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Valid Reasons To Reject A Rental Application

Ginny:  We have been renting out our home since we moved to another town where my husband took a job. We’ve got an applicant (a retired lawyer) who has seen our lease form but wants “at least three hours” to negotiate its terms. The lease is from a respected legal publisher and we’re sure it’s legal.

I’m getting a bad vibe from this applicant, whose current landlord describes him as solvent, prompt and respectful of the rental property, but who is “a real pain.” Should we decide not to pursue this application? –Tess and Larry, Winnetka, CA.

Tess and Larry:  Sometimes it takes more than solvency and respect for property to make a good tenant. Unless you are desperate to rent the property now, and are willing to take a chance on having to deal with problems down the road, you should think about passing on this applicant. But to protect yourself, you’ll need to gather a bit more information before sending this applicant on his way.

Let’s look first at the legally permissible reasons landlords may rely on to deny an application. The general rule is that if the applicant cannot meet your rental terms (wants to have a pet in a no-pets building, for example), cannot or will not complete an application, or has a history of being a poor tenant, you’re on solid legal grounds to say “No, thanks.”

Being a poor tenant means that any reasonable businessperson in your shoes would conclude that renting to this person would pose an unacceptable business risk.

The most obvious business risks concern applicants whose income-to-debt ratio is worrisome, whose rent-paying history is spotty, or who have been asked to leave by past landlords for misbehavior. But these transgressions are not the only ones you can consider; one of the risks you want to avoid is having to spend time and energy dealing with a difficult tenant.

Just make sure that your conclusion that this tenant is a potential time-and-energy sink is not based on stereotypes concerning the applicant’s race, religion, sex, and so on.

So, let’s consider the telling remark of the applicant’s current landlord. What exactly does “a real pain” mean? Call that landlord back and ask for examples. You may hear that the tenant made frivolous repair requests, denied the landlord access for no good reason, hassled other residents, complained a lot, and so on.

All of these traits spell annoyance, if not downright trouble, to most seasoned landlords, and you may reject the application on this basis. Be sure to keep your notes so that, if challenged later, you have evidence that your decision was based on sound business reasons rather than illegal discrimination.

You may also reject based on your unwillingness to negotiate your lease. No law requires you to engage in an hours-long discussion. Many times, of course, landlords are well-served to modify their leases, particularly when it’s pointed out to them that certain clauses are unenforceable.

And often, landlords are willing to vary certain terms (pets, amount of deposit, parking, a promise to paint or other refurbishing, and even the rent) when the applicant’s requests are reasonable and the market is soft.

Let’s face it: A landlord surveying a long line of eager and qualified applicants will be less interested in modifying terms like these than a landlord who’s operating in a cold market with very few potential renters on the horizon.

If you are satisfied with the legality of your lease, the only result of protracted discussions with your lawyer-applicant will be terms less favorable to you (you can bet, for example, that the applicant will want you to drop your “late fees” clause). Unless you’re willing to dilute the lease — and take on a tenant who may drain your time and resources — repost the vacancy ad.

Ginny:  I’ve been a tenant at my complex for more than 10 years, and have always paid the rent on time. The property manager sent me a letter asking, without explanation, for copies of my Social Security card and driver’s license. I’ve already provided my license several times for a parking sticker, and the Social Security number was provided before I moved in. I’m concerned about identity theft; do I have to supply this information? –Susan, Boise, ID

Susan: I’m not aware of any laws that give landlords the right to tenants’ Social Security number or driver’s license information. Of course, many landlords ask for this information in the course of screening applicants; they need identifying information to enable them to order a credit report (although it’s possible to get a report without supplying a Social Security number). Any applicant who refuses to supply necessary identifying information can be turned away on that basis.

Asking for your SSN and driver’s license information after a tenant has been accepted and proved to be a solid, rent-paying resident is something else again, however. This information is relevant at screening time, when landlords have to gather evidence of good tenant behavior, which they do by checking credit and even driving history.

But as a long-term tenant, you have amply proved that you are a good risk! Mind you, by law people cannot run credit reports on other people unless they have a sound business reason, which doesn’t appear to exist here.

Have a talk with management and ask why they want this information. If you hear, “So we can have it on hand,” beware. Federal law (the “Disposal Rule,” 69 Fed Reg. 68690) specifically forbids the keeping of sensitive information when it’s no longer necessary.

If management persists in asking for the information and you refuse, triggering an eviction, you will have to defend on the grounds that your eviction was punishment for your refusal to comply with an illegal demand.

Although violations of the Disposal Rule carry civil penalties, it’s not certain that you can raise them as a defense to an eviction. It’s hard to imagine a landlord foolish enough to oust a stable, long-term tenant over information that the landlord really doesn’t need. But if you encounter such foolishness, be sure to get some legal help if matters take a turn in this direction.