The California Landlord’s Guide to Fair and Effective Tenant Screening

Tenant screening that is thorough is critical for landlords in California to find responsible renters, avoid problems down the road, and protect their rental income and property. As the Forbes Business Council notes, “One of the most crucial tasks of the landlord is screening tenants. This process holds significance for a number of reasons.” Tenant screening helps assess applicants’ ability to pay rent on time, take care of the unit, follow rules, and be good neighbors.

However, landlords must follow fair housing laws during the screening process and avoid discrimination. The California Fair Housing Act prohibits discrimination based on race, color, ancestry, national origin, religion, disability, sex, marital status, sexual orientation, source of income, or other protected characteristics. Full-service Orange County property management advises landlords to prioritize objective screening criteria such as credit, income, and rental history when evaluating applicants.

Rental Applications

Landlords must follow fair housing laws when evaluating rental applications. The Fair Housing Act prohibits discrimination based on race, color, national origin, religion, sex, familial status, and disability. Orange County landlords cannot ask about or evaluate applicants based on any of these protected characteristics.

According to California law, landlords can ask about and evaluate the following on rental applications 

Landlords should obtain enough information through rental applications to properly evaluate applicants based on lawful selection criteria. However, they should not request details that violate fair housing laws or go beyond what’s needed to assess if the applicant can fulfill their obligations.

California law also limits rental application fees landlords can charge to $65 per applicant as of 2024. Fees beyond this violate state law.

Background Checks

In California, Orange County landlords are allowed to run background checks on rental applicants to look for any criminal history that may impact an applicant’s suitability as a tenant. However, there are important rules around using criminal records that landlords must follow.

According to the California Department of Fair Employment and Housing guidelines, landlords can only consider criminal convictions from the past 7 years when evaluating applicants. Convictions older than 7 years cannot be used to deny housing under fair housing laws.

When reviewing background check reports, landlords should focus on convictions for crimes that directly impact tenancy, like property damage, theft, or violence. Arrest records that did not lead to a conviction cannot be used to deny an applicant.

It’s recommended that landlords have standardized criteria for evaluating criminal records to avoid discriminating against protected classes. For example, setting a policy that any felony conviction within 7 years is grounds for denial. The criteria should then be applied uniformly to all applicants.

The leading Orange County property management firm recommends that landlords offer applicants an opportunity to dispute any incorrect or outdated information on a background check. If a report contains errors, landlords can request a revised version before making a final decision.

Credit Checks

Landlords in Orange County, California have the right to check a prospective tenant’s credit report as part of the screening process. However, there are certain rules they must follow.

According to California state law, a landlord can only run a credit check after the prospective tenant has completed a rental application and given written consent (Civil Code Section 1785.20.5). The rental application should clearly state that the landlord will be obtaining the applicant’s credit report.

When evaluating credit reports, landlords should focus on factors like:

However, California law prohibits landlords from rejecting applicants solely based on:

By following these guidelines, landlords can legally and effectively use credit checks in their screening process.

Reference Checks

Before contacting any references, landlords in California must obtain written permission from the applicant. This is usually collected on the initial rental application. With the applicant’s consent, landlords can contact previous landlords, current employers, and other personal references provided.

When speaking to previous landlords, questions should focus on the tenant’s payment history, compliance with lease terms, property care, and reason for moving out. However, landlords should not ask about characteristics like race, religion, or family status. They should also avoid open-ended questions and keep the focus on objective facts relevant to tenancy.

To check employment history, landlords can verify the tenant’s current job status, income, position, and length of employment. However, questions about medical conditions, disabilities, or other personal topics are off limits.

By getting written consent and keeping questions objective, landlords can get useful reference information without violating California’s fair housing laws.

Making Final Decisions

Comprehensive Orange County property management advises landlords in California to exercise caution when making final tenant selection decisions, ensuring that all factors are weighed objectively and consistently for every applicant.

According to the California Department of Fair Employment and Housing, housing discrimination laws prohibit landlords from rejecting applicants based on characteristics like race, religion, gender, disability, or family status (DFEH). Landlords should establish clear, written criteria for evaluating applicants and apply those criteria uniformly.

For example, landlords may choose to assign points for income level, credit score, rental history, employment stability, and other factors. They would then tally up the points for each applicant and select the individual(s) with the highest scores. As long as the criteria are applied equally and do not consider protected characteristics, this system can help landlords make objective decisions.

The California Code of Regulations states that tenant selection must be based on a “reasonable method” such as order of application, lottery, or other neutral system (CCR Title 25). Landlords should document their selection process and rationale in case unlawful discrimination is later alleged.

Most importantly, Orange County, California landlords must never apply additional scrutiny, ask for additional information, or impose different criteria on applicants from protected classes. Fair housing laws seek to eliminate both intentional discrimination and policies that have a discriminatory effect, even if that effect is unintentional.

Streamlining Screening

There are several ways landlords can streamline and improve the tenant screening process to make it faster and more efficient:

Using online rental applications and screening tools can automate many parts of the process. Online applications allow tenants to complete all their information and consent to background/credit checks digitally. Screening services can then instantly run checks and provide reports instead of landlords having to do this manually. This saves a tremendous amount of time and effort.

Creating standardized checklists and procedures for each step in screening can help ensure consistency. Checklists for reviewing applications, conducting background checks, calling references, and making final decisions can keep the process organized. Following the same steps for every applicant avoids missing information and supports fair housing compliance.

Properly storing all tenant screening documents is crucial for legal compliance. Keeping digital copies of applications, background check reports, credit reports, reference notes, and any other screening materials for a certain time period is required by law. Storing this information in an organized online system makes it easy to access when needed. Using cloud storage instead of physical files can save space and simplify record keeping.

Streamlining screening through tools, checklists, and digital storage can help landlords conduct effective and efficient screening to find the best tenants.

Avoiding Discrimination

When screening tenants, landlords must be very careful to avoid any discrimination prohibited by California’s fair housing laws. According to the California Department of Fair Employment and Housing, housing discrimination based on the following protected characteristics is illegal:

Landlords should be especially cautious regarding any tenant screening criteria or decisions based on criminal history, credit scores, income sources, or disability status, as these areas often raise fair housing concerns. It’s essential to apply all screening criteria consistently across all applicants. Requiring different terms or conditions for protected groups could get a landlord in legal trouble.

The best practice is to adhere to objective, quantifiable criteria when evaluating rental applicants, with insights from Orange County property management experts. Set clear standards that don’t target specific groups and apply them uniformly. Document the screening process and justification for all decisions to show they were made fairly if later challenged.

Using Screening Services

Many landlords choose to use professional property management solutions for tenant screening services to handle background and credit checks. The main benefits of using a screening service are convenience and compliance. The companies stay up-to-date on all legal requirements for tenant screening and provide full reports that landlords can use to make informed leasing decisions. This saves landlords time and effort trying to run checks themselves.

However, there are some downsides as well. Screening services can be more expensive than doing checks individually, with packages costing $30 or more per applicant. Some landlords also prefer to do their own reference checks by calling previous landlords directly. And automated online screening lacks the personal touch of vetting tenants yourself.

Overall, for most California landlords, the advantages of using professional tenant screening services outweigh the downsides. But it’s important to research different companies and find one that provides the right mix of background checks, compliance assurances, and value for your needs.

Conclusion

In summary, property management professionals recommend several key best practices that Orange County landlords should follow during the tenant screening process.

First, it is crucial to comply with all fair housing laws and avoid any discrimination based on protected characteristics like race, gender, or family status. Landlords should only evaluate objective criteria like credit, income, and rental history when selecting tenants.

Thoroughly checking references and doing credit and background checks can help identify responsible tenants, but landlords must follow proper procedures. For example, only looking back 7 years for credit and criminal issues.

Streamlining screening with online applications and standardized checklists improves efficiency. But sufficient due diligence is still required before approving any applicants.

Ultimately, effective and lawful screening comes down to gathering enough information to make an informed decision without unfair bias. This helps find great tenants who pay rent on time and properly maintain the unit. Following fair housing rules protects landlords from major legal issues down the road.

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