SB 1157 – beginning July 1, 2021, and until July 1, 2025 -will require a landlord of an assisted housing development, as defined, to offer tenants obligated on the lease of units in the development the option of having their rental payments reported to at least one consumer reporting agency. This means that tenants in multi-family developments receiving government assistance will have a new way to add to their credit histories.
The bill would authorize a landlord to charge a tenant who elects to have rent reported the lesser of $10 per month or the actual cost to the landlord to provide the service. The bill would prescribe requirements regarding how the offer of rent reporting is to be made for new and existing leases. The bill would also authorize a tenant who elects to have rent reported to file a written request to stop that reporting, provided that, in this case, the bill would prohibit the tenant from electing rent reporting again for at least six months.
The bill would declare that a tenant who elects to have rent reported does not forfeit specified tenant rights and if a tenant makes deductions from rent or otherwise withholds it, as authorized, the deductions or withholding do not constitute a late rental payment. The bill would exempt from these provisions a landlord of an assisted housing development with 15 or fewer dwelling units, unless specified conditions are met.
- For leases entered into on and after July 1, 2021, the offer of rent reporting shall be made at the time of the lease agreement and at least once annually thereafter. For leases outstanding as of July 1, 2021, the offer of rent reporting shall be made no later than October 1, 2021, and at least once annually thereafter.
- The offer of rent reporting shall include a written election of rent reporting that contains all of the following:
(1) A statement that reporting of the tenant’s rental payment information is optional.
(2) Identification of each consumer reporting agency to which rental payment information will
(3) A statement that all of the tenant’s rental payments will be reported, regardless of whether the
payments are timely, late, or missed.
(4) The amount of any fee charged pursuant to subdivision (f).
(5) Instructions on how to submit the written election of rent reporting to the landlord by mail.
(6) A statement that the tenant may opt into rent reporting at any time following the initial offer
by the landlord.
(7) A statement that the tenant may elect to stop rent reporting at any time, but that they will not
be able to resume rent reporting for at least six months after their election to opt out.
(8) Instructions on how to opt out of reporting rental payment information.
(9) A signature block that the tenant shall date and sign in order to accept the offer of rent
- When the offer of rent reporting is made, the landlord shall provide the tenant with a self-addressed, stamped envelope to return the written election of rent reporting.
The written election to begin rent reporting shall not be accepted from the tenant at the time
of the offer. A tenant may submit their completed written election of rent reporting at any
time after they receive the offer of rent reporting from the landlord. A tenant may request and shall obtain additional copies of the written election of rent reporting form from the landlord at any time.
- If a tenant elects to have his rental payments reported to a consumer reporting agency under subdivision (a), the landlord may require that tenant to pay a fee not to exceed the lesser of the actual cost to the landlord to provide the service or ten dollars ($10) per month. The payment or nonpayment of this fee by the tenant shall not be reported to a consumer reporting agency.
- If a tenant fails to pay any fee required by the landlord pursuant to subdivision (f), all of the following shall apply:
- The failure to pay the fee shall not be cause for termination of the tenancy, whether
pursuant to Section 1161 of the Code of Civil Procedure or otherwise.
(2) The landlord shall not deduct the unpaid fee from the tenant’s security deposit.
(3) If the fee remains unpaid for 30 days or more, the landlord may stop reporting the tenant’s
rental payments and the tenant shall be unable to elect rent reporting again for a period of
six months from the date on which the fee first became due.
This shall not apply to any landlord of an assisted housing development that contains 15 or fewer dwelling units, unless both of the following apply:
- The landlord owns more than one assisted housing development, regardless of the number of units in each assisted housing development.
- The landlord is one of the following:
- A real estate investment trust, as defined in Section 856 of Title 26 of the United States
(B) A corporation.
(C) A limited liability company in which at least one member is a corporation.
(1) “Assisted housing development” has the same meaning as defined in Section 65863.10 of the Government Code.
(2) “Landlord” means an owner of residential real property containing five or more dwelling units.
This shall remain in effect only until July 1, 2025, and as of that date is repealed, unless a later enacted statute that is enacted before July 1, 2025, deletes or extends that date.
To see this bill in its entirety, visit https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200SB1157.
[AOA: SB 1157 is a very short-sighted bill that largely focuses on folks with poor credit or no credit history, yet fails to consider the rest of the community that they are a part of. Allowing housing consumers to stop reporting the rental payment history removes accountability, one of the most powerful aspects of community. Lack of accountability leads to corruption and the decay of a society; integrity is the bedrock of a thriving community.
Not only is lack of accountability bad for housing providers, housing consumers that pause reporting to take financial advantage of housing providers will never reach their full potential as productive members of society. Instead of building better communities, one-sided policies that only benefit housing consumers create adversarial relationships and discourage investment in the housing sector. This would have been win-win legislation if once enrolled, there was no option to opt out of the program.
On the positive side, rent reporting itself is a great tool that rewards your paying tenants. Where legal, making rent reporting a requisite of the tenancy would deter bad tenants from renting from you. If you would like to offer rent reporting to your tenants, AOA Digital Property Management Software may be a good fit for you. Members who want a solution for rent reporting, please check the AOA website for the AOA Rent Reporting Service.
Note: AOA’s Notice of Rent Reporting to Credit Agency form may be downloaded for FREE at www.aoausa.com.