Do I have the Right to Refuse to Rent?

Mini- Storage Messenger - Do I have the Right to Refuse to Rent?

This month’s question is: I have a prospective tenant who is already complaining about how we run our business and he hasn’t even signed a lease yet, do I have the right to refuse to rent to him?

This is an interesting question. After you have spent all of your time and effort marketing the facility, making it known to the community, advertising, attracting good will in any way, here I am talking about turning away business.

Seriously, all of you have at least one person who has walked in the door, probably a lawyer, who wants to rent a unit from you, who from the get go, appears to be trouble either because of unreasonable expectations, unreasonable demands, or general unreasonableness. The general answer to the question is you probably do have the right to refuse to rent to anyone for no reason at all, subject to the conditions discussed below. First, it is better to have a reason that you can point to that allows you to refuse to rent to someone. As an example, if you are doing some sort of credit or criminal screening, one of the reasons you may choose not to rent is because somebody does not meet your criminal (and/or credit) criteria. For example you would probably not want to rent to someone who you knew had 10 prior convictions for the manufacture methamphetamine because it would be more than likely that the facility would be used as a meth lab. You would want to have written standards setting out that you do not accept these types of applicants. Another reason you may want to use to reject applicants is prior history at other self-storage facilities. For example, if someone has left owing 3 other self-storage facilities in the community $500.00 each this is probably a bad risk. The moral of this paragraph is you may want to have some pre-written rental standards that you can point to, in order to reject a perspective tenant who does not meet one of those standards, and stick to them.

Second, you have to be careful of an accusation of discrimination. The actual question sent in for this article dealt with a person who began a tirade against the manager and the staff from first contact. The facility could do nothing right in this prospect’s mind and failed to meet expectations immediately. This is a harder situation because if you refuse to rent to this person, the person could leave the situation thinking you refused to rent to them based on some sort of discriminatory reason. While fair housing discrimination laws, such as those that apply to apartment owners do not apply to the rental of a self-storage unit, there are other antidiscrimination laws, state by state, that may protect this perspective tenant and, whether or not you discriminated against one of those protected categories, you do not want to fall under the scrutiny of a microscope of a local civil rights organization if you can avoid it. If the person leaves feeling discriminated against and a civil rights organization gets involved, for example, the person feels you did not rent to them because of a disability such as a bi-polar disorder which makes them grumpy half the time, the civil rights organization could start trying to build a case and look at whether or not you have rejected other perspective tenants and whether or not you have a pattern in practice of refusing to rent to certain types of people who are protected from discrimination. You certainly do not want these organizations looking at your business.

The best course of action is to generally offer to the applicant/tenant that if he/she is already unhappy with the facility before even moving in or signing a lease that you are concerned about meeting the tenant’s high expectations and suggest that they look elsewhere. Should the tenant refuse to look elsewhere it is generally within your right (state by state exceptions may apply – check with your own attorney), to refuse to enter into a lease with someone who “concerns” you so long as that reason is not one of discriminatory intent, which by the way, is a broadly interpreted term.

Should all else fail, and the applicant insists on renting, enter into a month-to-month lease with the tenant and if your suspicions turn out to be right, that is the tenant becomes immediately difficult to please because of unreasonable expectations, etc., then you can terminate the tenancy with a one month notice.

While the tenant will feel inconvenienced at having to move so quickly, at least you rented to this tenant, tried to make it work and found that it would not work, you would have rather tried and failed, but to have not tried at all as it were. At this point you can simply say we cannot agree on your expectations, so please find somewhere else to go. Sometimes the mere threat of termination after a month is enough to garner compliance from the tenant on a going forward basis. However, if you are certain that this tenant is a lawsuit waiting to happen due to lost or damaged property, etc., you are probably better off not letting the tenant enter into a lease in the first place and dealing with the potential consequences, if they happen, at another date.

You can send your questions, comments, or suggestions for future topics to Jeffrey Greenberger at info@selfstoragelegal.com or mail them to Jeffrey Greenberger, c/o Katz Greenberger & Norton LLP, 105 E. Fourth Street, Suite 400, Cincinnati, Ohio 45202 or you can reach Mr. Greenberger at (513) 721-5151, or visit his website at www.selfstoragelegal.com.