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The tenant screening process is a crucial step in the rental application process, as it protects property owners from renting to tenants who might violate the lease agreement.
It's just as important to acknowledge the laws that concern this process and to watch out for new ones. For California landlords, AB 2493 introduces new guidelines for application screening fees for residential rental properties.
The New Law: Assembly Bill 2493
Rental property owners must now add AB 2493 to the list of landlord-tenant laws they must consider before conducting resident screening. Effective January 1, 2025, it addresses the multiple screening fees that prospective tenants pay when they apply for rental properties.
In a way, it shifts the process a housing provider follows and introduces new regulations about refundable application fees. Landlords must learn about these new rules to ensure compliance and avoid legal fees.
What California Landlords Must Know About AB 2493
Application Fee Amount
The law states that a landlord may charge screening fees only if an available unit can be rented within a reasonable period. The amount should "not be greater than the actual out-of-pocket costs of gathering information concerning the applicant."
That includes the costs of tenant screening services or a consumer reporting agency, along with the reasonable value of the landlord's time spent acquiring information. Overall, the application fees cannot exceed $30.
Acknowledgement or Refund of the Costs
When you charge application fees, AB 2493 requires you to provide an itemized receipt of the out-of-pocket expenses and time the landlord or agent spent processing the applicant's information.
If the tenant is not selected or withdraws their application, you are legally required to return the screening fees. Unselected applicants should receive the entire screening fee within 7 days after the selected tenant has been notified or within 30 days after the application was submitted.
AB 2493 authorizes the landlord to elect to accept reusable tenant screening reports and prohibits you from charging fees to access the credit report or an application screening fee.
Documents the Applicant Owes
To ensure transparency, the new law requires the landlord’s established screening criteria to be provided to the applicants upfront. In addition to written screening criteria, the application form must also be included. Landlords must provide more information if the applicant moves further into the application screening process.
For instance, AB 2493 requires property owners to provide applicants with a copy of the consumer credit report by personal delivery, mail, or email within 7 days of the landlord or agent receiving the credit report, or within three days if the applicant requests it.
Providing a rental criteria will still be necessary even if an applicant submits an existing tenant screening report, so they can determine how records like positive rental payment information or good rental history will affect their chances.
New Rules on the Application Screening Process
The order in which a landlord or property manager processes applications should now be on a first-come, first-served basis. You must process the first applicant before getting to other application submissions.
The significant changes protect tenants from landlords who might prioritize applicants during the tenant selection.
Handling the Additional Work
Between refunding application fees to providing credit reports, it's easy to be overwhelmed with the new California Civil Code. Processing applications when you have multiple properties can be almost impossible. Luckily for you, there are ways you can adapt easily to the new requirements brought by AB 2493.
- Separating Application Screening Fees: Create a separate bank account for application fees or put them in a cash app. Including them in your rental business income could confuse you and result in imbalances in your account.
- Printing Out Several Screening Criteria Copies: Having a couple of rental criteria copies handy eliminates the need to print them out amidst your landlord tasks.
- Consulting Legal Professionals: A small mistake can lead to substantial legal fees, and consulting experts about laws like AB 2493 mitigates these risks.
- Hiring Property Managers: Companies like Harland Property Management stay up-to-date with all the crucial landlord-tenant laws, so you won't have to worry about new laws like AB 2493.
- Conducting Meticulous Screening: A landlord's screening criteria must be comprehensive to avoid complications later on if key information about the prospective tenant is missing.
Opting for Professional Property Management
Property managers are generally helpful, whether you simply need assistance or are drowning in landlord responsibilities. However, tasks like screening tenants, drafting rental agreements, charging security deposits, collecting rent payments, and keeping detailed records can take up a lot of your time.
Now that there are new rules, you will also worry about providing application forms and rental criteria, refunding fees to unselected applicants, and ensuring a rental unit is available within a reasonable period. A property management company can help you stay compliant regarding AB 2493.
AB 2493: New Law FAQs
When can a landlord legally charge an application screening fee under AB 2493?
- A landlord can only charge a screening fee if an available rental unit can be rented within a reasonable period.
What is the maximum amount a landlord can charge for an application screening fee in California?
- The application screening fee must reflect the actual out-of-pocket costs incurred for the screening, including service and time costs, but cannot exceed $30.
Is an itemized receipt required when charging an application fee?
- Yes. When charging an application fee, landlords must provide an itemized receipt showing the actual screening costs and time spent.
How does AB 2493 protect prospective tenants?
- The law increases transparency, limits unnecessary fees, enforces refunds, and ensures fair application processing. These protections aim to reduce financial risk and discrimination for rental applicants.
Hiring Harland Property Management
AB 2493 affects residential rental properties specifically, which means you need an expert in residential property management. You can be a worry-free landlord with comprehensive services that help alleviate the stress of dealing with landlord/tenant laws, finding licensed and insured contractors, and fulfilling state-required disclosures.
You don't even have to commit right away! Contact us so you may determine whether we are the right fit for your business, and we will happily answer all your real estate inquiries.
