Denial of Lease Applications Related Issues

​Adverse Action Letter Regarding Rental Application
If a landlord denies the prospective tenant’s rental application because of poor credit, the landlord is required, under Section 615(a) of the Fair Credit Reporting Act  to provide a special notification to the prospective tenant that, among other things, provides the applicant with the name, address, and telephone number of the credit reporting agency; informs the applicant that the credit reporting agency did not make the adverse action and is unable to provide the applicant with the specific reasons why the adverse action was taken; and gives the tenant the right to obtain a free copy of her credit report from the credit reporting agency to dispute the accuracy or completeness of the credit report.
This type of notice must also be given if the landlord charges the tenant an extra amount as a result of having bad credit (such as an additional security deposit or extra rent). The notice does not need to state the specific information in the credit report that was of concern to the landlord. Instead, it merely needs to state that information in the credit report was a basis for the denial of the rental application. 

​The Adverse Action Letter Regarding Rental Application, GAR Form 904, fulfills the federal requirements and should be supplied to the applicant whenever an application is denied, or the Landlord decides to charge additional rent because of poor credit.  
It is recommended that third-party credit reports be included in the Paperless Pipeline files for your protection should a complaint be received by a landlord with a difficult tenant.
 Section 8 Tenants
A person’s low-income or financial status is not a protected class under the Fair Housing Act, and discrimination based on poor credit or low income is therefore permitted.  Landlords may refuse to rent to Section 8 tenants based on their low-income status without violating the Housing Act of 1937, the federal Fair Housing Act or any other federal or Georgia law.
Disclaimer on Credit, Criminal and Reference Checks
Lease listing agents and property managers often run credit and criminal background checks on behalf of a landlord. Both GAR F122, Exclusive Leasing Listing Agreement and GAR F128, Exclusive Leasing/Management Agreement disclaim in the agreements the accuracy and completeness of any background check to avoid claims if the tenant turns out to be less reputable than was thought.
GAR F128 Exclusive Leasing/Management Agreement
Owner acknowledges that any credit and criminal background checks requested by Owner hereunder are being performed by third party credit reporting companies, that the information obtained from such companies may be incomplete and/or inaccurate and that the scope of such checks may vary from company to company with some checks being limited to Georgia while others apply nationwide. Owner shall specify in writing to Manager if Owner wants the credit reporting company to perform a national search. Owner further acknowledges that in checking references the information provided to Manager may also be false, incomplete and/or inaccurate. While Manager may obtain or cause to be obtained certain information regarding the background of prospective Tenants, the decision to rent or not rent to any prospective Tenant shall be made by oOwner oroManager. In filling out any Move-In portion of the Move-In/Move-Out Agreement (F910) all parties acknowledge that defects in the Property may not always be noticed.
GAR F122 Exclusive Leasing Listing Agreement,
Owner acknowledges that any credit and criminal background checks requested by Owner hereunder are being performed by third party credit reporting companies, that the information obtained from such companies may be incomplete and/or inaccurate and that the scope of such checks may vary from company to company with some checks being limited to Georgia while others apply nationwide. Owner shall specify in writing to Broker if Owner wants the credit reporting company to perform a national search. Owner further acknowledges that in checking references the information provided to Broker may also be false, incomplete and/or inaccurate. While Broker may obtain or cause to be obtained certain information regarding the background of prospective Tenants, the decision to rent or not rent to any prospective Tenant shall be made by Owner rather than Broker. In filling out any Move-In, Move-Out Condition Report (F910 or F911) all parties acknowledge that defects in the Property may not always be noticed.
References:                                                                                                                  Weissman, Seth. The Red Book on Real Estate Contracts in Georgia. BookBaby. Kindle Edition.
Georgia Association of Realtors Contract Forms 2022