Rental Applications - Legal Guidelines

Written rental applications are the best way for a landlord
to screen prospective tenants and to protect himself against discrimination charges.

A landlord may not discriminate on the basis of race, sex, marital status, age, religion, nationality, disability etc.

You may refuse to let a two bedroom property to a couple with four children, but you can not turn down a blind applicant because you don't want his guide dog on the premises.

pen on application form

You can legally choose anyone from the rental applications if you can show your decision is based on business criteria, such as: sufficient income to pay the rent, good credit history, good referral from previous landlords and good employment history.

It is therefore very important to keep written documentation to support your decision, should it be challenged by a rejected applicant.

The golden rule is to be consistent in your evaluation. If you do a credit check on one applicant, you must do it on all the others. Similarly, you cannot specify a higher security deposit for one candidate and not the others at the application stage or demand a higher income (see note about affordability further in our article) to qualify for some tenants.

PLEASE NOTE:
Links to a variety of free forms to assist you with managing your rental properties can be found on our main Real Estate page.

IF you've stated that you will treat the rent applications on a first come, first served basis, you must record the date and time of receipt of the application. You can not then choose the last candidate (even though clearly the better one) over an earlier candidate that qualified.

As soon as you've qualified a tenant, you can notify those further down the list of the fact, state that you had no need to verify credit history or other details and return their payment for the application fee.

It may be better not to work on a first-come-first-served basis, but to collect all the rental applications and do all the background checks. It is then a lost easier to choose the best candidate according to standard business principles, especially if you use a scoring system. If a few candidates are equally qualified, you can then favor the earliest submission.

A special mention about affordability...

When considering the income of a potential tenant, you need to look at the available funds for the rent portion after making deductions for living expenses and creditors.

If an applicant is overextended with other credit commitments (car payments, student loans, commuting costs etc.) and the odd emergency expense, then sooner or later he/she will have difficulty paying the rent.

7 figures in a row

Rejection of Tenant Applications

Should you reject a prospective tenant (take adverse action) based on a credit report, you have to notify him/her orally, in writing or electronically. It is always best to do so in writing and to retain proof thereof!

Your application rejection letter must include the following:

Your reason for rejection:
Full details of the agency that provided the credit report;
A statement that the agency did not make the decision to take adverse action and therefore can not provide details of the adverse action;
Notice to the applicant that he/she can obtain a free copy of the report if requested within 60 days;
Notice to the applicant that he/she has the right to dispute the accuracy of the report with the agency.

Inaccuracies on Rental Applications

A landlord may also decide to turn down applicants based on inaccurate or false information on the rental applications, information that can not be verified or negative reports from previous landlords. If the decision is based on a negative report from a previous landlord, you do not need to supply details of the information, but just the nature of the information, e.g.:

adverse history of rent payments
adverse history of damage to other properties
etc.

Guarantor Agreement

What if a potential tenant ticks all the right boxes but does not qualify on the strength of his/her income?

It is up to the landlord to decide whether to accept a guarantor. This is most often the case with students or first time renters. Ideally the guarantor should be a family member with a proven track record, or the employer.

The guarantor must complete a separate guarantor application form and the lease or rental agreement does not necessarily have to reflect this arrangement. Use our free guarantor agreement as a separate document which references the lease.

All these sample documents, including a free rental application form are listed with our free Real Estate Contract Forms.

The Added Benefit of Rental Application Forms

Records of rental applications can assist the landlord in having emergency contact numbers for family members on hand in a medical situation or should the tenant decide to disappear with rent. Photocopies of any identity documents should also be attached.

Keeping proper record of rental applications and applying fair and consistent evaluation when choosing a tenant, offers the best protection for landlords if charged with discrimination!

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