BPOA Article Library
Legal • June 1, 2005
17 Legal Reasons to Reject an Applicant
[Editor’s Note: the article below is reprinted from the March 2005 issue of Tips and Trends. Please note that Berkeley’s recently passed Measure P deals with a similar subject, i.e. the grounds on which a landlord may reject a substitute roommate. One important thing is to be consistent in your tenant selection processes: if some tenants are rejected because of their job history, or lack of it, you should be sure that you have not already accepted others whose history is the same or even worse. Note also that #10 on the list is questionable in our town, where there is a “base occupancy” level set for all controlled units]
17 LEGAL REASONS TO REJECT AN APPLICANT
Many landlords believe that they cannot reject any applicant for any reason. That they have to accept the first one to come along with the money or risk the grief of a lawsuit. Not so. There are numerous legitimate, businesslike reasons to reject a prospective tenant.
1. Unsatisfactory References from landlords, employers and/or personal references.
These could include reports of repeated disturbance of their neighbor’s peaceful enjoyment of their homes; reports of gambling, prostitution, drug dealing or drug manufacturing; damage to the property beyond normal wear and tear; reports of violence or threats to landlords or neighbors; allowing people not listed on the lease or rental agreement to live in the property; failure to give proper notice when vacating the property; r a landlord who would not rent to them again.
3. Frequent Moves
You have to decide what constitutes “frequent” moves and apply the same criteria to every applicant.
4. Bad Credit Report
If a report shows they are not current with any bill, have been turned over to a collection agency, have been sued for a debt or have a judgment for a debt, that is grounds to reject. These do not have to be debts connected in any way with housing.
5. Too Short a Time on the Job
As with frequent moves, you have to decide what “too short” a time is and apply the same criteria to every applicant.
6. Too New to the Area
There is nothing to say you have to rent to people who have just moved to town. Be careful, through, many times these would be excellent tenants and the time and long distance call expense of checking them out could pay big dividends.
You can safely discriminate against people who smoke.
8. No Verifiable Source of Income
9. Too Many Vehicles
Lots of cars can be a real source of irritation to neighbors and make the entire neighborhood or apartment complex look bad. Chances are, if they have more than one vehicle for every adult, they spend a lot of time broken and being fixed. That means they could be in pieces in the front yard or parking lot.
10. Too Many People for the Property
Use the 2 per bedroom plus one for the unit rule. 2 bedrooms = 5 people.
11. Drug Users
They must be current drug users. If they are in a drug treatment program and no longer use drugs, the Federal Governments considers them handicapped and protected by the Fair Housing Act.
13. Any Evidence of Illegal Activity
You must be able to come up with some kind of satisfactory evidence. I don’t know what that would be, every case would be different. Certainly a letter from the police department warning a previous landlord of their illegal activity and threatening to close the property is considered sufficient evidence.
14. History of Late Rental Payments
15. Insufficient Income
You must set up objective criteria applied equally to each applicant. Insufficient income could reasonably be if the scheduled rent exceeded 35% of their gross monthly income.
For example, if the rent is $600, their gross monthly income must be at least $1,1714.29. The formula is:
Accepted income = scheduled rent
You can require proof of all income. Be careful, though, if you are willing to accept the only one member of a married couple to supply the total dollar income, you must be willing to accept the same of unmarried, co-tenants that share the housing. Under Fair Housing law you cannot require that unmarried people meet different income requirements than married people.
16. Too Many Debts
Even if their gross income is sufficient, they may have so many other debts that they would be hard pressed to make all the payments. A rule of thumb might be that all contracted debts, including rent, cannot exceed 50% or their gross income. Contracted debts would be such things as credit card payments, car payments, loans, etc. Those would not be cable TV, water nad garbage, telephone or other utilities.
17. Conviction for the Manufacture or Distribution of a Controlled Substance in the Past Five Years
The best way to proceed is to post a list of the acceptable rental criteria and hand it to each applicant. You can use the list above, but under no circumstances is it intended to be legal advice. Check iwth an attorney who is familiar with the Landlord Tenant Law before posting or handing out anything like a list of acceptable criteria for applicants.
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