Can Landlords Refuse to Rent to Tenants?

Landlords have the right to refuse to rent to tenants, but their reasons for doing so must be legally valid. Acceptable grounds for refusal can include poor credit history, a record of nonpayment of rent, or violations of occupancy limits. However, landlords cannot discriminate based on protected characteristics such as race, gender, or familial status, as the Fair Housing Act outlines.

Understanding these distinctions is essential for both tenants and landlords to navigate the rental process lawfully. Explore the laws that govern rental denials, helping you understand your legal rights and responsibilities in the rental market. If you have concerns about discrimination or legal compliance, seeking professional legal advice is prudent.

When Landlords Can Legally Refuse To Rent Their Property

Landlords can refuse a potential tenant for a broad range of reasons. Many of the most common reasons for refusal become apparent during the tenant screening process. A landlord will ask applicants about their income, employment history, criminal background, and rental history. The landlord or property management company will compare the applicant’s answers to a predetermined set of standards. If the applicant does not meet the minimum standard, they will be refused as a tenant.

If a potential tenant is not honest or does not finish their application, a landlord may refuse them on the grounds of mismatched identity or lacking critical information. A lack of honesty on a rental application is a sign of increased potential issues later. A landlord could have a general policy to not allow pets or smoking in their rental. Any applicant who says yes to either of these will be automatically denied. However, this does not cover individuals with a service animal, as these animals are not considered pets.

Landlords want to avoid going through the eviction process. To do this, they have a minimum income requirement for the monthly rent. That way, they can ensure the tenant can afford to pay rent. Anyone who cannot show adequate income can be rejected. However, several states have restrictions on income rejections. While a landlord can reject a tenant based on income amount, they cannot reject them based on source of income. As long as it isn’t an illegal income source, the landlord cannot discriminate against the type of employment the potential tenant has. This protects tenants with a disability, child support, retirement, or unemployment insurance as a part of their income.

Similarly, a landlord can request permission to run a credit check for the applicant. A credit report will show the potential tenant’s financial responsibility. A poor credit history or low credit score will signal the tenant may struggle with making responsible financial decisions that could lead to eviction later.

Potential tenants with a rental history will help a landlord better understand what to expect from the individual as a tenant. Those with an eviction history are more likely to require eviction in the future. Similarly, those with a pattern of late payments, violation of lease terms, or security deposit paid-for damages are a greater risk for the landlord.

Criminal background is one of the more complicated valid reasons for tenancy refusal. Many city and state laws protect individuals convicted of a crime. It is a form of fair housing to protect individuals seeking housing after conviction. Landlords may or may not be able to reject a potential tenant based on criminal background, depending on the crime convicted of and the period of time since conviction.

Occupancy Ordinances

Beyond landlord-established limits and standards, state and local laws may require a landlord to refuse tenancy of a rental unit. A landlord must reject a potential tenant if approving them would put the rental unit over the legal occupancy limit.

Generally, occupant limit laws restrict the number of people living in a dwelling based on the square footage, housing type, or the number of bedrooms. Large single-family homes tend to have higher occupancy rates than small apartments. A common situation is where renters want to add additional roommates. However, this would put the total number of occupants over the zoning limit. The landlord has no option but to refuse the additional tenants.

Housing Discrimination and Tenant Protections

Landlords cannot reject a rental applicant based on race, color, national origin, religion, sex, familial status, disability, or sexual orientation. The federal Fair Housing Act protects against discrimination in these protected classes. Each state also has its own version of the Fair Housing Act. Some states, such as California, provide broader discrimination coverage, including income source and gender identity. New York includes marital status and sexual orientation in its Fair Housing Act. ​

Practical Steps for Tenants and Landlords To Avoid Legal Issues

You don’t have to have a signed lease agreement to enforce a tenant’s rights against a landlord. Typically, a landlord should provide written notice of tenancy rejection. That notice should outline the valid reasons for refusal. If the applicant feels that the reason isn’t valid or is unlawfully discriminatory, they can file a complaint with the local housing authority. Another option is to speak with a landlord and tenant lawyer. Many states also have fair housing agencies or programs that provide legal help to landlords and tenants in conflict.

The best approach is to avoid conflict before it starts. For landlords, the best approach is to educate themselves on local, state, and federal laws that directly impact their rental property. Having a landlord attorney to provide counsel can help them proactively avoid conflict. A lawyer can assist with creating applicant screening standards that comply with housing discrimination laws. They can also prepare a legally compliant rental agreement and applicant rejection letter.

Marc Lieberman is a real estate attorney for Kutak Rock in Scottsdale, Arizona. He works primarily with investment firms, though his insights on legal representation and the cost of litigation can also be applied to other areas of real estate law. His firm’s experience with representing clients highlights the importance of screening clients. Facing a trial because of a problematic tenant can be an expensive option. “You have to decide whether the client has adequate resources to actually defend themselves. The average case we’re seeing these days is going to be over $1,000,000 to litigate through trial.”

Lieberman explains the dilemma that many clients and their attorneys face. Financial constraints can limit how a client pursues their claim. “Unless the client has substantial sums or has insurance, their ability to defend themselves may be quite limited. If [attorneys don’t take] cases on contingency, you have to decide whether or not the case would be worthwhile. You [the client] have to decide whether you think you’re really going to win the case or if you can settle it.”

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