As a landlord, you want tenants that pay their rent on time, don’t pose a threat to your property, and (hopefully) seek to renew their lease. That’s why you use tenant screening as a way to ensure your property gets quality tenants, and avoids potential liabilities. In the case where you receive applicants that aren’t the right fit or potentially pose a threat, you legally must send out an adverse action letter to the denied or conditional (modified terms) applicant.
According to Caryn Bennett’s article, “you are to provide the applicant in writing (1) an Adverse Action Notice explaining why the decision was made, (2) a Summary of Rights Under the Fair Credit Reporting Act (FCRA) and (3) any additional forms required in your state.”
At a minimum, the Adverse Action Notice must include:
- The name, address, telephone, credit score (if used) of the applicant and website of the agency that provided the report.
- A statement that the agency did not make the decision to take the adverse action and cannot give the specific reason for it.
- A notice of the applicant’s right to dispute the accuracy of the information provided by the agency and the applicant’s right to receive a free report from the agency upon request within 60 days.
Still confused? The Federal Trade Commission (FTC) provides guidance on how to legally use consumer reports.
It is the landlord’s responsibility to provide these notices to each conditional or denied applicant. If you fail to provide the applicant their statutory notices, the applicant has a right to submit a formal complaint with the Consumer Financial Protection Bureau (CFPB) and/or pursue legal action.
Providing an Adverse Action notice to each denied or conditional applicant is vital in that it enables an applicant (who disagrees with the information on the tenant screening report) to initiate a consumer dispute and correct any inaccuracies. Plus, giving your applicants an opportunity to correct any inaccuracies ultimately improves the tenant screening data you rely on!
By using ApplyConnect®’s automated decision letters, our system sends your applicant(s) the Summary of Rights under the FCRA, a link to the CFPB, and how to initiate a consumer dispute with ApplyConnect®. Take advantage of our Adverse Action Notice template and pre-written consumer State notices. All of these (and more) are available on our Resources page.