Legal and Illegal Reasons Landlords Can Reject a Rental Application

Landlords can legally set whatever criteria they want for tenants, as long as they are reasonably related to their business needs and don't violate antidiscrimination laws.

Here's a breakdown of situations where a landlord can rightfully reject an applicant, as well as some red flags that might indicate bad faith on a landlord's part.

Legal Reasons for Rejecting Rental Applicants

A landlord may legally reject an applicant for legitimate business reasons such as

• poor credit history
• income that a reasonable businessperson would deem insufficient to pay the rent
• negative references from a previous landlord or employer
• a criminal conviction that's relevant to the person's fitness as a tenant, and
• a prior eviction lawsuit (even one that the tenant won).

A landlord can also refuse to rent to smokers or disallow pets because smokers (and pet owners) as a group are not protected by antidiscrimination laws. If a landlord's policy is no pets, no smoking, or some other legitimate lease or rental agreement term, the only hope a tenant who wouldn't qualify with these rules in place has is to try to negotiate.

Finally, landlords can limit the number of occupants for health and safety or legitimate business reasons. For example, if a rental's septic system can handle only four residents, the landlord would be on solid ground restricting the number of tenants. However, a landlord may not adopt a low occupancy standard for the purpose of prohibiting families, for example—this would be a violation of fair housing laws.

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Illegal Reasons for Rejecting Rental Applicants

The Federal Fair Housing Acts (42 U.S. Code §§ 3601-3619) prohibit discrimination on the basis of race, color, religion, national origin, sex (including gender identity and sexual orientation), age, familial status (having children), and physical or mental disability (including alcoholism and past drug addiction). In addition, many states and cities also prohibit discrimination based on marital status and source of income.

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Rental Application Questions—How Far Can They Go?

Most landlords will want you to fill out a rental application with information on your employment, income, credit and financial information, rental housing history, and any criminal convictions. It's legal to ask for all this information and use it to make rental decisions. Landlords may also legally ask you for your Social Security and driver's license numbers and (except in New York City, Colorado, and California) for proof of your legal residency in the United States. Landlords may even ask if you smoke or if you've ever been sued.

How far can landlords go? They can ask for any information that will:

• tell them whether you're likely to be a good tenant, and
• help them find you if you skip town owing them for rent or property damage.

Questions that don't relate to these two issues are probably not legal. Keep in mind, however, that not all discrimination is illegal, so some questions that may not "sound right" may in fact be legal. (See "Can Landlords Ask About a Potential Tenant's Relationships" below.)

Look at it this way: When you rent a car, you're often asked for multiple forms of ID and your driving history. Renting a place to live isn't all that different: The landlord, as much as the car rental agency, needs to know whether you're a good risk and how to find you if things go awry. In fact, since rental property is a much bigger investment than a car, a landlord is motivated to be even pickier.

Why Do Landlords Ask Financial Questions?

Money talks, especially in rental housing. If the landlord reasonably concludes that you can't afford to pay the rent in view of your income and existing debt level (which will be visible on your credit report), they are not obligated to rent to you. Many landlords use a rent-to-income ratio of one-to-three (rent can be no more than one-third of your income) as a rule of thumb.

As a broad generalization, you too probably don't want to spend more than 25% to 35% of your monthly take-home pay on rent, but this will obviously depend on your other expenses. And you won't want to live in a penthouse if it means you need to eat popcorn every night.

Can Landlords Ask About a Potential Tenant's Relationships?

Most landlords don't care a bit about whom you share your bed with—they're much more interested in whether you pay your rent on time and are a decent housekeeper and a considerate neighbor. Unfortunately, a few landlords see themselves as enforcers of their chosen code of religion or morality. For example, some landlords don't want to rent to heterosexual, unmarried couples, and some refuse to rent to homosexual couples.

Discrimination on the basis of sexual orientation is illegal under federal fair housing laws. However, in many states, unmarried couples aren't protected by antidiscrimination laws, meaning landlords can get away with these kinds of choices. In these states, it wouldn't be illegal for a landlord to question you and your would-be roommate about the nature of your relationship (for example, by asking if you're "together").

If you and your friend are questioned concerning your relationship, what should you do? This is an issue for all roommates, even the ones who are just friends. Think about what this line of questioning bodes for future dealings with this landlord: Here is a businessperson who is inappropriately interested in customers' private lives. Chances are good that the landlord spends their time and energy checking up on tenants' love lives, at the expense of running a pleasant and livable building. If at all possible, look elsewhere.

Question One, Question All

While landlords are entitled to ask business-related questions on a rental application or during an interview, there is an important hitch: They should subject all applicants to the identical set of basic questions. Because federal and state antidiscrimination laws make it illegal to single out members of certain groups for special treatment (such as questioning only people of a certain race or ethnic background), interview or application questions that aren't directed at everyone constitute an illegal practice.

For example, landlords who ask about immigration history should ask all tenants, not just those whom they suspect might be in the country illegally. Questioning only those from Asia would amount to illegal discrimination on the basis of national origin. Similarly, requiring credit reports only Black applicants would also be considered illegal discrimination.

Tenants Should Interview the Landlord, Too

Do a little background investigation of your own. Conscientious landlords will probably take the time to learn about your rental and employment history. There's no reason why you, too, can't ask a few questions to find out whether you want to rent from this landlord. Ask current tenants and neighbors what it's like to live there; ask the tenant whose unit you're considering why they're moving out. If the current tenant is leaving in disgust over poor management or dreadful neighbors whom the landlord won't evict, you'll want to think twice about signing a lease or rental agreement. Keep in mind that a building with a large turnover rate, and especially one where evictions are common, is probably not run very well.

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