Although being a landlord can be profitable, it also comes with its share of problems. One common issue is disputes with tenants. You can avoid many of these simply by being careful in whom you approve to live in your rental properties.
Before you start being more selective, you must understand the legal reasons you can deny an application. This knowledge not only can help you choose better tenants but also help you prevent a mistake that can lead to an applicant suing you.
Finances
The most common reasons for rejections are financial. Examples include:
- Not making enough money to pay rent in full and on time
- Declaring bankruptcy in the past
- Having bad credit or too much debt
- Paying rent late to previous landlords
Another warning sign to look for is bouncing from job to job, as this may indicate that the person has challenges maintaining employment, and therefore income.
Rental history
Rental history can provide further information that may result in a legal denial. You can find out what kind of tenant the person is to ensure you do not rent to someone who has caused property damage, been evicted or had any legal disputes with previous landlords.
Specific characteristics
The Fair Housing Act prohibits discrimination based on protected classes such as race, gender, religion and disability, among others. However, the law does not apply to those who smoke, own pets or have a criminal history.
Application issues
If the person provides false information or does not fill out the application completely, you can reject it. Also, you can deny a potential tenant who does not agree to abide by your rental terms or who wants to negotiate the cost of rent.
With proper screening, you can increase your chances of accepting pleasant, reliable renters and decrease the likelihood of lawsuits against you for illegal rejections. In the event your tenants turn out to be problematic or you face litigation, speak to an attorney on how to handle the matter correctly.
