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The Ultimate Guide to Tenant Screening for Orange County Property Owners

Screening tenants is one of the most important tasks for landlords and property managers. Learn the ins and outs of tenant screening in Orange County.
tenant screening

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?

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

A credit check is a document that tells you about a tenant’s credit activity and current credit situation. This can give you an idea of how they’ve managed their money and credit in the past and demonstrate if they’ll be able to pay their rent on time.

Criminal Background Checks

A criminal background check, also known as a criminal record check, is a list of arrests and convictions. In California, landlords and property managers can only order criminal record checks that look back at the last seven years (with some exceptions). This means landlords can only see convictions in the past seven years.

Employment Verification

Employment verification is the process of confirming a potential tenant’s current employment. This can be as easy as requesting a letter from the company or calling to speak with a manager.

Eviction History Check

Running an eviction history check shows you if the potential tenant has ever been evicted. Remember, California state bill AB 2819 automatically seals an eviction record for 60 days. The records will remain sealed unless the case goes to trial and a judgment is made in favor of the landlord within 60 days.

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:

  1. Can you confirm that [tenant] rented from you
  2. Did [tenant] pay their rent on time?
  3. Was the unit clean and in good order when they left?
  4. Was [tenant] disruptive to other tenants or neighbors?

Everything Landlords Need to Know About Tenant Screening Fees

While tenant screening has a cost, the benefits far outweigh the price. Tenant screening gives you insights into potential tenants that help you make the best decision for your rental property.

The Average Cost of Rental Screenings in Orange County

Tenant screening fees can range from $25 to $75 on average, depending on the company. It’s essential to use an appropriately accredited organization to complete screening reports. For example, the Fair Credit Reporting Act (FCRA) approves a reputable credit-checking service.

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.

Before processing applications, landlords and property managers must understand the legal considerations and compliance requirements. Large property management companies and DIY landlords alike must adhere to the following rules.

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

Fair housing laws at both the federal and state levels state that tenant screening must happen without discrimination. In California, this includes prohibiting bias based on:

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

Under the Fair Housing Act and FCRA, landlords are required to provide tenant-applicants with information if their application is rejected because of something on these reports. Applicants can request a free copy of the report within 60 days of their application being denied.

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

Now that you know the basics of tenant screening, let’s explore six easy 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

Analyzing a potential tenant’s credit score and credit report shows how likely they are to pay their rent on time. In the US, credit scores range from 300 to 850. The higher the credit score, the lower the credit risk.
Credit score What does it mean?
Less than 580 Very poor
580 – 669 Fair
670 – 739 Good
740 – 799 Very good
800 – 850 Exceptional
Use a credit-checking service approved by the Fair Credit Reporting Act (FCRA). These services will provide details about their payment habits, any debt they carry, the size of their monthly payments, and details on bankruptcies.

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

The power of references shouldn’t be underestimated. Make sure to reach out to each reference an applicant provides. It’s especially important to reach out to an applicant’s landlord references. When you speak with previous landlords, you can learn more about what kind of a tenant your applicant is. If you have references to multiple landlords, reach out to all of them to get a well-rounded assessment of a tenant’s character.

6. Interview the tenants

Once you’ve completed all of the above steps and are satisfied with the results, it’s time to set up an interview with your tenant-applicant. Consider this meeting your chance to ask any lingering questions and address any concerns. Keep things casual, but make sure you’re paying attention to their responses.

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?

Most landlords run credit checks, criminal records, searches, eviction history checks, and rental history verifications as part of their tenant screening process. Together, these checks help to assess a tenant-applicant’s reliability and suitability.

How far back can landlords check criminal history in California?

While some states allow landlords to look as far back as they would like when conducting criminal records checks, California only allows landlords to see convictions that have happened in the last seven years.

What is the 7-year rule in California?

The seven-year rule states that landlords and employers can only order criminal record checks that look back at the last seven years (with some exceptions) in California. This means landlords can only see convictions in the past seven years.

Can landlords run credit checks in California?

Yes, landlords in California can run credit checks on their tenant-applicants. You can require all potential tenants to submit to having their credit history checked. You can then use a reputable credit reporting agency to run the report.

How do I screen a tenant in California?

There are a lot of steps involved in screening a tenant in California. With the applicant’s written consent, you can conduct credit checks, criminal background checks, eviction history checks, and verify rental history with previous landlords.

What is the maximum tenant screening fee in California?

In 2024, the maximum amount a landlord in California can charge a tenant-applicant as a tenant screening fee is $62.02. So, if a landlord or their authorized agent spends $65.00 for the reports and their time spent, they can only charge $62.02 per applicant.
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