Tenant Rejection Letter
FCRA-Compliant Adverse Action Notice
📋 Fill Online • 📥 Download PDF • ⚖️ Legally Compliant
⚠️ IMPORTANT: Legal Requirements
Federal law requires specific disclosures when rejecting applicants. This form includes all required FCRA adverse action notices. Failure to provide proper notice can result in lawsuits and penalties up to $1,000 per violation.
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Complete Screening – $39.95Complete Guide to Tenant Rejection Letters
Rejecting rental applicants is one of the most legally sensitive aspects of property management. Federal and state laws require specific disclosures and procedures when denying applications. This guide explains your legal obligations, how to write compliant rejection letters, common mistakes that lead to lawsuits, and best practices for protecting yourself while maintaining professional relationships.
Legal Requirements: The FCRA Adverse Action Notice
The Fair Credit Reporting Act (FCRA) requires landlords to provide an “adverse action notice” when rejecting applicants based wholly or partly on information from credit reports, background checks, or tenant screening reports. This isn’t optional—it’s federal law with serious penalties for violations.
Required Elements of Adverse Action Notice:
- Statement that application was denied
- Name, address, and phone of credit reporting agency used
- Statement that agency did NOT make the decision and cannot explain it
- Notice of applicant’s right to obtain free credit report within 60 days
- Notice of applicant’s right to dispute inaccurate information
Penalties for Non-Compliance
Failure to provide proper adverse action notices can result in:
- Statutory damages: $100-$1,000 per violation
- Actual damages: Any harm caused to applicant
- Punitive damages: If willful violation found
- Attorney’s fees: You pay applicant’s legal costs if they win
- Court costs: Additional legal expenses
- FTC enforcement: Federal Trade Commission can impose additional penalties
When Adverse Action Notice is Required
You must provide adverse action notice when denying applications based on:
- Credit reports: From Experian, TransUnion, Equifax, or other credit bureaus
- Tenant screening reports: From companies like TransUnion SmartMove, RentPrep, etc.
- Background check services: Criminal background checks from screening companies
- Eviction reports: Eviction history from tenant screening services
When Adverse Action Notice is NOT Required
You do NOT need formal FCRA adverse action notice when rejecting based solely on:
- Direct verification: Information you obtained directly (calling employers, previous landlords)
- Application information: Income stated on application doesn’t meet requirements
- Personal observation: Applicant behavior during showing or application
- First-come, first-served: Another qualified applicant applied first
However: Even when not legally required, providing written rejection with specific reasons is best practice and shows Fair Housing compliance.
Fair Housing Compliance
Beyond FCRA requirements, rejection letters must comply with Fair Housing laws. You cannot reject applicants based on:
- Race or color
- National origin
- Religion
- Sex (including gender identity and sexual orientation)
- Familial status (families with children)
- Disability
Many states and cities add additional protected classes like source of income, military status, or criminal history with convictions older than 7 years.
How to Write Legal Rejection Reasons
❌ ILLEGAL/RISKY: “You don’t fit our community” (discriminatory)
❌ ILLEGAL/RISKY: “We’re looking for different tenants” (vague, appears discriminatory)
❌ ILLEGAL/RISKY: “Did not meet our qualifications” (too vague)
✅ LEGAL: “Credit score below our 620 minimum requirement”
✅ LEGAL: “Gross monthly income of $3,200 does not meet 3x rent requirement ($4,500)”
✅ LEGAL: “Previous landlord reported chronic late rent payments and property damage”
Common Mistakes That Lead to Lawsuits
- No written notice: Verbal rejection only—leaves no paper trail of legitimate reasons
- Missing adverse action notice: Used credit report but didn’t provide required FCRA disclosures
- Vague reasons: “Not qualified” or “better applicants” insufficient and appear discriminatory
- Inconsistent standards: Accepting some applicants with same issues you reject others for
- Delayed notice: Waiting weeks to notify applicants (send within 3-5 days)
- Wrong credit agency info: Providing incorrect contact information for credit bureau
- Not keeping copies: Failing to document that notice was sent and what it said
Delivery Methods
How you deliver rejection letters matters legally:
- Certified mail (best): Provides proof of delivery and date received
- Email (acceptable): Keep sent email as proof, include read receipt if possible
- Regular mail (acceptable): Keep copy showing date mailed
- Hand delivery (risky): Get signed receipt acknowledging delivery
- Verbal only (NEVER): Provides no documentation of compliance
Timing Requirements
Send rejection letters promptly after making decision:
- Within 3-5 business days: Best practice for all rejections
- Before offering to others: Reject first applicant before accepting second if both applied for same unit
- After complete screening: Don’t reject until all verification is complete
What to Keep in Your Files
Maintain these records for every rejected applicant (keep for 2-3 years):
- Complete application: Shows what applicant claimed
- Screening reports: Credit reports, background checks, etc.
- Verification notes: Notes from landlord/employer calls
- Copy of rejection letter: Proof of what you told applicant and when
- Proof of delivery: Certified mail receipt, email confirmation, etc.
- Rental criteria: Written standards showing consistent application
Professional Tone Matters
Even when rejecting applicants, maintain respectful, professional tone:
“Thank you for your interest in renting [property address]. After careful review of your application and supporting documentation, we regret to inform you that we are unable to approve your application at this time.
We appreciate the time you spent completing your application and wish you success in finding suitable housing.”
