What is an adverse action notice and when do I send one?
Quick answer
An adverse action notice tells a rental applicant that a screening report led you to deny them or offer worse terms. Federal law requires it whenever a background, credit, or eviction report influences the decision, even in part. Send it promptly and in writing. It must name the reporting agency and explain the applicant's right to dispute the report.
What an adverse action notice actually is
An adverse action notice is the written explanation you give a rental applicant when you turn them down, or offer them worse terms, because of a screening report. It covers more than a flat denial. Asking for a larger deposit, a cosigner, or higher rent because of the report also counts as adverse action.
The trigger is the report, not your gut. If a background, credit, or eviction check influenced the decision even in part, the notice applies. This is a core requirement of the federal Fair Credit Reporting Act, known as the FCRA.
When you have to send one
Send an adverse action notice any time a consumer report plays a role in a decision the applicant would see as negative. Common triggers include:
- Denying the application after a credit or background check.
- Requiring a higher deposit or a cosigner because of the report.
- Approving the applicant on different terms than you advertised.
You do not owe a notice when the reason has nothing to do with a report. If someone simply withdraws, or you never pulled a report, there is no adverse action to disclose. Timing rules vary by jurisdiction, so send it promptly and check the state law guides along with your own counsel.
What the notice must include
A compliant notice does not argue your case. It tells the applicant where the information came from and how to check it. At a minimum, include:
- The name, address, and phone number of the screening company that supplied the report.
- A statement that the screening company did not make the decision and cannot explain it.
- The applicant's right to a free copy of the report and to dispute inaccurate information.
Keep the language neutral. You are pointing to the report, not defending your judgment. Deliver it in writing so you keep a clean record.
Common mistakes landlords make
The most common error is skipping the notice on a partial denial, like a bigger deposit. Landlords assume it only applies to outright rejections. It does not. Another mistake is verbal-only delivery with no paper trail.
Document every decision and keep the applicant's report, your notes, and the notice together. If the applicant later claims discrimination, a clean file showing a report-based, consistently applied reason is your best defense. Fair housing rules and screening rules travel together. Rules vary by state, so the state law guides are a good starting point alongside your attorney.
How Rentari helps
Rentari keeps the screening decision and the paperwork in one place. Run AI Tenant Screening to pull background, credit, and eviction checks, then see exactly what each report contained in the tenant background check guide. When a report drives a denial or a higher deposit, the source details the notice requires are already at hand.
For the notice itself, the landlord forms library gives you adverse action and denial templates you can fill in and deliver in writing. Applied consistently across every applicant, this builds the documented trail that protects you if a decision is ever questioned.
Related questions
Do I need to send an adverse action notice if I never ran a report?
Does charging a higher deposit count as adverse action?
Can I deliver the notice verbally?
This article is general information for landlords, not legal, tax, or financial advice. Rules vary by state and city; verify specifics with the official statute or a licensed professional. See our state law guides.