The term “adverse action” refers a negative outcome for an individual based on an evaluation decision. It often applies in legal, financial, and employment contexts, where someone is denied benefits, services, or opportunities based on specific criteria.

In residential leasing, adverse action refers to a decision made a property manager (or landlord) to decline a rental application, or place additional conditions for approval on the applicant. An example of an additional condition might be the requirement of a guarantor or an increased security deposit. Under the Fair Credit Reporting Act (FCRA), property managers are required to provide an adverse action notice if the decision is based on information from a consumer report, such as a credit check. The notice must include the reason for the adverse action, the contact information of the reporting agency, and the applicant’s right to dispute inaccuracies. Adverse action notices help promote transparency and give applicants the opportunity to correct errors in their reports