As a homeowner, you may be tempted to rent your property quickly. Understandably so. However, there are great and not-so-great tenants, and renting without regard for tenant quality can cost you more down the road. Similarly, renting without regard for local tenant screening laws can also be a detriment to your business. Fortunately for you, tenant screening laws exist to protect your best interest and that of your prospective residents.
In California, tenant screening laws can work to your advantage by screening applicants more efficiently while legally exercising your rights and protecting your investment from unqualified renters.
Proper screening will help you find the right renters capable of paying on time and with good rent history. However, without a clear understanding of the law, this process can become a disservice. Specific statutes will give you insights into when you can turn down a prospect and when it is illegal to use certain information against them.
Avoid future legal disputes by taking into account the following California tenant screening laws:
The screening cost
To start, know that it is legal in California for homeowners to add the cost of screening to the rental application fee. This includes the actual charge of the process and the cost of your time. However, note that the state sets the maximum rental application fee at $52.46 per applicant as of February 2022. This cap is based on the consumer price index and inflation rate.
Remember that while you may pass along the cost of the screening, California’s tenant screening laws state that you must provide a written receipt to each applicant. Receipts must be itemized and contain all costs, like the charge for your time or the price of screening services used.
However, it is also stated in the law that if the homeowner spent less than the application fee collected, the difference must be returned. For example, if the owner did not run a credit check on the applicant, they are required to refund the fee for that purpose.
Lastly, unless the applicant signs an agreement, homeowners should not charge a screening fee if there is no available rental unit. But, if a unit will be vacant within a reasonable time, the owner may charge the fee without the written permission of the prospective tenant.
Frozen credit reports
As stated by California’s tenant screening laws, it is your legal right to request your applicant’s credit reports as part of your screening process. But bear in mind that they also have the right to legally freeze their credit reports. This means that credit reporting agencies cannot release information to outside parties without consent. On a good note, despite a security freeze, you can still request your applicant to share access to their report as they are allowed to do so.
If you do get a copy of the credit report, you are obligated to send a copy to your prospective tenant if they request one. On the other hand, if they fail to lift the freeze or grant you access, this can be considered an incomplete application and is grounds for rejection.
Criminal background checks
When it comes to criminal background checks, it is illegal in California to discriminate against an applicant based on their arrest records in the state. In addition, although tenant screening laws allow homeowners to do a criminal background check, they are not allowed to consider the following information in deciding whether to rent the property to a specific prospect:
- Any infractions or petty charges
- Any convictions that are sealed, expunged, dismissed, or not legally operative (unless the tenant offers this information)
- Any information regarding a referral to or involvement in a “pre-trial or post-trial diversion program or a deferred entry of judgment program” (unless the tenant provides it willingly)
- Arrests that did not end in a conviction
- Anything indicating that the renter was questioned, taken into custody, detained, or investigated by law enforcement
However, homeowners can deny a prospective tenant based on their previous crimes if they can sufficiently prove that these prior offenses threaten the health and safety of the other renters. Such crimes can also be grounds for rejecting an application if they affect the applicant’s ability to meet their responsibilities as a renter.
Protection against discrimination
Homeowners should note that the Federal Fair Housing Act protects all tenants/applicants in the U.S. This prohibits homeowners from committing any form of discrimination or mistreatment based on the following seven “protected classes”:
- National origin
- Familial status
- Disability or handicap
Prospects in California are also protected by the most stringent state fair housing laws in the country. According to the Fair Employment and Housing Act (FEHA) and the Unruh Civil Rights Act, it is unlawful for owners to discriminate or harass any applicants based on the following:
- Age (over 40 years)
- Arbitrary discrimination
- Gender identity and gender expression
- Genetic information
- Immigration status
- Marital status
- Medical condition
- Primary language
- Sexual orientation
- Source of income
For marital status, most states only protect married couples from discrimination. Illinois would be an excellent example, as homeowners can legally turn away unmarried couples. Good news for California tenants because FEHA states that owners cannot ask for any information about marital status. This ensures that all relationship statuses are protected.
The screening process is essential in finding the best tenant for your vacant property. While it is true that your primary responsibility is to ensure your investment’s safety, it is also your job to observe your state tenant screening laws to avoid future disputes. Understanding your rights and your tenant’s will help you conduct screenings properly and meet the perfect tenant.