If there’s one thing I’ve learned in my years as a landlord, it’s that good returns follow good tenants.
So what do California landlords need to know about collecting rental applications and screening applicants, to only lease to high-ROI tenants?
Too many landlords feel like they don’t have time to screen every renter thoroughly, that they’re losing money every day the rental sits vacant. But there’s literally no more important task, in your job as a landlord.
With a good tenant, you can sleep easy at night as a landlord knowing the rent will get paid and the property will be well cared for. With a bad tenant, on the other hand, you’re left to wonder about the state of your investment while fielding calls from angry neighbors.
You need to find renters who will make your life easier as a landlord, not harder. Any prospective tenant can act like the best tenant in the world during the initial walk-through. But if you want to make sure you’re getting the best renter, it’s important to screen every prospective tenant thoroughly before signing a lease agreement, and that starts with the rental application.
Why Do Landlords Need to Collect a Rental Application?
Successful property management begins with good documentation – if for no other reason than to avoid discrimination lawsuits.
When you decline one applicant and sign a lease agreement with another, the declined applicant can sue you. It’s an occupational hazard of being a landlord. But keeping your tenant screening reports and rental applications gives you documentation to show the judge, that you rented to the more qualified applicant.
The rental application in California is also where applicants legally declare, on penalty of perjury, that the information is correct. If they claim they have no pets, or that only one adult will live in the property, then sneak in pets or extra occupants, they perjured themselves in the rental application.
Rental applications also contain asset information that’s useful later, if you have to pursue a deficiency judgment. For example, California rental applications include vehicle information, so you can attach a lien to tenants’ vehicles if they fail to pay.
The rental application in California, together with a reliable real estate lease, reduces your liability risk and helps protect your investment. It also builds a strong foundation for the ongoing relationship between you and your tenant; you will both be able to proceed with confidence of your mutual respect and trust and start the rental off on the right foot.
Here’s where you can access our free rental application for California.
Rental Application Fees in California
California Civil Code 1950.6(a) states, in relevant part, “when a landlord or his or her agent receives a request to rent a residential property from an applicant, the landlord or his or her agent may charge that applicant an application screening fee to cover the costs of obtaining information about the applicant.”
Read: cover your tenant screening costs, but don’t earn a profit.
As of 2018, the maximum amount that a landlord may charge for a tenant application screening fee is $49.12, if the landlord collects the rental application fee. Alternatively, landlords can have the applicant pay any tenant screening fees directly (which is how our tenant screening service works – you can select that the applicants be charged directly).
What Tenant Screening Reports Should Landlords Include with a California Rental Application?
Credit Check: An applicant’s income tells you whether they can pay. An applicant’s credit report tells you whether they will pay.
Since you can’t always judge a book by its cover, tenant credit reports allows you to dig deeper into the financial habits of the prospective tenant. If they have a good credit history and pay their bills on time, chances are they’ll pay their rent on time as well.
We provide full credit reports on all applicants, that you can optionally include with your California rental application.
Criminal Background Check: In addition to pulling credit reports, you need to screen renters’ background. You should check state and federal criminal records to determine whether the prospective tenant has a criminal history. Sex offender registries and terrorist watchlists are typically included in criminal background checks and important to consider.
Particularly look out for recent fraud offenders and violent offenders, and avoid them as high-risk tenants.
Avoid signing a lease with applicants who have been evicted in the last five or ten years.
Housing History & Identity Verification: A fourth report to consider is verifying the applicant’s identity and housing history. If it doesn’t align with the information on their California rental application, landlord beware!
Start with a free tenant background check to start the process, and you can use our landlord app to run any or all of the tenant screening reports above.
Why Landlords Should Interview Prospects Before Collecting a Rental Application in California?
Tenant screening is a process. It takes time. But if you use pre-screening to your advantage, you can save yourself time down the road by not moving forward with tenants who are not a good match.
Pre-screening helps you eliminate any candidate who doesn’t fit your surface-level criteria. This kind of criteria can be easily determined during an initial conversation. For example, you should find out if a prospective tenant has a pet or smokes.
If you don’t ask the right questions during pre-screening, you end up wasting your time. The later stages of tenant screening, including the rental application, reaching out to references, and analyzing a credit and background check, should be reserved for tenant leads who have a high chance of being qualified.
Pre-screening also enhances your overall screening process. It’s your opportunity to set expectations for your rental process, which will help you attract quality tenants. Here are some potential questions to ask.
- Why are you moving?
- What is your current living situation?
- When are you looking to move in?
- What is your monthly income?
- Can I ask for references from your former landlords and employer?
- Will you submit a California rental application and authorize a background check?
- The security deposit is $X. Are you comfortable with that deposit amount?
- Do you have pets?
- Do you smoke?
- Will you have roommates?
This can be a lot of questions to ask all up front, but it will give you the best sense of how qualified a tenant lead is from the start.
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Which Occupants Need to Fill Out a California Rental Application?
The question of who needs to fill out a rental application in California often comes up when more than one person will be living in the rental property or when co-signers will be part of the deal.
Here’s what you need to keep in mind:
- Anyone over 18 years old who will be living in the property for any length of time should fill out a rental application.
- Anyone who isn’t living in the home but who is co-signing the lease should fill out a rental application.
- Anyone who moves in at a later date should fill out a rental application in California.
The reason all those groups need to fill out a rental application is to let you know who is living in your property. You need to have contact information if problems should arise with the property.
If interested renters walk away because of your policy, you’re probably better off. Usually, people who don’t want to fill out an application aren’t ready to commit, or they don’t think they would pass your screening requirements.
Fair Housing Laws on Tenant Screening
The Federal Fair Housing Act prohibits discrimination in the rental, sale or financing of housing based on race, color, national origin, religion, familial status and disability. Tenant screening, an aspect of rental housing, is subject to all fair housing legislation.
Requiring different information from different protected classes of applicants violates landlord Fair Housing laws. For instance, you cannot require a white applicant to provide a copy of a tax return and a Hispanic applicant a copy of his employer-provided W-2 form. You cannot inquire about religion or national origin. Also, in California, you cannot ask about immigration status or citizenship.
You can prohibit pets generally and state this on an application, but if a prospective tenant has a letter from a doctor saying he requires a companion dog due to a mental health condition, you cannot deny tenancy or prohibit the dog. In summary, you cannot base any action or decision in the screening process on any aspect of an applicant’s membership in one of the protected classes.
The Bottom Line
A rental application is an important part of tenant screening, in a perfect world, a landlord could trust all people who wish to rent from them. However, the world is not perfect and not all tenants are created equal.
Collect a California rental application from all interested parties, run thorough tenant screening reports, and remember that your returns are directly tied to the quality of your tenants.