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Charge for Credit Report Is Legal


Question: If a landlord runs a credit report on me to determine if he wants to rent to me, can he require me to pay for it?

Steven R. Kellman, director of the Tenants' Legal Center in San Diego, replies:

The landlord can't actually force you to pay for the credit check but can simply make it a condition of the application process.

The landlord is entitled to receive assurance that the credit of an applicant meets their standards of financial and rental history. The problem is that the landlord gets to choose the method. Therefore, it may be frustrating for the tenant with good credit to have to pay to prove it.

It may be equally frustrating for the tenant with less than good credit to pay for these credit checks and be denied the rental. Those repeated application fees can add up mighty fast.

Another problem arises when the less than honest landlord takes the opportunity to accept many applications (and fees) from tenants with doubtful credit simply to profit from these credit check fees. Some landlords simply pocket the fees without actually running a credit check.

If the tenant feels discriminated against in this process, it will come as no comfort to learn that it is not discriminatory if all applicants are charged the same fee in the application process.

Tenants are advised to check out the landlord as best they can before applying for that rental and paying that credit check fee.

Property manager Robert Griswold replies:

It has been a long-standing custom and practice of landlords and their property managers throughout California to pass the cost of credit checks to prospective renters in the form of application fees or credit check fees.

The majority of landlords and property managers do not abuse the credit check procedure as part of a comprehensive application evaluation process.

However, as in many instances in life, there are some individuals who act improperly and unethically. They charge very high credit check fees with no relationship to the actual costs of running a credit check, performing the other background investigation on rental history and/or properly verifying employment to qualify a prospective renter.

Some landlords in the San Francisco Bay Area were found guilty of charging application fees of $50 or more and/or collecting application fees when no rentals were even available. These greedy landlords were also charging tenants illegal transfer fees of up to $150 just to move from one apartment to another within the same apartment community.

In Southern California, virtually all landlords and property managers surveyed over the last 10 years have indicated that they do not charge for transfers.

They also collect application fees only when they actually have a unit for rent and they do not charge more than $30 (the maximum allowed per state law) for an application fee per applicant.

Typically, landlords and property managers charge $15 to $30, which covers the actual cost of the credit check ($10 to $20), plus the miscellaneous administrative costs of verifying the information on the application, such as employment, rental history, etc.

The application fee is clearly not a profit source for legitimate landlords and property managers. Of course, there may be exceptions, and you should avoid these landlords.

Also, be sure to abide by any local rent control laws or procedures, if they apply in your area.

New Landlord Must Honor Original Lease

Q: We have a 12-month lease on a home with six months remaining. Our landlord sold last month, and we were advised in writing that our deposit was transferred to the new owner. Is our original lease still valid? Can we or the new owner cancel the lease?

Griswold replies:

Your lease is still valid and you and the new owner must honor the complete terms and conditions unless you mutually agree to a change in terms or a new lease.

The transfer of your security deposit was properly documented in writing. The new owner will be responsible for the required accounting upon your vacating the premises.

Noisy Neighbors Don't Justify Breaking Lease

Q: My neighbors upstairs are really noisy. I complained to the landlord and she said she would look into it, but the noise is still a problem. I have six months to go on my lease but want to move right away because of the noise. Can I break my lease and leave without owing any more rent?

Ted Smith, principal in a law firm representing landlords, replies:

This is a tough question. Taking the landlord's side, you don't appear to have a good enough case to break your lease. The law requires that the disruption of your quiet enjoyment be very substantial--almost unbearable.

If you can prove it is that bad, you may have the right to walk away from the lease with no further responsibility. The law calls it "constructive eviction."

Try to get the landlord to take action against the noisy neighbors and agree to help him (by testifying in court) if it becomes necessary to evict them based on the noise disturbances.

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