If you reject a tenant solely or in part upon the information in the prospective tenant’s consumer credit report and/or on the credit score, current California and Federal laws require that you provide the applicant with an Adverse Action Notice in writing.
If you reject an applicant on other grounds, for instance, a poor recommendation from a previous landlord, or in the case of receiving multiple applications, or because you’ve simply chosen a more qualified applicant, the notice is not required.  If, however, you require the applicant to have a co-signer or guarantor on the lease (as may be the case with many student applicants) or require an extra-large deposit or advance payment of rent, based on an applicant’s credit report, score or history, you must give the notice.
There is no standard form for Notice of Adverse Action, and the law does not specify how it must be delivered.  Delivery by mail is deemed adequate.  Here are the required elements:

¢    A statement that your decision was based in whole or in part on information contained in a consumer credit report
¢    The name, address and phone number of the consumer credit reporting agency which furnished the report
¢    A statement of reasons for taking the adverse action
¢    A statement that the applicant has the right to obtain, within 60 days, a free copy of his/her report from the credit reporting agency identified in the notice
¢    A statement that the applicant has the right to dispute the accuracy or completeness of any information contained within the report provided by the credit bureau

Additional disclosures are required if the denial is based upon a credit score and not the report as a whole.
There are both federal and state penalties for a failure to comply with the notification requirements, so it’s a good idea to familiarize yourself with the law and make sure you’re in compliance.

[Editor’s Note:  AOA members may download the Notice to Applicant, (form number 140), which complies with the law.  Mail the completed form to the rejected applicant and attach a copy to their application with the date mailed for your files.]
Reprinted with permission of the Small Property Owners of San Francisco Institute (SPOSFI) News.  For more information on becoming a member of SPOSFI or to send a tax-deductible donation, please visit their website at www.smallprop.org or call (415) 647-2419.

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