Being a landlord in California can be quite lucrative, as the state's cost of living is 39% higher than the national average, and housing is 102% higher. However, all it takes is one bad tenant to ruin your pleasant experience.
One way to protect yourself against bad renters is to perform background checks. But you'll need to tread carefully to ensure that you're following laws and regulations.
Read on for a short guide on conducting a tenant background check in California so you're compliant.
Get Written Consent
Before you start with any background checks, you'll have to obtain written consent from the potential renter first. Not only is this the right thing to do, but it's also required by state law.
You'll need to provide a clear and separate disclosure that tells applicants that a background check will be conducted. Make sure that the disclosure is in writing, and more importantly, that it's not combined with any other information.
Conduct a Credit Check
It's a great idea to check a potential tenant's credit history to see how financially responsible they are.
You can use a consumer reporting agency to pull credit reports. Just remember to comply with the Fair Credit Reporting Act (FCRA). This means that if you decide not to rent to someone based on their credit report, you have to provide adverse action notices.
Get a Criminal Background Check
While you're allowed to get criminal background checks on potential tenants, you should be aware that California has specific laws regarding this. In particular, you can only consider certain types of convictions that are directly related to the rental property's safety and security.
In other words, you're not allowed to have a blanket ban on renting to people with any sort of criminal record. To make sure you're following the law, it's wise to consult with an attorney.
Check Their Rental History
Get in touch with the applicants' previous landlords to verify their rental history. Use this opportunity to ask about their payment history and behavior, as well as any issues they've had with these people.
This information can help you gauge their responsibility as renters. Take any evictions as a red flag.
Verify Their Employment and Income
To ensure that your new tenants can pay rent, you should verify their employment and income. Things to request from them include recent pay stubs, employment verification letters, and other relevant documentation that prove they have a steady income.
Make Sure Your Tenant Background Check Is Compliant
Running a tenant background check is crucial if you want to rent to responsible and reliable people. However, you need to take the right steps to stay compliant.
While you can do this yourself, it's better if you have a property management company handle it. They know how to conduct a tenant background check in the correct fashion, and you won't have to worry about a thing.
Get in touch with us if you'd like tenant background check services and more. We're a property management company that can do it all for you.