7 Steps to Run a Tenant Background Check in California

Finding the right tenant is crucial for every California property owner. Whether you’re renting out a single unit or managing multiple properties, ensuring that your tenants are responsible and trustworthy can make a world of difference in your overall property management experience. A tenant background check in California is an essential part of the tenant screening process that helps ensure that the applicant meets your standards.

It’s important to keep in mind, however, that California has specific laws governing how landlords can conduct these checks, and it’s crucial to understand the steps involved to protect yourself from legal missteps. Let’s jump right into your complete guide for a walk-through of each step to help you easily navigate California’s tenant screening laws and find the best renter for your investment property.

Why Tenant Screening is Important

Tenant screening is about more than just finding who can pay rent on time. It’s about ensuring the potential tenant respects your property, follows the rules, and contributes to a peaceful community. A thorough tenant background check in California can help you avoid problem tenants who might miss rent payments, damage the property, or create conflicts with neighbors.

California tenant screening involves verifying the applicant’s rental history, criminal background, employment status, and creditworthiness. By following the proper steps and adhering to state-specific regulations, you can secure a tenant who will care for your property and help you maintain a positive landlord-tenant relationship.

7 Steps to Running Tenant Background Checks for Your California Property

Step 1: Obtain Written Consent

Before starting any tenant background check process, you must obtain written consent from the prospective tenant. Under California law, a landlord cannot run a background or credit check without explicit permission from the applicant. Typically, this is done through the rental application form, where a clause authorizes you to conduct background and credit screening. Make sure the consent is clear and the tenant understands what kind of checks will be performed.

Tip: Be transparent with your tenants about why you conduct background checks and what you are looking for. Transparency builds trust and reduces any potential misunderstandings during the screening process.

Step 2: Know the Tenant Screening Laws in California

Before starting the screening process, it’s important to understand the tenant screening laws that California landlords must follow. These laws are designed to protect tenants from discrimination and ensure that screenings are conducted fairly:

Fair Housing Laws: 

California is subject to both federal and state fair housing laws. Under these regulations, you cannot deny a tenant based on race, religion, gender, disability, familial status, or other protected classes. Familiarize yourself with these rules to ensure you’re not unintentionally violating a prospective tenant’s rights.

Disclosure Requirements: 

If you reject a tenant based on information found in their background or credit check, California law requires that you provide an “adverse action notice.” This notice must include the reason for the rejection, contact information for the screening agency, and instructions for the applicant to dispute any inaccuracies.

Step 3: Run a Credit Check

A credit check is a vital part of any California tenant screening process. It helps you evaluate the prospective tenant’s financial reliability and ability to make rent payments on time.

To run a credit check, you will need the applicant’s social security number, full name, and written consent—partner with a reputable credit reporting agency that follows California’s privacy regulations. The credit report will provide a history of the tenant’s credit account, outstanding debts, and payment history.

In California, landlords can charge prospective tenants an application fee that includes the cost of the background check. However, this fee is capped by the state and adjusted annually for inflation. As of recent years, the maximum fee has been around $60. Be sure to check for the most up-to-date cap before charging your prospective tenants.

Keep in mind that California law restricts how you can use credit information when making a decision. For example, if a tenant has had financial hardship due to medical bills or other extenuating circumstances, consider these factors alongside their overall credit history to avoid potential discrimination claims.

Tip: Look for a pattern of behavior. A few missed payments during a difficult time might not be a dealbreaker if the applicant has otherwise demonstrated responsibility over time.

Step 4: Conduct a Criminal Background Check

A background check for renters in California often includes a criminal history report. This step helps ensure the safety of other tenants and the surrounding community. However, California has strict rules about how criminal records can be used in tenant screening.

Criminal Background Restrictions in California:

California passed the “Fair Chance Act,” which limits how landlords can use criminal history when screening tenants. Under this law, landlords cannot inquire about or consider a tenant’s criminal history until after making a conditional offer. This rule is intended to provide individuals with criminal records a fair chance at securing housing.

If you decide to deny any applicant based on their criminal record, you must perform an individualized assessment. This means considering the nature and severity of the offense, how much time has passed, and whether the offense is relevant to the safety of the property or other tenants.

Tip: Always document your decision-making process. If you choose to deny an applicant based on their criminal history, keeping detailed records of your assessment will help you in case of any disputes.

Step 5: Verify Employment and Income

A background check for renters in California generally involves verifying the applicant’s employment status and income. Most landlords require that tenants earn at least three times the monthly rent to qualify. You can verify income by requesting recent pay stubs, tax returns, or bank statements.

In addition to verifying income, consider contacting the applicant’s employer to confirm their job status and stability. Employment verification helps you determine whether the tenant has a steady income source and can fulfill their rental obligation without issue.

Step 6: Check Rental History and References

A prospective tenant’s rental history can provide valuable insight into their behavior as renters. Contact previous landlords to ask about the applicant’s payment history, whether they took care of the property, and if they followed community rules.

When contacting references, ask specific questions that can help you assess the tenant’s reliability, such as:

• Did they pay rent on time?
• Were there any complaints from neighbors?
• Did they leave the property in good condition?

These questions can help you make an informed decision beyond what is available in credit and background checks.

Tip: Be aware of potential fake references. Some applicants may list friends as previous landlords, so try to verify that the contact information matches public records or property management information.

Step 7: Make Your Decision and Inform the Applicant

Once you have completed the California tenant screening process, it’s time to make a decision. If the applicant meets your criteria, you can move forward with signing the lease. If not, you need to provide an adverse action notice, especially if the decision was based on information from a credit or background check.

Be prompt in communicating your decision, as applicants are often waiting on multiple rental opportunities. Clear communication is key to maintaining professionalism and ensuring a positive reputation in the rental market.

Best Practices for Running a Tenant Background Check in California

Conducting a tenant background check in California requires careful attention to state laws and regulations. Here are some best practices to keep in mind:

• Stay informed: California laws regarding tenant screening can change, so it’s important to stay informed about the latest regulations to ensure compliance.

• Be consistent: Apply the same screening criteria to all applicants to avoid discrimination claims. Consistency is key to ensuring a fair and legal screening process.

• Document everything: Keep detailed records of your screening process, including consent forms, background checks, and communication with applicants. Proper documentation can protect you if any disputes arise.

Running a tenant background check in California is a critical step in finding reliable renters for your property. By following these steps and adhering to tenant screening laws, you can make informed decisions that protect your investments while providing fair opportunities for prospective tenants.

Whether it’s verifying income, checking rental history, or conducting a background check for your renters in California, each step plays a crucial role in ensuring you find the right tenant for your property. Take your time, be thorough, and remember that a well-screened tenant is key to a successful and stress-free rental experience.

Simplify Tenant Background Checks in California With TrueDoor

Hiring a professional property management company, like TrueDoor Property Management, can make all the difference when it comes to properly handling screenings and ensuring your property is well-managed. Conducting thorough background checks, adhering to California’s specific tenant screening laws, and managing day-to-day tasks can be overwhelming for property owners. TrueDoor Property Management proudly serves Orange County and the Inland Empire, offering expert knowledge and fraud-deterring technology to expertly navigate tenant laws and ensure a seamless rental experience.

By trusting a professional team to handle tenant selection, you can avoid legal pitfalls, secure responsible tenants, and protect your investment. Reach out today to gain peace of mind knowing that your property is in capable hands, allowing you to focus on what matters most: growing your portfolio and maintaining a successful rental business.