deny, like bad credit, or the last landlord said the person blew their rental up and they were manufacturing meth. That you would need to complete the process of the initial application, and after everything checks out, I believe then you run a criminal background check to see if there are any issues there. And if you find anything, you have many hurdles to go over before you can actually deny an application. Like we said before, the nature of the crime, how long ago it had happened, if they had completed any rehabilitation for it. And every city has a different level of their process. I think some are completely banning criminal background checks altogether. I mean, which is just insane.
Stacie:Yeah. And I'm gonna move on from this subject because in some cities, the protection of criminals, and I mean horrible, violent crimes is outrageous. But what you all need to know is that denying an applicant based on criminal history must be specific, justified, and consistently applied to all applicants. Keep your focus on violent and recent convictions that directly threaten the safety of your current tenants, of the neighbors, or your property. All right. I wanna talk quickly about the age of applicants. The Fair Housing Act does not include age as a protected category, but don't think for a second that if it's not federally regulated, that you're in the clear. Because many states and local governments have filled in that legal gap by adding age as a protected class in their own housing codes. So obviously we're talking about older people, right? They might have to move outta their home and into a smaller apartment as they age. Some landlords feel that they lack the ability to actually properly care for the unit as they age. And Kevin and I can say firsthand that those are very reasonable concerns. We had an older gentleman and his wife in one of our three bedroom units, and after many years, the wife had passed and the gentleman, I believe, was put into a home eventually. And when he moved out, that unit was disgusting. It had never been cleaned. The dog had peed all over the place. I mean, when we went through with the black light, carpet in many places was more purple than it was beige. The walls had God knows what dripping down them, and half the windows did not appear to have ever been opened. Now, we bought the unit with this tenant in place, and I'll tell you, and we still do believe this, but we felt it was our place to provide a home for this man to live comfortably. We raised the rent minimally, and even though we had to put thousands of dollars into the unit after he moved out, we felt good that he had somewhere safe to live, because many elderly people do not. You know, this is our perspective and certainly not one that any of you have to follow. And because we have not yet faced another elderly applicant, we can't say how we would feel about running to another one.
Kevin:I mean, I think we'd be a little hesitant for sure, but of course if they qualified on all accounts, what would we be able to do about it?
Stacie:Nothing.
Kevin:Right. Because if they qualify and they know they qualify and we deny them, they can come back and say we discriminated against them due to their age. So that is why fair housing is such a huge issue when it comes to denying applicants. It's also why, like we said before, we do not participate in automatic applications. We will always prescreen them by asking them about our criteria directly, or having them read our qualifying standards and agree to our criteria that way. Because at that point, what else can we do? If they have the income and they have positive rental histories, and if their personal references can confirm there are no pets or no smoking, which we have had happen, so that's why we do follow through with personal references. But if everything checks out and they want to rent from us, then it's a done deal.
Stacie:So I think it's important to drive the point home that consistency is key. You need to create your policy and apply them in the same way to every single applicant. You know, try to see your policies or criteria as anchors in your business, not barriers to keep the bad people out. Those criteria are designed to avoid bias and keep fairness at the forefront of your application process. Actually, not only the application process, but your business as a whole. Consistency is key on how you handle maintenance requests or if tenants ask for permission to do something. You need to handle the process the same for everyone, or as best you can. You know, think of it this way. Ethics goes beyond the law, and fairness means transparency, respect, and professionalism. So do your best to create a culture of integrity, because that will certainly help to reduce liability and build trust amongst your tenants.
Kevin:Yeah, I mean, those are all good points.
Stacie:So one thing I wanna go over is what constitutes a denial versus an acceptance. A clear denial is an outright refusal to rent to the applicant of your rental, right? And depending on the reason for that denial, you would send them a written notice. If their denial is due to an issue related to their credit report, like we said before, then by law you must issue an adverse action notice. This notice is focused on what the Fair Credit Reporting Act states that the notice must include, which is the decision was based on a report that was provided by, and then you list the contact information of the credit reporting agency. It also needs to tell them that they have 60 days to contact that credit reporting agency to receive the same report that you ordered. This is to shed some light on the applicant's understanding of what is on their credit report, and they can either work to improve it or if the information is wrong due to fraud or another issue, they can work to correct it. There's also a statement on the notice that states the credit agency has nothing to do with this denial, and they're just providing the information.
Kevin:And some tenant screening apps will process this automatically for you, right?
Stacie:Yeah, we'll go over that in a little bit. Now if you deny them because of any other reason is not related to their credit you can issue them a standard denial letter, which essentially states the property address, all the information for both the applicant and the landlord, and either a brief description of the reasoning behind the denial, or it can just simply say that unfortunately you didn't meet the criteria to rent our unit. Acceptance is, hey, this person has a credit rating within our criteria, their confirmed income is more than enough to cover the rent and household expenses along with any debt service they might have. Their past landlords have nothing bad to say about'em, and they're able to pay the security deposit and move in within acceptable timelines, so you move forward with the lease negotiations. There's also a withdrawal of the application on the part of the applicant. Likely'cause they've submitted multiple applications and are already heard back from their first choice. For this scenario, we don't send'em a formal notice, but if we have not yet began processing the application, we will return their application fee to them.
Kevin:Which honestly is very unlikely that we haven't begun processing it. Because we do our best to start those apps as soon as we get them. Mostly because we do the background check first, to make sure we can move forward with the rest of the checks. And that credit background check can take about five minutes from when we begin to enter their information to when we get their report back.
Stacie:Yeah, that's exactly right. Super quick and we like to know as soon as possible what we're working with credit-wise when we get applications. But there are a couple of other scenarios called partial denials and conditional acceptances. Now, they're very similar in the way that they're both giving the applicant a chance to still rent from you, but either with restrictions or changes to the originally understood offered to rent. Conditional acceptance means that their application is approved contingent on certain terms. This can be them needing a co-signer because their income was not sufficient enough, or they do not have sufficient rental experience, you know, like a recent graduate or something. Or maybe having to pay a higher security deposit because they have a pet, or something was found in the credit report like a bankruptcy. Again, if you're denying or offering conditional acceptances where the reason has to do with something on their credit report, you must use an adverse action notice, even if it's a conditional acceptance. A partial denial, on the other hand, is acceptance with restrictions. So think about if you found that they have a lot of debt. Or the rent to income ratio is too low. So instead of offering them a one bedroom unit that they applied for, that rents for like$1,500, you offer them a studio that rents for$1,100, which moves that rent to income ratio up into the acceptable range stated in the criteria or qualifying standards. You also can offer them a month to month instead of a one year lease. So if there's any issues, you can get outta the lease easier. Now, with a partial denial, you have to be very careful because it can really create a scenario, where someone can file a discrimination claim. Again, for this one, as with the others, if the partial denial has to do with something found on the credit report, like too much debt, you have to issue an adverse action notice.
Kevin:Yeah, so to be safe, any decision, be it a flat denial, a partial denial, or a conditional acceptance has to do with an applicant's credit score, debt you find in the report, bankruptcies, bounce checks, whatever. You should make sure to use an adverse action notice. We also suggest to cover yourself you provide the written criteria or a qualifying standard that you apply to all applicants. Send a copy of that along with the notice.
Stacie:And even better if they've signed those standards, agreeing that they meet the criteria, you know, send that signed agreement.
Kevin:Exactly. Essentially do what you have to do to cover your butt and make it abundantly clear that everyone who applies has to meet this criteria, and that you uniformly apply these policies to every single applicant. And it's also very important to document everything. The information used that made you come to the decision you did, any conversations you have had with the applicant about it, and when you have to send a signed notice to the applicant, make sure you keep a signed copy for your files as well. Now when it comes to the timeline for a denial, you should be sending this to the applicant within one to three days after screening is completed. Any longer and they can start to feel suspicious about your processing procedure. Because it can look like you're waiting for another applicant you might like better. And even though in many states this is perfectly legal to do, you better hope if you accept someone else, it is because there is a definitive difference. Like the one you choose might have higher income, they don't have pets, or they're just a better applicant all the way around. Like better landlord responses, higher income, little or no debt, no pets. You get the idea. But some states are now requiring landlords to process apps on a first come, first served basis, not process a whole bunch at the same time, and pick the one you like best. And to be honest, that is the way we do it. It's clean, it's fair, and yeah, sometimes you lose out on an applicant we like that came in at the last minute. But for us it's a much safer way to process our applications. Okay, concerning delivery of the notice. I hope I don't need to say this, but your notices should be written. Please do not call or text someone to tell them they were denied or have a partial or a conditional acceptance. Documentation is your legal protection, so use it. You can email the applicant, but a signed copy, preferably in blue ink should be attached and the hard copy should be mailed to them.
Stacie:So let me just take a second to discuss that blue ink comment that Kevin just made. If you are signing in person or if the computer program that you're using offers the option to sign in the color blue, that is the best way to sign any legal documents. Signatures in blue ink are easier to locate amongst an all black ink document and most all documents are produced in the black colored ink. And blue ink is much harder to, well forge your signature from where black ink is the easiest. Some lovely scammers out there like to pull your signature from documents and move it over onto a document that you didn't create or sign to make it look like you agreed to something you did not.
Kevin:Yep. I mean, pay attention next time you're signing papers in front of a lawyer or at the title company, the ink is almost always blue.
Stacie:Yeah. This is something we learned many years ago when we used to sign our leases by hand. Now we sign electronically, but we use a blue colored signature. So now I wanna talk quickly about whether landlords should outsource tenant screening. And the point here is that you would use a professional, like a property manager to process your applications. The pros to this decision is that it keeps you as the property owner at arms length from sensitive data. Which means you can say you did not know anything about this applicant's background or why they were denied should a legal issue arise. It also reduces personal bias because again, you know nothing about this applicant personally. And lastly, most property managers are required to stay up on landlord tenant laws. They know the Fair Housing Act like the back of their hand, and they usually will have preset qualifying standards that you can use. They not always, but usually are very professional about how they speak to and deal with applicants. They understand the importance of ethics and fairness and consistency and have no issues'cause they do this day in and day out. Now, the cons or maybe why you would rather handle tenant screening yourself. You know, one side of that is the cost. I will say I have no idea what a property manager would charge for just a service alone. Usually they want the whole job so they can make a nice chunk of change, usually one month's rent. And that would include them marketing the property, for screening applicants, doing showings, handling, tenant screening, and processing the lease and the move-in of the new tenant. So cost may be a huge factor for you. And using a property manager to do your tenant screening may mean you have less control over how the process is completed. You know, you have no idea if they do or don't get ahold of older landlords. And I can tell you, we can count on one hand how many times we have been contacted by another landlord to check on a past tenant.
Kevin:What's it been? Maybe three times?
Stacie:Barely that. I mean, and this is in 20 years of doing this, you guys. Many property managers don't take the time to call personal references either. And I'll tell you those personal references is where we learn a lot about our tenants because they might be old friends and it comes up that the applicant lived, say, in Nevada with this person for five years, but nowhere on their credit report does Nevada come up as a previous address. Or you might learn that the applicant is an outdoorsy kind of person and will go hiking or camping every weekend. Which means they're not hanging out in the unit causing more wear and tear. We have found out if someone smoked when they told us they did not. We found out that someone had pets when they said they did not. So by using a property manager to run your tenant screening, you might lose a level of completeness that you would get should you process that application yourself.
Kevin:Yeah. And as we have said this before, once you do it a few times, you really get comfortable with it. Stacie used to handle tenant screening, and a few years ago I started to help her out with it. And I was nervous as hell, but we had our procedures and I just followed them step by step.
Stacie:Yeah. Now you do most of the calling for our apps?
Kevin:I do. Okay we always seem to have so much to say when we are talking about stuff and that's because we want to be as clear and concise as possible when we give you information. So we apologize this seems to be long-winded, but we are covering a lot of stuff today. We mentioned earlier that there are some tenant screening software companies that will send an automatic adverse action notice when you deny an application. These notices are compliant and aligned with the Fair Credit Reporting Act. And the first one we wanna talk about is Turbo Tenant. You know we love this landlord management software company. One reason is because the tenant screening option is part of the free use of having a Turbo Tenant account. You do not need to have a paid subscription for the system to generate an adverse action notice. Avail provide sample adverse action notice templates with integrated delivery and screening results. Rent Prep is another one. Their forms can be customized depending on your reason for the denial, which is pretty good. Buildium and AppFolio also offer automatic adverse action notices but they are primarily for landlords with much larger portfolios. And lastly, these ones are not a landlord management software, but a tenant screening software. We discussed them in our last episode and they are Tenant Alert and SmartMove, which is owned and operated by TransUnion Credit Bureau. Both Tenant Alert and SmartMove provide a template for adverse action notices, which are compliant and safe to use.
Stacie:We did discuss both those tenant screening softwares in our last episode, episode 1 0 6. You can give that a listen by going to your landlord resource.com/episode 1 0 6. As for all the companies that Kevin just discussed. We'll link'em in our show notes so you can learn more about'em and all that they have to offer.
Kevin:Alright, you guys we're getting ready to wrap this episode up. But first I briefly want to go over some common mistakes landlords make when it comes to denying an applicant. And the first mistakes is denying without documentation. It is always a good idea to send the applicant something in writing, letting them know they were not accepted and the reason why. You don't need to go into detail here and honestly, less is more. Also, another mistake landlords make is giving vague or personal reasons for not accepting someone. You cannot tell them you had a bad feeling about them, or that you don't want a tenant who likes to cook fried chicken that will cause a mess, or Indian food, which will leave the unit smelling like turmeric. Another mistake is being inconsistent when you apply standards. You never know when two separate people apply who might know each other. And don't think for a second if one is accepted and the other isn't, they won't compare notes. And this one, which I hope we have drilled in your head enough here today, is not using the required adverse action notice that meets the FCRA standards when denying an applicant due to reasons found in their credit background check. And finally denying someone based on criminal records without an individualized assessment. Because HUD guidelines require landlords to consider the nature, severity and recency of the offense.
Stacie:That one about Indian food. I had to really hold in my laugh.
Kevin:You know exactly what I'm talking about, don't you?
Stacie:I do. You guys, we have a tenant who we love, but the unit reeks of Indian food every time we go into it. And the joke is, if we'd known that they like to cook Indian food so much, we would've denied'em. And of course that's a joke, but man, that smell is pungent and, and not in a good way.
Kevin:Yeah. I thought you liked that one. I mean, often when you hear us give examples, these are real life examples we have experienced and dealt with in our rentals.
Stacie:Yeah. Well, we certainly have a lot of examples. Let me do a quick recap of the episode. So denying applications is a necessary but sensitive part of being a self-managing landlord. You wanna follow the law, but you want to do your best to strive for ethics and fairness and consistency. You wanna protect yourself with written policies or qualified standards. Always document everything. And use proper or required forms when they're needed. And remember, how you deny an application reflects on your professionalism and your reputation as a landlord. Everything you do should be completed in an organized and professional manner, so the tenants that you do approve will enjoy their experience living in your rentals. Oh, and we almost forgot. We have a rental application denial letter resource pack, something like that, that we've put together for you as a free download. It's really just a few templates for you to cut and paste onto your own letterhead. It's completely customizable and it, it's really just something for you to follow. It includes a very simple adverse action notice that does comply with the Fair Credit Reporting Act. A conditional acceptance letter, which is also FCRA compliant. And a professional courtesy denial letter, which is not FCR compliant, but it has little check boxes and things like that where you can let'em know why they were denied. You can download it by going to your landlord resource.com/denial letter, or you can click the link in the show notes. All right, everyone, that is the end of the show for today. Thank you so much for taking the time to join us and listen to all we have to say about denying rental applications. If you enjoyed this episode, would you do us a favor and leave us a kind review of the podcast because reviews help others find out that we're the real deal. And if you wanna hear more, follow or subscribe to the podcast so that each week episodes are downloaded right to your favorite podcast platform. We'd love to stay in contact with you. In the show notes you can find links to all the free downloads we offer, like the new denial letter resource pack that we have. There's also ways to sign up for our free newsletter, our private Facebook group that's just for landlords and our social media accounts on Instagram and Facebook. And we also have YouTube where we share very informative and detailed tips and tricks for landlords, so check those out. And I think that's about it. Thanks again you guys for being here. Until next time, you've got this landlords.
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