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Landlord Adverse Action Notices

As a landlord – or property manager or other housing provider – you evaluate housing applications or decide whether to renew a current tenant’s lease. You might decide to run a tenant background check using a company that compiles background information. These tenant background checks can include a variety of information, such as rental and eviction history, credit history, or criminal records. Tenant background check reports are consumer reports. When you use consumer reports to make tenant decisions, you must comply with the Federal Fair Credit Reporting Act (“FCRA”). See FCRA § 1681m (or 615a).

What is considered a consumer report under the FRCA?

A consumer report may contain information such as a person’s credit characteristics, rental history, or criminal history. These reports are covered by the FCRA. Examples of these reports include:

  • A credit report from a credit bureau, such as Trans Union, Experian, and Equifax or an affiliated company;
  • A report from a tenant screening company that describes the applicant’s rental history based on reports from previous landlords or housing court records;
  • A report from a background check company that describes the applicant’s criminal history;

What is considered an adverse action?

An adverse action is any action by a landlord that is unfavorable to the interests of a rental applicant or tenant. Examples of common adverse actions by landlords include:

  • Denying the application;
  • Requiring a co-signer on the lease;
  • Requiring a deposit that would not be required for another applicant;
  • Requiring a larger deposit than might be required for another applicant; and
  • Charging a higher amount for rent than for another applicant.

If you take any of these adverse actions based partly or completely on information in a consumer report, you must give the applicant or tenant a notice of that fact in writing, electronically, or orally. An adverse action notice tells people about their rights to see information being reported about them and to dispute inaccurate information. The adverse action notice is required even if information in the consumer report was not the primary reason for the decision. The notice must include:

  • the name, address, and phone number of the Consumer Reporting Agency (“CRA”) that supplied the report;
  • a statement that the CRA that supplied the report did not make the decision to take the unfavorable action and can not give specific reasons for it; and
  • a notice of the person’s right to dispute the accuracy or completeness of any information the CRA furnished, and to get a free report from the CRA if the person asks for it within 60 days.

Example of an adverse action notice:

Thank you for applying for [TYPE (ex. Employment, Housing, Loan, etc.)] with [COMPANY NAME]. Regretfully, due to information obtained through a consumer report while processing your application, we are unable to approve your application at this time.

Under the Fair Credit Reporting Act (FCRA), you have the right to dispute the accuracy or completeness of any of the said information the consumer reporting agency furnished us, for which you must contact them directly. Likewise, you are entitled by law to obtain the report used in this decision within sixty (60) days of this notice.

To obtain the consumer report you have the right to contact the consumer reporting agency directly via the following methods:

Consumer Reporting Agency: [CONSUMER REPORTING AGENCY]

Telephone: [PHONE] (toll-free)

Mailing Address: [ADDRESS]

The consumer reporting agency which furnished the consumer report did not make the ultimate decision to deny your application and could not, by law, render any decision on a matter such as this under any circumstance.

It is best to consult with an attorney who is experienced with landlord/tenant actions before taking any of these steps. Many landlords are unfamiliar with the ins-and-outs of all the laws, both State and Federal, which should inform their decisions. Having strong legal advice from the beginning of a tenancy is essential to avoid problems down the road.

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