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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.

Exemptions

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Exemptions from Rent Reporting Requirements

Most residential landlords are required to offer tenants the option to report positive rental payment history. However, certain landlords are exempt from this requirement:

1. Assisted Housing Developments

Landlords of assisted housing developments are exempt.

2. Landlords with 15 or Fewer Units

Landlords who own 15 or fewer residential units are generally exempt.
However, they must comply if all of the following apply:

  • They own more than one residential rental building (regardless of the number of units), and

  • They are organized as a:

    • Real Estate Investment Trust (REIT),

    • Corporation, or

    • Limited Liability Company (LLC) with at least one corporate member.

If both conditions are met, the landlord is not exempt and must offer positive rent reporting to tenants.

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:

  1. 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.
  2. 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.
  3. Example 3: Mike owns three triplexes (3 units each) under a REIT. He must comply because the three triplexes are i properties are under a REIT with a corporate member.

Deadlines for Offering Reporting

For leases that are active as of January 1, 2025, landlords must offer positive rent payment reporting by April 1, 2025, and at least once a year after that.

For leases starting on or after April 1, 2025, landlords must offer positive rent payment reporting when the lease is signed and at least once a year after that.

Providing the Offer to Tenants

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Contents of Offer (Offer Must be in Writing)

  • Clearly state that participation in rent reporting is optional.

  • List the names of all consumer reporting agencies that will receive the information.

  • Specify any fees that may apply (see fee details below).

  • Provide instructions for how the tenant can notify the landlord of their choice by mail or email.

  • Include a statement that the tenant can opt in at any time, but if they choose to opt out, they must wait at least six months before opting back in.

  • Explain how the tenant can opt out of the program.

  • Include a signature section for the tenant to sign and date.

Tenant Notification Requirements

  • By Mail: If the offer is sent by U.S. mail, the landlord must include a self-addressed, stamped envelope for the tenant to return their written response.

  • By Email: The offer must be clearly communicated and documented to ensure proper recordkeeping.

Landlord Requirements for Offering Rent Reporting

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Fee Guidelines for Rent Reporting

  • The landlord may charge a fee, but it must be the actual cost of reporting or $10 per month, whichever is lower.

  • If the landlord incurs no cost, no fee may be charged to the tenant.

  • Unpaid fees cannot be deducted from rent payments.

If the Tenant Fails to Pay the Fee:

  • It cannot be used as a reason to terminate the tenancy.

  • It cannot be deducted from the tenant’s security deposit.

  • If the fee remains unpaid for 30 days, the landlord may stop reporting the tenant’s payments.

  • After termination, the tenant must wait at least six months before opting back in to rent reporting.

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.
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