Understanding AB2747 and SB924: Requirement to Report Positive Rental Payments
New California laws, AB2747 and SB924, require landlords to offer reporting of tenants' positive rental payment history to at least one nationwide credit reporting agency. This post breaks down the requirements, deadlines, exemptions, and other important details to help property owners understand how to comply.
Who Must Comply?
All residential property landlords are required to offer to report positive rental payment history, except in the following cases:
Exemptions:
- Landlords with 15 or Fewer Units:
Landlords with 15 or fewer units are generally exempt. However, they must comply if:- They own multiple residential rental buildings, and
- They are a REIT, Corporation, or LLC with at least one corporate member.
Here’s how it works:
- If you own multiple properties, each with 15 or fewer units, you are exempt as long as the properties are not in a REIT, Corporation, or LLC with at least one corporate member.
- If the properties are in a REIT, Corporation, or LLC with a corporate member, then you must comply, regardless of the number of units per building.
Examples:
- Example 1: John owns four fourplexes (4 units each) under his personal name. He is exempt because none of the properties are in a REIT, Corporation, or LLC with a corporate member.
- Example 2: Sarah owns ten duplexes (2 units each) under an LLC that has no corporate members. She is exempt because there is no corporate member in the LLC.
- Example 3: Mike owns three triplexes (3 units each) under a REIT with a corporate member. He must comply because the properties are under a REIT with a corporate member.
Deadlines for Offering Reporting
Landlords must offer to report positive rental payment history as follows:
- For Existing Leases (as of January 1, 2025):
- Offer must be made by April 1, 2025, and then annually.
- For New Leases (entered into on or after April 1, 2025):
- Offer must be made upon lease execution and then annually.
How to Provide the Offer
Landlords can provide the offer by:
- Mail: Include a self-addressed stamped envelope for tenant response.
- Email: Ensure the offer is clearly communicated and documented.
Cost Recovery for Reporting
- Landlords can charge tenants the actual cost or a fee of up to $10 per month for reporting.
- If the tenant:
- Opts out or fails to pay the fee, they must wait six months before opting in again.
- Fails to pay the fee for 30 days, the landlord can terminate the reporting.
Important Restrictions:
- Rent or security deposits cannot be used to cover the reporting fee.
- Eviction cannot be filed for non-payment of the reporting fee.
Special Cases: Repair and Deduct or Withholding Rent
- Tenants must notify the landlord in writing before the rent due date if they are:
- Using the repair and deduct method, or
- Withholding rent due to issues with the property.
- If the tenant does not provide written notice, the landlord is not obligated to report positive rental payment history for that period.