Tenant screening is obtaining a prospective renter's credit and rental histories. Tenant screening reports help landlords decide who to rent to and how much to charge for a security deposit.
Federal laws regulate some aspects of resident screening. For example, all US landlords must inform tenants if their application gets rejected due to a screening report.
Tenant screening is also governed at the state level. California tenant screening laws are among the strictest in the country. Keep reading this guide to learn what you can and can't do with a resident screening report in Mercer, CA.
There Are Limits to the Fees You Can Charge
California places caps on rental application fees and security deposits. These caps protect prospective tenants, especially lower-income ones.
Here is what you need to know about California's application fees and security deposit caps.
Maximum Application Fees
Landlords can legally charge prospective tenants for their screening costs. They usually do so in the form of an application fee.
However, the state recommends that landlords not charge application fees that exceed the actual cost. For that reason, the state caps application fees at $59.67. Note that this cap changes annually based on inflation.
Landlords who do pass on the tenant screening cost must provide applicants with an itemized receipt. If the application fee exceeds the cost on the receipt, the applicant has the right to request a refund for the difference.
Maximum Security Deposits
Tenant screening laws also govern security deposit caps. Landlords can legally charge tenants up to two times the monthly rent. So, if a unit costs $3,000 per month, you can only legally charge tenants a $6,000 security deposit.
Consent Is Required for Background Checks
In California, prospective tenants must give signed consent for background checks during tenant screening. Running a background check without consent is illegal.
One way to get written consent is to include a signature section in the tenant application. Inform the prospective tenant about the requirement and explain that if they sign, you can legally run a background check.
Tenants Can Freeze Credit Their Reports
Landlords can legally ask for or run credit reports on applicants. But tenants have the right to freeze their credit report. If this happens, credit reporting agencies will not give you access to the tenant's credit profile.
Also, federal law requires landlords to give the credit report to the applicant if they ask for it. Applicants also have the right to ask for contact information for the credit report provider and dispute the report.
Need Help With Tenant Screening in Mercer, CA?
California tenant screening laws regulate aspects of the application process. They place caps on application fee and security deposit amounts. These laws also influence tenant background check and credit report best practices.
Are you tired of dealing with California's strict tenant screening laws? Let Chosen Property Management take this task off your hands. Contact us to learn about our property management services, including tenant screening.
