7 Perfectly Legal Reasons You Can Deny a Rental Application in Washington, D.C.

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Selecting tenants for your rental property can be stressful, as you’ll have to go through numerous applications, narrow your search to a few qualified candidates, and contact references before finally making your decision. You might also have to show the property multiple times and keep it spotless for prospective renters wanting to view it.

This process gets even more challenging because you must worry about your reasons for denying certain rental applications to ensure they’re legal. You can’t reject an application on any discriminatory basis, including race, age, sexual orientation, familial status, or participation in a subsidy program, so you must be careful with the explanations you give for approving or declining an applicant. 

The good news for landlords is that you can use some steadfast justifications for denying an application to reduce your chances of encountering problems as long as you’re transparent with your selection criteria. This guide explains why choosing suitable tenants is important and examines some valid reasons to deny rental applications in the D.C. area.

Why Selecting the Right Tenants Is Vital

The entire point of the application process is to get to know prospective tenants better so you can choose the ideal people to live in your investment home. Tenant turnover costs you time and money, so finding long-term renters is in your best interest. Selecting the right tenants is also helpful because they’re more likely to do the following:

Take Care of the Property

Finding tenants who will care for your property like it’s their own is crucial because it will likely minimize the damages you’ll encounter. These renters will be careful with the home, and you won’t have to worry as much about their actions cutting into your investment’s profitability. 

Pay Rent on Time

Carefully vetting tenants makes it more likely you’ll choose someone who pays rent on time. A late rent payment once in a while probably isn’t a big deal, but tenants who are habitually late cause stress and could force you to temporarily cover expenses while waiting for payment.

Follow the Rules

Respectful tenants will typically follow your property rules, so you won’t have to deal with complaints from neighbors, parking violations, and unauthorized residents living in the house. Having your renters follow the rules also reduces stress and limits turnover because you can avoid potential evictions.

There’s tremendous value in finding the right tenants for your rental property because they’ll increase your profitability and reduce your stress. You’ll also need to learn why you can reject inadequate applicants to ensure you don’t violate any laws.

Seven Valid Reasons to Deny Rental Applications

The U.S. Department of Housing and Urban Development’s Fair Housing Act states that you can’t deny a renter’s application for discriminatory reasons. There are some perfectly valid reasons to deny rental applications, but you’ll have to clearly present these eligibility criteria to prospective tenants before accepting applications. Some justifications you can use to reject an application include the following:

1. Doesn’t Earn Enough Income

You’ll want to ensure your tenants can afford to pay rent every month, so rejecting an application for lack of income is valid. There isn’t a set amount of income your tenants should have, but landlords typically look for a 3:1 income-to-rent ratio to reduce their risk. Your eligibility criteria should clearly state how much you expect your renters to earn monthly.

2. Lies on the Application Form

Discovering information on an application form that’s unverifiable or false is a valid reason to reject the applicant. This misleading data could include fake references, employment history, or other information that makes it seem like the renter better matches your eligibility criteria. 

3. Smokes Cigarettes

You can reject an application if the applicant is a smoker. Asking for this information up front is advisable because you’re well within your rights not to want someone who smokes to live in your investment home because of the smell and residue it creates. You can also make being a nonsmoker part of your criteria.

4. Doesn’t Submit to a Background Check

Your screening process might ask for a criminal background check, and you have the right to reject an application if the applicant doesn’t submit one. Remember that you can only use criminal convictions occurring within the last seven years for certain crimes as reasons for denying an application after making a conditional offer.

5. Has Poor References

Checking applicant references is a vital part of the inquiry process, and poor feedback from previous landlords is a valid reason to reject the tenant. The information you gather as you speak with past landlords is invaluable because it provides insight into how you should expect your experience with the renter to go.

6. Won’t Agree to Your Rental Terms

You can reject an applicant who refuses to agree to your rental terms or sign the necessary paperwork before finalizing the tenancy agreement. You have the right to set rental conditions, and you don’t have to let any tenant who doesn’t agree to these terms live in your rental home.

7. Has Bad Credit

Landlords in D.C. can’t use a poor credit score to reject an applicant outright, but they can use the specific information the credit report presents to deny an application. You can ask for a credit report as part of the application process, and if the prospective renter has multiple late payments or credit defaults, it provides a valid reason to reject the application.

Understanding your rights as a landlord is essential as you navigate the rental application process. You don’t want to face legal problems in the future because you didn’t understand how these applications work and the legality of the reasons you give for rejecting one.

Property Management Assistance

Marketing your property and vetting potential tenants takes significant time and effort, and you also have to worry about Fair Housing Act violations throughout the process. Getting assistance managing your investment property makes sense because you can earn passive income while leaving the hard work to the professionals. 

Nomadic Real Estate offers property management services in the Washington, D.C., area. Our team will vet all prospective renters before accepting any applications, ensuring you end up with tenants who will care for the place and pay rent on time. Contact Nomadic Real Estate to learn more about how a property manager can help you.

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Enhanced Reporting

Your portal includes a selection of extremely useful reports. Reports are available in the “Reports” section, and are distinct from the financial statements. Unlike financial statements which are static records, Reports are dynamic real-time records that will update with current data every time you view them. 

Scroll down to learn more about Reports:

Navigate to the "Reports" module in your portal:

Owner Portal Reports
  • Keep in mind, these reports are dynamic records. They will refresh to display current information every time you view them. 

Enhanced Rent Roll Report:

Enhanced Rent Roll Report
  • The Enhanced Rent Roll Report will show the rent amount, last payment date, move-in date, lease expiration date, and security deposit amount for each of your tenants. 
  • It will also show a portfolio summary with occupancy percentage, vacancy loss, and more!

Unit Comparison Report:

Unit Comparison Report
  • If you own multiple units (or buildings) with Nomadic, you’ll get access to the Unit Comparison Report. 
  • This report enables you to quickly compare financial performance between your units at a glance without toggling between individual reports. 

Income Statement Month-Over-Month:

Income Statement by Month Report
  • The Income Statement Detail – Monthly Report serves as a month-over-month record of portfolio performance. You’ll see itemized income and expense categories and can track monthly. This report will update with fresh data every time you view it. 

Financial Statements

Financial statements will be published to your portal on a monthly basis. The statements are found in your Documents library, and provide a historical record of all financial performance. The statements serve as a snapshot of financial performance over a given period, and are static documents (unlike Reports, the statements do not update/change in real-time). 

Scroll down for more info about the Financial Statements in your Documents library:

The Documents area contains monthly financial statements:

Owner Portal Documents
  • The statements in the Documents are are static documents. They are posted to the portal once a month to serve as a historical record of financial performance. 

Download a statement to see month and YTD financials:

Owner Portal Property Statement

You'll also find a month-over-month operating statement:

Month over Month Statement

Portal Communication Tool

You can use your owner portal to communicate with our team. Any messages you send through the portal will go straight to your Account Manager. When we reply, you’ll get an email notification and you’ll also see the message in your portal next time you log in. 

Here’s an overview of using the communication platform:

Click "Communications" and navigate to "Conversations":

Commincation Dashboard Screenshot
  • The communications module will contain a record of all messages that you create through the portal. 

Click the "New Message" button and send your message:

Owner Portal New Message Screenshot

Responses will show up in the conversation ticket:

Portal Conversation Response Screenshot
  • You’ll get an email notification whenever you get a response, and you’ll also see the message in your portal next time you log in. 

You can reply in-line using the comment box:

Owner Portal Comment

Each conversation will be logged in its entirety:

Portal Conversation Snapshot

Understanding the Ledger

Your portal includes a ledger with all transactions. The ledger is populated with data in real-time as transactions flow through our accounting software. Much of this information is also available in the Reports area, as well as the Statements in your Documents library, but the ledger is the most comprehensive resource for diving into the details. 

Please scroll through the sections below to get a better understanding of how to interpret the ledger. 

By default, transactions are sorted chronologically:

Owner Ledger Dates
  • The date reflected in the lefthand column is the actual transaction date, not the “bill date”. This is the date the transaction was actually processed. 

If you have multiple properties with Nomadic, you'll see the address for each transaction in the "Location" column:

Ledger Property Column
  • You can filter the ledger to look at just one property, all properties, or specific sets of properties. 
  • If you only have one property with us, you’ll just see the ledger for that property. 

The Description column displays the transaction type:

Owner Ledger Description Column
  • BILL: this is an expense transaction, such as for repair costs or management fees.
  • CHARGE: this is a transaction  billed to the tenant, most typically a rent payment. 
  • NACHA EXPORT: this is a credit we processed to your distribution account. This type of transaction is how you get paid! 

The Amount column shows the dollar value of each transaction:

Owner Ledger Amount Column
  • Positive Amounts: if an amount is positive, it reflects a transaction that is payable to you. Typically, this will be a rent payment that we collected from your tenants. On occasion, a positive number could also signify a journal entry or credit adjustment. 
  • Negative Amounts:  if an amount is negative, this is a transaction that is either payable to Nomadic or is an amount that has already been paid to you. Typically this will be for repair costs or management/leasing fees. Owner draws (net distributions into your checking/savings account) also reflect as negative amounts, since they have already been paid to you. 

The Account Balance column shows a sum of positive/negative transactions at a given point in time:

Owner Ledger Account Balance Column
  • Account Balance should always equal zero after a net distribution has been processed. When the balance is zero, this means that all expenses have been paid and you’ve received the remainder as net operating income, leaving a balance of zero (meaning: no one is due any money, as all funds have been distributed appropriately). 

Navigating the Propertyware Owner Portal

Your portal includes some extremely useful features that help you understand your property’s financial performance at a new level, with real-time transparency into every transaction.

Scroll through the snapshots below for an overview of portal navigation! If you need more help or have specific questions about using the portal, you can reach out to your Account Manager any time for a screen share. 

You can filter all info by date range or property:

PW Portal Filters

View a snapshot of income and expenses on your dashboard:

PW Owner Dashboard View

See every transaction in real-time on your ledger:

Owner Portal Ledger View

Statements and forms will be posted to your documents library:

Owner Portal Document Library

View a suite of real-time financial reports:

Portal Reports View

See a running list of all bills, and drill down for more detail:

Owner Portal Bills View

Under Bill Details, you'll find dates/descriptions/amounts and more:

Portal Bill Details

You can also communicate with your Account Manager through the portal:

Owner Portal Communication Tools

How do net distributions work?

Net distributions keep your accounting clean and simple. Each month we’ll collect rent from the tenants, deduct any repair expenses for the previous month and any management/leasing fees for the current month, and credit the remaining net operating income to your account. 

Net Distribution

You’ll receive a statement via email each time a net distribution is processed, and can view all transaction details in your Propertyware owner portal.