Tenant rejection letter: 7 must-haves (+ template)

No property manager enjoys sending out tenant rejection letters. However, it’s an important part of the job and they’ve got to be done right. They’re not just a courtesy — they provide crucial information to a prospective tenant about their living situation and protect landlords against potential legal consequences down the road.

If you’re new to writing tenant rejection letters, the process can be intimidating. It’s essential that you understand when it’s valid to deny a potential tenant’s application and when it isn’t. Equally, you need to include all the necessary information in your document, both from a professional and legal perspective.

We put together this article to give you a strong starting point for writing a tenant rejection letter. We’ll cover what tenant rejection letters are, valid and invalid reasons for denying prospective tenants, and seven ‘must-have’ elements you absolutely need to include in your communications. 

‍We also have a free tenant recent letter template that’s ready for you to download and customize. 

What is a tenant rejection letter?

A tenant rejection letter, also known as an adverse action letter, is a formal document that property owners send to inform a potential tenant that their rental application was unsuccessful. 

It’s essential that tenant rejection letters clearly communicate the reason why they rejected the prospective tenant’s application, or else they risk legal consequences. However, you are well within your rights to deny rental applications for a variety of reasons as long as they are fair and legitimate. 

For legal reasons, tenant rejection letters provide unsuccessful applicants with information about their rights. For example, they may outline details about someone’s right to dispute something like a credit report and explain how they can obtain copies of said reports.

Reminder:
‍Tenant rejection letters are legal documents. For example, if you deny a potential renter because of their credit report in the United States, you need to specify that in your letter and indicate the consumer reporting agency you used to generate the report to comply with the Fair Credit Reporting Act (FCRA).

Having said that, the legal requirements associated with tenant rejection letters may vary based on local laws. Be sure to consult a legal professional in your area to make sure you’re including all the necessary information in your letters before you start sending them out.

Valid reasons to reject a rental application

There are several sound reasons why someone might reject a rental application. Some of the most common include:

• Poor credit history
  Landlords usually look for tenants with a fair or good credit score — CapitalOne reports that a score above 670 is a good benchmark. 
  
  A low credit score, accompanied by current or past outstanding debts, late payments, or an overall bad tenant credit check, might raise concerns about someone’s financial responsibility and likelihood of paying their rent, resulting in a rejected application.
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• Insufficient income
  Landlords and property management companies normally establish a minimum income requirement for someone to rent their property. Many expect the potential renter to have monthly income that amounts to at least 3x more than their rent. 
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• Undesirable rental history
  If a landlord or property manager becomes aware that a potential tenant has previous evictions or broke conditions of their rental agreements in the past, they may be reluctant to approve a rental application. 
  
  Likewise, negative feedback from a previous landlord who refers to things like rudeness, property damage, or late payments is also a red flag.
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• Criminal history
  If an applicant is a convicted criminal, especially involving violent or property-related crimes, they might be considered a security risk to the rental or other tenants. This is the main reason many landlords and property managers ask for a tenant background check as part of the application process.
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• Incomplete or inaccurate application
  One of the most avoidable reasons a landlord might reject a potential tenant is an incomplete application. That might involve missing documents, no references, a lack of employment history, or not sending a fee or deposit. Similarly, prospective tenants who lie or misrepresent themselves in their applications are likely to get a denial.
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• Problems with the lease agreement
  An applicant may want to negotiate aspects of the lease agreement. For example, they may have multiple pets, want to stay in the rental property for a longer or shorter period of time, or wish to live with a higher-than-expected number of occupants. If the landlord doesn’t agree with their conditions, they’ll likely reject the application.
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Invalid reasons to reject a tenant application

It’s crucial to consider that there are several invalid, illegal reasons for denying a tenant. For example, in the US, the federal Fair Housing Act prohibits landlords, real estate companies, and other relevant entities from denying housing to people for a wide range of reasons. 

We’ll outline those criteria in more detail below, but it’s worth pointing out that fair housing laws differ by country, state, and local area. If you have any doubts about whether you’re within your right to reject a tenant’s application, we recommend consulting a legal professional.

It’s illegal to deny a prospective tenant for the following reasons based on fair housing laws in the United States:

• Race or color
• Religion
• Sex
• Sexuality orientation
• Gender identity
• National origin
• Familial status 
• Marital status
• Disability
• Age
• Arbitrary discrimination 

Arbitrary discrimination is when a landlord or property manager discriminates against a certain group of people and denies their potential tenancy for that reason. Examples include discriminating against applicants based on factors like physical appearance, political affiliation, military service, or group membership.

7 must-haves in a tenant rejection letter

When preparing a tenant rejection letter, including all the necessary information is important both for legal reasons and common courtesy. While tenant rejection letters can vary to some extent, be sure that your document checks all the following boxes:

1. Basic contact information and property details: First off, include the date, the prospective tenant’s full name and address, the landlord or property manager’s full name and address, and the property address (if it differs from the sender’s).

2. Clear statement of your decision: Communicate that the tenant’s application was unsuccessful right at the beginning of the letter. Be professional yet direct — you don’t want to cause any confusion.

3. Specific reason(s) for the denial: You’re legally required to tell the applicant exactly why you rejected their tenancy. There may be one or several reasons, so make sure you list all that apply. Depending on your reasons, provide additional details, like the consumer reporting agency you consulted if the credit report was a factor in their rejection.

4. Suggestions or resources for the future: While this step isn’t required, it’s a kind and helpful gesture where applicable. You might send the unsuccessful applicant information about local housing authorities or credit counseling services, recommend they find a co-signer, or send other properties in your portfolio that would be a better fit for them.

5. Appeal information: If you accept appeals, be sure your letter explains how someone can file one. Include a specific timeframe and indicate to whom the prospective tenant should send their appeal.

6. Rights and protections information: It’s essential to make the unsuccessful tenant aware of the rights and protections that apply to them. For example, include information that applies to the Fair Credit Reporting Act, the Fair Housing Act, or other applicable housing laws.

7. Signature: Remember, a tenant rejection letter is a legal document. When you sign off at the end, be sure to sign it.

Rental application rejection letter template

If you need guidance getting started with your tenant rejection letter, download our free template below. All you have to do is customize it so that it fits your circumstances, needs, and geographic area.

TEMPLATE COPY

[Your name]
[Your title]
[Company name]
[Company address]
[City, state, and postal code]
[Email address]
[Phone number]

‍[Current date]

‍[Applicant’s name]
[Applicant’s address]
[City, state, and postal code]


‍Dear [applicant name], 

Thank you for your interest in renting [full property address]. We appreciate the time and effort you put into the application process. After careful consideration, we’ve decided to decline your application based on one or more of the following reasons:

◽️ Credit history
◽️ Income-to-rent ratio
◽️ Rental history
◽️ Criminal history
◽️ Incomplete application
◽️ Inaccurate application
◽️ Issues with the lease agreement
◽️ Other reason: [specify]

We understand this news may be disappointing. If you have any questions or want to discuss our decision in more detail, feel free to contact us at [phone number] or [email address]. We’d also encourage you to consult the following resources to assist your applications in the future. [Resources and/or other suggestions here]

If you disagree with our decision, you have [time period] to respond to this letter and file an appeal. You may send your appeal to [contact person] at [contact person address] or [contact person email address].


Under state and federal law, you have certain rights and protections we wanted to highlight:

[This last section varies based on your country and jurisdiction, so will need to be customized accordingly]

• Fair Housing Act: It is illegal to discriminate against applicants based on race, color, religion, sex, national origin, familial status, or disability.
• Equal Credit Opportunity Act: You have the right to know the specific reasons for the rejection of your rental application if it was based on information in your credit report.
• Fair Credit Reporting Act: You are entitled to a free copy of your credit report from the reporting agency if your application was denied based on your credit. You also have the right to dispute inaccurate or incomplete information. You may contact [credit reporting agency] at [address] and [phone number] for a free copy of your report.

We wish you the best of luck in your search for a new home.

Sincerely,

[Your name]
[Send title]
[Company name]
[Signature]

Send your next tenant rejection letter with ease and confidence

All in all, tenant rejection letters might not be your favorite aspect of the job, but they’re a vital part of the residential rental business. 

‍They communicate the reasons why a prospective tenant wasn’t successful in their application, providing them with clarity and important information for their future housing search. 

‍Even more critically, they ensure you have your legal bases covered so no one can accuse you of unfair or illegal denial down the line.

Be sure to download our free template to save yourself time and avoid missing any key information when you’re writing your next tenant rejection letter. This is because Minut believes in empowering property managers and reducing their workload so you can focus on the big picture — running your business.

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