Understanding California tenant screening laws is crucial if you are a landlord with rental property located in the state of California. You may have a wealth of experience screening tenants, in California or elsewhere. You may even consider yourself an expert.
But assuming either of those things could get you into hot water – legally, financially, or otherwise – with the state of California, or any of the hundreds of counties, cities, towns, and municipalities that have their own California tenant screening laws on the books.
Instead, take a few minutes to familiarize yourself with the tenant screening rules that apply, based on your location, the tenant’s location, and especially the location of the property you’re renting.
Running Tenant Background Checks in California
In California, there are statutes that govern credit, employment, and housing decisions, as well as any requisite background checks related to those decisions. These apply to you, Mr. or Ms. Landlord!
Certain types of background checks require both notice and authorization. This is governed by the Investigative Consumer Reporting Agencies Act (ICRAA).
Let’s dive in for a bit more detail. You should find this helpful when screening tenants in California, or conducting tenant background checks.
The Investigative Consumer Reporting Agencies Act (ICRAA)
The Investigative Consumer Reporting Agencies Act (ICRAA) has a basic requirement that an agency or person requesting a report must have permission to do so in writing, and must provide the prospective renter (in this case) with all required disclosures.
The rule applies to any kind of background check that provides you with data about the prospective tenant’s, “character, general reputation, personal characteristics, or mode of living.”
Hmmm… I’m no lawyer, and you should DEFINITELY consult one to help you understand and correctly apply these rules. However, it sounds like this rule applies to almost any kind of background check you would want to run on someone looking to rent your property, doesn’t it?
Again, this is NOT legal advice, but in my estimation the list of governed California background checks would include – at a bare minimum – employment background checks, credit checks, eviction checks, criminal background checks, and even less formal inquiries like personal references.
Bottom line… if you’re going to do background checks on a prospective tenant in California, you will need to obtain their permission. You will also need to disclose to them what checks you are doing. This includes telling them exactly what information you will be obtaining, and how you will use that information.
Do this, and do it consistently. Otherwise, you’re just inviting trouble. Oh, and a minimum fine of $10,000 plus attorney fees.
Can I Charge Fees for California Tenant Screening?
When it comes to collecting fees from your prospective renter to cover the costs of the background checks you’ll be running, the good news is you can absolutely do so.
On the other hand, like most everything else regarding the landlord tenant relationship in California, there are specific rules governing how much you can charge and how the money can be used.
California Tenant Screening Laws Regarding Fees
Below are the provisions you must be aware of…
- The maximum screening fee a landlord may charge is around $40 per applicant (as of 2019). The actual fee you can charge can be updated once per year based on changes to the Consumer Price Index for the closest metro region.
- The fee you charge may only be spent on “actual out of pocket costs” for obtaining a consumer credit report, as well as “the reasonable time spent” for checking the applicant’s background info and personal references.
- If you use the applicant’s screening fee to pull a credit report, you have to provide a copy to the applicant if they request it.
- When the combination of the credit report and your “reasonable time spent” costs less than the fee collected, you are required to refund the difference. If you do not pull a credit report or check background and references on an applicant, you are required to refund the entire fee.
- If you do not have a rental unit available, you may not charge a tenant screening fee in California, unless the applicant agrees in writing.
- The landlord is required to provide the prospective tenant with an itemized receipt at the time you collect the tenant screening fee.
What About California Criminal Background Checks?
Landlords frequently ask, “Are there any California tenant screening laws about denying a tenant for a criminal record?” The answer is definitely, “Yes!”
Once again, I’m not an attorney, and I don’t even play one on TV, but the name of the game here is consistency. In other words you need to establish your standards, make sure they comply with California tenant screening law, and then apply them exactly the same way, with every applicant, each and every time.
As a landlord, you get to decide if you are willing to rent to a person with a criminal background, within the limits established by the State of California. You are not required to have a criminal background check performed, but many landlords do.
One act that applies here is the…
California Fair Employment and Housing Act
This act, applied in conjunction with the Unruh Civil Rights Act, basically prohibits you, as a California landlord, from discriminating based on national origin, marital status, disability or medical condition, color, ancestry, source of income, religion, sexual orientation, race, or sex.
However, specific California case law, as interpreted by the California Supreme Court, does not limit discrimination to only these characteristics. In other words, arbitrarily discriminating for ANY reason is unlawful.
Is “No Criminal Record” Discrimination in California?
The broad answer is yes. If you reject every applicant on the basis of any entry on his or her criminal background report, this could be considered a discriminatory practice, and you might run afoul of the law.
To keep this from happening, make sure you can demonstrate that the applicant’s criminal background negatively affects his or her ability to meet the terms of the lease and obligations of their tenancy.
In other words, there’s a difference when it comes to the crimes your applicant may have committed. Was it burglary, dealing drugs, or murder? Or, was it a traffic offense or pot possession without intent to deal?
Minor Infractions Shouldn’t Necessarily Prohibit Tenancy
It’s against the law for a landlord to turn down an applicant for past drug use, but you can certainly refuse tenancy for past drug manufacture and drug dealing.
Also, if you turn down an applicant because of past arrests that did NOT lead to a conviction, this is likely discriminatory and a violation of the law.
It also makes sense, from a legal standpoint, to consider not just the crime itself, but the circumstances surrounding it, as well as how much time has passed since the conviction.
Conduct Tenant Screening The Same Way, Every Time
To reiterate, the name of the game is consistency. You are required by Fair Housing laws to apply the same background check and screening process, as well as the same standards of approval for tenancy, in the same way with every applicant.
Don’t break the law by accepting one tenant with a criminal conviction, and then turning down another for the exact same conviction.
And remember to get the applicant’s permission before running the California criminal background check, and disclose to them that you are running it.
Finally, if you don’t want to run a criminal background check on every applicant, that’s OK. But you can’t do so arbitrarily. What you can do is only run criminal checks on an applicant AFTER they pass your other checks, such as the credit check.
California Landlords Must Comply With Tenant Screening Laws
A good practice would be to use a standard tenant application for California that has the proper disclosures. An example of this would be the California Realtors Association Rental Application. PreApproved Renter has a digital versions of this for your use.
This article is intended as a primer only, not an in-depth treatment of California tenant screening law, and is not a substitute for legal advice from a qualified attorney. Take the time to familiarize yourself with all the laws governing the landlord tenant relationship, and by all means comply with them, and avail yourself of the services of a licensed attorney. This article is not intended as legal advice.
The above information is current as of September 2019.