Amended Calif. Civil Code 1954.07
Effective date: April 1, 2025
Bill text: AB 2747
Why this matters: Residential landlords, unless exempt, are now obligated to offer to report a tenant’s positive rental payment information to at least one nationwide consumer reporting agency. A fee charge is limited in amount and not authorized for a negative report.
Tenant’s positive rental payment history reporting
While credit scores greatly impact an individual’s financial decisions and opportunities, the current credit score model designed by credit agencies for bankers deprives a significant portion of the population who have non-traditional credit histories from building their credit rating. Now, California tenants have another tool to improve their credit scores.
Residential landlords, unless exempt, are mandated to offer tenants the right to have their positive rental payment information reported to at least one nationwide consumer credit reporting agency. Notice of the offer is handed to the tenant when entering into a rental or lease agreement and again delivered annually during the tenant’s occupancy. [See RPI Form 550 and 551]
The reporting of the tenant’s payment information offered to tenants is limited to timely rental payment performance by the tenant. A landlord electing to report late or missing rental payments to a credit agency may not recover their costs of the negative report. [Calif. Civil Code §§1954.07(b)]
The prior statutory method for reporting these payments to credit reporting agencies was cumbersome and unreliable resulting in inconsistent landlord cooperation with tenants. The consequence is a mandated landlord procedure spelling out the exact steps a residential landlord must take to assure tenants their positive payment history is reported to build their credit scoring. The landlord is reimbursed for the cost of reporting to the credit agency.
From the landlord’s standpoint, the standardized offer for the landlord to report all positive rental history, when accepted by the tenant, incentivizes the tenant to make timely rent payments.
The amended legislation builds off prior law which gave tenants who receive government assistance the right to have their rental payments, whether positive or negative performance, reported to at least one consumer reporting agency. As amended, landlords may now charge a reporting fee to cover costs up to $10 monthly, but only for reporting positive rental payment history for any tenant who accepts the offer.
When the landlord incurs no cost to report positive rental payments, they may not charge the tenant a fee. [CC §§1954.07(g)(1)(a)]
While a landlord may always report any negative rental payment history, they may not charge a fee to recover their cost of reporting a tenant’s delinquent or incomplete payments to a credit agency. [CC §§1954.06(b); 1954.07(l)(2)]
Exemptions exist for small landlords to avoid the mandated offer to report positive credit information, including:
- multi-family developments receiving government assistance;
- a property containing 15 or fewer units, unless the landlord is a:
- real estate investment trust (REIT);
- corporation; or
- limited liability company (LLC) in which at least one member is a corporation; and
- the entity owns more than one residential rental building regardless of the number of units. [CC §§1954.07(j)(2); 1954.07(j)]
All residential rental and lease agreements entered into, unless the landlord is exempt, must offer to report positive rental payment information. [See RPI Form 550 §1.3 and 551 §1.3]
For existing tenants, the landlord must notify the tenant of their right to require the landlord to report their positive rental payment history. [See RPI Form 553-3]
Further, the notice of a tenant’s right to require the landlord to report positive rental payment history must be delivered annually by the landlord to their tenants. [CC §§1954.07(b); See RPI Form 553-3]
The landlord’s offer to report positive rental payments includes:
- notice the reporting of the tenant’s rental payment information is at the tenant’s option;
- the name of each consumer reporting agency the landlord will provide with the tenant’s rental payment information;
- the fee amount the landlord charges to report as the lesser of $10 a month or the landlord’s actual reporting costs;
- instructions for submitting the written election of rent reporting to the landlord by first-class United States mail or email;
- notice the tenant may opt into rent reporting at any time;
- notice the tenant may opt out of rent reporting at any time with the caveat rent reporting may not be resumed within six months of opting out;
- instructions for opting out of reporting rental payment information; and
- a block for the tenant to date and sign to accept the offer of rent reporting. [CC §§1954.07(d); See RPI Form 553-3]
A tenant’s failure to pay a reporting fee due the landlord:
- is not cause to terminate the tenancy;
- may not be cured by a deduction from the tenant’s security deposit; and
- when unpaid after 30 days allows the landlord to stop reporting the tenant’s rental payments and the tenant may not elect rent reporting again for six months after the fee was due. [CC §1954.07(h)]
The landlord may not redirect any funds received from the tenant to pay for the credit reporting fee. When the tenant makes deductions from rent or withholds rent to remedy a failure of the landlord’s duty to repair the premises or maintain habitable conditions, the remedy does not constitute a late payment of rent. [CC §§1954.07(g)(2); 1954.07(k); 1941]
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Landlords of prospective Section 8 tenants must allow credit history alternatives
