Denying a tenant without legal grounds can drag you and your real estate business to court for years to come. That’s a hot, legal mess you wouldn’t want yourself to be in because such fiasco would cost you a fortune on attorney fees alone.
If the court finds that you violated the laws included in the Federal Fair Housing Acts, you will pay damages to the tenant, including punitive damages, and damages for emotional distress. Aside from that, you will be penalized with $16,000 for the first violation. If it’s not your first, you have to pay $65,000 to $100,000.
When doing real estate business, you have to make sure that there will be more coming in instead of coming out. Getting into a legal dispute will definitely put you in a rough patch financially. That said, you have to be aware of the law before you start turning tenants away. For starters, you shouldn’t deny tenants because of discrimination.
Nevertheless, there are legal causes that allow you to reject a tenant, and those are what we’re going to list down here.
If they smoke and if they own a pet
These are forms of nuisance and do not belong in the anti-discrimination law. You can turn them down because both smoking and pets can cause detrimental health issues, such as cancer and respiratory problems to other tenants in the property.
You can ask them during the vetting process about their stand on smoking and owning a pet. If they’re a pro, you can set regulations, or you can outright reject their application. After all, it’s your property. Make sure, however, that you mention the reason for rejection in writing. Write it in such a way that a court might read it one day.
If they don’t make enough income or can’t be verified
You’re running a business. A tenant who doesn’t understand that should vacate the property so you can rent it to someone else. A tenant can afford the rent if his or her income is three times more than the rental cost. Anything lower than that is risky.
Regardless of the candidate’s charming personality, the giveaway to making your business succeed is looking at his or her financial information. It’s a red flag too if, on the other hand, you can’t verify where the income is coming from. Some tenants might ask for discretion, and it’s totally your call whether you approve the application or not. However, if you’re having a hard time making a decision, you must hire a property manager. The services that this professional provides can keep your real estate money coming in, and it will be from responsible, long-term tenants.
If they have been convicted of a crime
You can’t deny someone with a criminal record because you don’t work for the justice system. If the tenant has been convicted of a serious crime, then you can deny the application. Once again, you must have proof that this conviction exists as you put it into writing. You also need to prove that you’re not using any means of a discriminatory vetting process.
Conclusion
Be thorough with your vetting process. It’s not an easy task, but you have to do the process right. Otherwise, it can land you in a legal mess that has every potential to bankrupt your finances. If you’re not sure how to do it right, you can hire the services and expertise of a property manager. Their job is to make this a seamless experience for you and for your tenants, all the while making sure that you will enjoy the steady cash flow from responsible, long-term tenants.
If you’re in New York, get in touch with us today and find a solution to your property management needs!