As a rental property owner, screening tenants is a critical task on the path to success. You want tenants who will pay their rent on time, be kind to neighbors, and take good care of your property. Understanding the tenant screening process will help improve your chances of finding the perfect tenant for your property.
When it comes down to it, it’s easier to screen a tenant who isn’t a good fit than to evict someone from your property. Investing time and money to screen tenants effectively can help you improve your return on investment by improving cash flow and reducing vacancies.
In this article, we’ll explain the ins and outs of tenant screening for property owners in Orange County.
Let’s get started
Table of Contents
- What is Tenant Screening
- The Importance of Screening Tenants
- Components of Tenant Screening
- Everything Landlords Need to Know About Tenant Screening Fees
- Legal Considerations and Compliance Surrounding Tenant Screenings
- 6 Steps to Effectively Screen Tenants
- Find Great Tenants for Your Property
- Tenant Screening FAQs
What is Tenant Screening?
Tenant screening is a process used by landlords and property managers to assess whether or not a tenant is likely to fulfill the terms of the lease or rental agreement. Tenant screening helps determine if a tenant-applicant will take care of your rental property and make their payments regularly and on time.
The Importance of Screening Tenants
One of the most important tasks of a landlord or property management company is screening tenants.
When you conduct a thorough screening process, you can ensure that your investment is protected to the best of your ability. A careful evaluation of potential tenants can help you mitigate the risk of renting to tenants who may damage your property, fail to pay their rent or break other lease terms, which may result in an expensive lawsuit or even eviction.
Tenant screening also helps keep the community’s living environment safe for all residents. The process allows landlords and property managers to find applicants with positive tenancy experiences and responsible behavior.
Components of Tenant Screening
A thorough tenant screening is made up of various components.
Before conducting any of these screenings, you must get written consent from the applicant to conduct a rental background check. Because some tenant laws and regulations are set at the state level, it’s important to understand what kinds of screenings you can legally perform for your rental property.
Let’s dig into each component in more detail for California landlords and property managers.
Pre-screening
Gathering some details about the tenant to see if they meet your basic requirements before you start the official screening process can save you time. This can allow you to automatically rule out candidates who aren’t a good fit while qualifying those with potential.
Reach out to applicants via phone, email, or text messages to share information about your screening process, and ask them some qualifying questions like:
- When would you like to move in?
- Can you provide previous references for landlords and employers?
- Do you plan to live with roommates?
- Are you comfortable with having a credit check performed?
Credit Checks
Criminal Background Checks
Employment Verification
Eviction History Check
Reference Checks from Previous Landlords
Reference checks are a great way to hear from previous landlords about how individuals were as tenants. Here are a few questions to ask prior landlords about tenant-applicants:
- Can you confirm that [tenant] rented from you
- Did [tenant] pay their rent on time?
- Was the unit clean and in good order when they left?
- Was [tenant] disruptive to other tenants or neighbors?
Everything Landlords Need to Know About Tenant Screening Fees
The Average Cost of Rental Screenings in Orange County
Who Should Pay Tenant Screening Fees?
Either the landlord or the prospective tenant will be responsible for covering the charges for the tenant screening reports. Most landlords choose to have the applicant cover the costs, which are often classified as a rental application fee or a tenant screening fee on a rental application.
In California, the maximum amount a landlord can charge a tenant-applicant as a tenant screening fee is $62.02.
So, if a landlord or their authorized agent spends $65.00 on the reports and their time, they can only charge $62.02 per applicant. The additional $2.98 is the landlord’s responsibility.
Legal Considerations and Compliance Surrounding Tenant Screenings
The Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) governs consumer information collection, use, and disclosure, including credit reporting. When running credit reports, landlords must follow FCRA guidelines, which mandate accurate data handling. The FCRA also ensures tenants know what information is being collected and allows them to dispute any incorrect information.
Fair Housing Laws
Race
Color
Religion
Sex
Disability
Family status
Source of income*
Sexual orientation*
Marital status*
Age*
Arbitrary characteristics*
Ancestry*
Gender identity *
Gender expression*
Citizenship*
Immigration status*
Primary language*
Military/Veterans status*
Fair housing laws aim to promote equal housing opportunities for all; large financial penalties often accompany violations.
Note: All classes marked with an * are specifically protected under California law.
Adverse Action Notice Requirements
Avoiding Discrimination During Screening
Fairness in the screening process is a legal requirement but also essential for any ethical real estate business. The guidelines in the Fair Housing Act clearly outline how to prevent discrimination based on certain protected classes. However, every landlord must ensure their practices adhere to these standards.
Here are three steps to avoid discrimination during the tenant screening process.
- Use the same screening criteria for all applicants. From credit checks and rental history to income verification and the questions you ask during the interview, remaining consistent helps avoid unconscious bias.
- Stay informed on fair housing laws to keep you and your team up-to-date on all legal requirements and best practices.
- Keep detailed records of all interactions and decisions during the screening process to maintain transparency and accountability.
6 Steps to Effectively Screen Tenants
1. Conduct a background and criminal record check
Looking into a tenant’s personal history can help you avoid renting to someone who is likely to default on payments, engage in inappropriate behavior, and damage your property. There is a lot to be found online with a quick Google search, but you should also ask for written permission to run a police records check.
Remember, you can only request a criminal records check for the past seven years in California.
2. Run a detailed credit check
| Credit score | What does it mean? |
|---|---|
| Less than 580 | Very poor |
| 580 – 669 | Fair |
| 670 – 739 | Good |
| 740 – 799 | Very good |
| 800 – 850 | Exceptional |
3. Verify income and employment
When signing a lease with a new tenant, confirming that they earn a steady income through a stable job is essential. If not, they may struggle to make their rent payments on time. Verify their employment and income by requesting a recent pay stub and several months of bank statements and contacting the employer if needed.
You can also assess a tenant applicant’s ability to pay rent by calculating their rent-to-income ratio—the general rule of thumb is to look for a tenant with a 30% rent-to-income ratio.
4. Review their rental history
Understanding a tenant’s rental history can help you learn more about what kind of tenant they are. For example, do they move rentals often, or do they stay in one apartment for longer? Those that move often may be a red flag and are worth further discussion.
Reach out to the Apartment Association of Orange County (AAOC) to see if a property owner has previously reported a tenant for issues.
5. Check the references provided
6. Interview the tenants
Find Great Tenants for Your Property
It can be difficult to find the right tenant for your rental property. Working with a reliable property management company can simplify the process of leasing your property to a new tenant. At Good Life Property Management, we’re committed to finding top-notch tenants for your property.
We believe life should be enjoyed, not spent sweating the small stuff like rental history check and income verification. That’s why we set out to make property management easy. We care about you, your property, and your tenant. And we do it all so you can Live the Good Life.
Schedule a call to speak with one of our Good Life experts.
Frequently Asked Questions
What background check do most landlords use?
How far back can landlords check criminal history in California?
What is the 7-year rule in California?
Can landlords run credit checks in California?
How do I screen a tenant in California?
What is the maximum tenant screening fee in California?
