Why hire a property Manager
As of January 1, 2025, California has implemented a new landlord-tenant law - AB 2493 - that alters how rental housing providers and property managers handle rental applications and screening fees.
Here's a summary of what rental property owners need to know. The changes went into effect on January 1, 2025.
Key Changes:
When offering a property for lease in California, rental property owners must either:
1. Refund all screening fees to applicants who are NOT selected, regardless of the reason for rejection, or
2. Provide screening criteria upfront to applicants at the time of submission of their application, and then process all applications in the order they are received. The first applicant who meets the established criteria must be accepted.
The new law provides for two options for handling applications:
Option 1: Refundable Application Fees:
- Property owners can still charge application fees, but they must issue refunds to any applicant who isn’t selected. Refunds are due within:
- 7 days after the selected tenant is notified, or
- 30 days from the submission date of the application (whichever comes first).
- Refunds must be provided regardless of why the applicant was not chosen—whether they didn’t meet the rental criteria or withdrew their application.
- Property owners must keep records of refunds for verification in case of an audit or dispute.
Option 2: First Come, First Qualified, First Approved:
- Property owners or their property managers must review rental applications in the exact order they are received and accept the first application that meets the leasing criteria. No skipping. No prioritizing. No cherry-picking.
- Property owners must provide the rental criteria to applicants upfront - when they submit their application. This ensures transparency and allows applicants to see the qualifications required to be considered.
- The rental criteria should include factors such as minimum credit scores, income thresholds, and rental history requirements.
- Property owners must apply consistent, fair evaluation standards based on the public facing criteria to reduce the risk of discrimination or favoritism.
Credit Report Requirements
AB 2493 also mandates that property owners must provide applicants with copies of their credit reports:
- Standard Rule: Property owners must provide a copy of the applicant’s consumer credit report within 7 days of receiving it—no request is needed from the applicant.
- Accelerated Request: If an applicant specifically requests a report under the Investigative Consumer Reporting Agencies Act (ICRAA), property owners or their property managers must provide it within 3 days of the request.
What we do:
AB 2493, doesn’t materially change our existing application process. We have always taken the application process and concurrent application screening seriously, because comprehensive screening is the last line of defense for our clients.
The first thing we do when we receive an application is review each new application to determine if it is complete and meets our predetermined screening criteria which is published on our application landing page.
Here are our leasing criteria:
- Credit Score: 700 or better
- Income threshold: Gross income must be three times the monthly rent.
- No Unlawful Detainers (Eviction) proceedings within the past seven years.
- Immediate disqualification for conviction of violent crimes within the past seven years.
If an application is complete, we will process it and email PDFs of the application, credit/eviction/background check and income verification report to each applicant. Once we’ve vetted the application by calling the current and prior landlord, employer and verified that reported income is correct, we review the application with our clients and make a recommendation. Occasionally, our clients will ask to see more applications so we notify the applicant that the landlord is delaying the decision for a period of time to allow for more applications to come in.
In reviewing our application process, we’ve found that very little will need to change. The only difference is that we will be refunding any application fees to applicants who are not selected and pass these costs along to our client/owners.
We will try to minimize owner application costs by pre-screening and rejecting any applications that are incomplete or do not meet our leasing criteria, prior to processing them. Unfortunately, we will need to charge property owners all screening fee expenses for applications that have been processed.
