As a landlord, your top priorities are to ensure that your property is well-maintained and profitable. Finding the right tenants is crucial to achieving these goals. Tenant screening is a necessary process that helps you assess the suitability of potential tenants for your rental property. California law limits how you decide who should be your tenant.
AWB Law, PC provides legal counsel to California landlords so they can navigate critical issues like tenant screening without violating applicable laws. He also represents them if they’re involved in litigation and need help defending their rights. You can contact them at (949) 244-4207.
Why Should You Screen Potential Tenants?
There are many reasons to pick the right people for your property. Any tenant poses potential financial and legal risks. Appropriate screening helps you manage and mitigate those risks.
1. Reduces the risk of rent default
One of the most significant risks of renting out your property is the chance that a tenant will fail to pay rent on time or at all. Tenant screening helps to minimize this risk by providing insight into a tenant’s financial history, including their credit score, income, and employment history. By screening potential tenants, you may identify those more likely to pay rent on time and those at a greater risk of default.
2. Protects your property
You want to protect your property from damage and abuse. Tenant screening can help identify tenants with a history of damaging other rental properties. This information can help you make an informed decision about whether someone is too great a risk.
3. Promotes a safe living environment
As a landlord, you are responsible for providing a safe environment for your tenants and their guests. Tenant screening can help identify potential tenants, but state law limits the use of a person’s criminal record against them.
4. Saves time and money
Tenant turnover is costly because finding a new tenant and preparing the property for move-in takes time and resources. Tenant screening can help reduce turnover by identifying tenants likely to stay for the lease’s duration and those you may need to evict.
5. Makes a good tenant-landlord relationship more likely
A good tenant-landlord relationship is essential for a successful rental experience. Tenant screening can help identify tenants who better fit your property and management style. By renting to tenants who are responsible and reliable, you are more likely to have a positive relationship with them, which can lead to a better rental experience for them and less cost and aggravation for you.
How Do Laws Affect How I Screen Possible Tenants?
Avoid future legal disputes by considering the following laws:
1. Screening costs
It’s legal for property owners to add screening costs to a rental application fee, including the actual charge of the process and your time’s value. Those costs are capped at $59.67 for 2023, and increases are based on the consumer price index and inflation rate. You must provide the applicant with a written, itemized receipt.
You should charge these costs honestly. You must return the difference if you spend less than what you charge. Unless the applicant agrees otherwise, you can’t charge a screening fee if you don’t have any available space (but you can charge your costs if it’ll be vacant within a reasonable time).
2. Credit reports
You can request your applicant’s credit reports. If the report’s accurate, it should state if the person’s been behind in making payments in the past, and if so, what the problems were.
If they are frozen, the credit reporting agencies can’t release them. If that’s the case, your applicant can permit them to release reports to you. If they refuse to do so, you can reject their application. You must send the applicant copies of the credit reports you receive.
3. Criminal background checks
California law is mixed when using a person’s criminal record to decide whether they should be a tenant. Landlords can review an applicant’s criminal record when deciding whether to rent to them, but you can’t use all the information it may contain.
You can deny a rental application based on prior crimes if they are the types that may threaten the health and safety of the other renters, or they affect the applicant’s ability to meet their responsibilities as a tenant.
Unless the applicant gives you this information, you can’t consider:
- Infractions or petty charges
- Charges that are dismissed or not prosecuted
- Convictions that are expunged, sealed, or not legally operative
- Information concerning involvement in a referral to a deferred entry of judgment program or a pre-trial or post-trial diversion program
- Anything showing the applicant was questioned, investigated, detained, or taken into custody by law enforcement
Your decisions on these issues must be consistent, or you risk being accused of illegal discrimination.
1. Anti-discrimination laws
The federal Fair Housing Act prohibits screening out tenant applicants based on several “protected classes”:
- Color
- Race
- Religion
- National origin
- Familial status
- Disability or handicap
- Sex
State laws, the Fair Employment and Housing Act, and the Unruh Civil Rights Act make it illegal to not rent to someone because of their:
- Age (over 40 years)
- Ancestry
- Citizenship
- Gender identity and gender expression
- Genetic information
- Immigration status
- Marital status
- Medical condition
- Primary language
- Sexual orientation
- Source of income
It’s also illegal to retaliate against someone for their past complaint of discrimination, or participation in a discrimination investigation, by choosing not to rent to them.
We’re Here to Help
If you’re a residential landlord with questions about screening tenants or are involved in a dispute with someone who claims you acted illegally when you handled their application, call AWB Law, PC at (949) 244-4207 or complete our online contact form today.
