It is essential that if you are renting out homes and property in California, you do whatever it takes to ensure you have the best tenants renting your property. The vital first step is having a solid custom rental application. There are several pre-written applications already available for you to use.
Choosing not to use an application can be extremely risky and can result in choosing a tenant with eviction records and a history of non-payment.
Lets take a look at the California Rental Application process and the laws regulating rental applications in California. We’ll start first with the laws regulating applications.
California Rental Application Law
California state law legally limits the cost for credit check application fees landlords use to screen prospective tenants. The law regulates how much landlords can charge and the specifics landlords must comply with while accepting these fees for a credit screening check. (Cal. Civ. Code § 1950.6.)
By California law, Landlords may charge around $40 (as of 2019) dollars per rental credit screening. This figures is allowed to be updated annually and may vary by metropolitan area.
The screening fee is to be used, by California law, to cover the “actual out-of pocket expenses” of obtaining the credit report. The fee is to be used by the landlord to obtain a consumer credit background report, references and a background check/report on an applicant.
When the Applicant Requests Their Credit report
A landlord who uses the screening fee to obtain the applicant’s credit report must give the applicant a copy of the report upon his or her request.
If you spend less (for the credit report and your time) than the screening fee you collected, you must refund the difference. A landlord who never gets a credit report or checks references on an applicant must refund the entire screening fee.
Unless the applicant agrees in writing, a landlord may not charge a screening fee if no rental unit is available. However, if a unit will be available within a reasonable period of time, a landlord may charge the fee without obtaining the applicant’s written permission.
Landlords must provide an itemized receipt when collecting an application screening fee. For a sample receipt and more details on screening tenants in California, see The California Landlord’s Law Book, Rights and Responsibilities, by David Brown, Ralph Warner and Janet Portman.
Several California Rental Applications to Choose From
There are several different California Rental Applications to choose from. Several different sites offer pre-written California Rental Applications, background checks, and offer credit check services.
Several legal document sites offer Rental Applications specifically suited to California and the laws governing rental and background checks throughout the state.
PreApprovedRenter has digitized many of these California rental apps including the California Association of Realtors rental application.
California Rental Criteria
Most California landlords adhere to the following criteria when choosing a tenant for their rental property.
It’s good to remember that evictions can cost up to $3000+. That is money that you will have to put forth for legal fees, and the actual cost of the eviction process. This amount does not include any damages that an angry tenant can inflict on a home after they are presented with an eviction notice.
It’s not unheard of for angry tenants to damage property and even steal fixtures before they leave the premises. Repairing damage, replacing doors, lights, outlets, and fixtures. All of which will need to be repaired and or replaced by you.
Being sure any potential tenant meets certain criteria for your rental unit is crucial. Making sure a tenant can afford to pay the rent every month is the crucial first step, and using a well-prepared California rental application is imperative.
Income Guidelines on Rental Applications
For rental units priced under $1800 per month, renters should make at least 3x that amount every month. This ensures the renter can make rent payments every month and still have the funds necessary to pay the utilities, as well as their own needs. If a renter can make the rent every month, but can’t pay utilities or for their own needs every month, they will quickly become unreliable and most likely default on rent.
For rental units that cost between $1800 and $3000, gross monthly income should be at least 2.75 times the cost of monthly rent billed to the tenant. For rental costs of $3001 or greater, gross monthly income should be at least 2.5 times the amount of rental billed to your tenant every month.
There is some flexibility of course, and as a landlord you can flex at times for a very reliable tenant who has a spotless record and a great credit score. You will have to use your discretion when it comes to possible tenant and applicants who are seeking to rent land, apartments, and homes from you.
Standard Leases in California
A Rental Lease is a contract made between a landlord and a tenant before the tenant occupies the home or property that is being rented. These legally binding contracts will cover all terms and conditions pertaining to a rental unit such as rent amount and payment date, security deposit, tenant and landlord responsibilities, and termination date.
Standard leases in California and the United States typically last 12 months but can vary per landlord and tenant. Options to renew are also between a tenant and landlord.
However, before you ever get to the point of signing a lease with your new tenant, be sure to make good use of a California Rental Application to properly screen and qualify the tenants, and save yourself a world of headaches down the road.