Landlords of Assisted Housing Developments Are Required To Offer Tenants The Option of Having Their Rental Payments Reported to a Credit Reporting Agency

On September 28, 2020, Governor Newsom approved Senate Bill 1157, which adds Section 1954.06 to the California Civil Code.

Beginning July 1, 2021, any landlord of an assisted housing development must offer the tenant or tenants obligated on the lease of each unit in that housing development the option of having the tenant’s rental payment information reported to at least one consumer reporting agency that meets certain requirements. A tenant’s election to have rent reported under this law must be in writing.

For leases entered into on and after July 1, 2021, the offer of rent reporting must 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 must be made no later than October 1, 2021, and at least once annually thereafter.

The offer of rent reporting must 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 be reported; (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 this law; (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 reporting.

When the offer of rent reporting is made, the landlord must provide the tenant with a self-addressed, stamped envelope to return the written election of rent reporting.

The written election to begin rent reporting cannot 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 obtain additional copies of the written election of rent reporting form from the landlord at any time.

If a tenant elects to have that tenant’s rental payments reported to a consumer reporting agency under this law, 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 cannot be reported to a consumer reporting agency.

If a tenant fails to pay any fee required by the landlord pursuant to this law, all of the following applies: (1) The failure to pay the fee is not cause for termination of the tenancy, whether pursuant to the unlawful detainer statutes or otherwise; (2) The landlord cannot 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.

A tenant who elects to have rent reported may subsequently file a written request with their landlord to stop that reporting with which the landlord shall comply. A tenant who elects to stop reporting is not be allowed to elect rent reporting again for a period of at least six months from the date of the tenant’s written request to stop reporting.

A tenant who elects to have rent reported does not forfeit any rights under the implied warranty of habitability. If a tenant makes deductions from rent or otherwise withholds rent as authorized by the statutes governing the implied warranty of habitability, the deductions or withholding of rent shall not constitute a late rental payment. A tenant invoking the right to repair and deduct or withhold rent under those sections must notify their landlord of the deduction or withholding prior to the date rent is due. This law does not relieve a housing provider of the obligation to maintain habitable premises.

This law does not apply to any landlord of an assisted housing development that contains 15 or fewer dwelling units, unless both of the following apply: (1) The landlord owns more than one assisted housing development, regardless of the number of units in each assisted housing development; and (2) The landlord is one of the following: (a) a real estate investment trust; (b) a corporation; or (c) a limited liability company in which at least one member is a corporation.

For purposes of this law, the following definitions apply: (1) “Assisted housing development” has the same meaning as defined in Section 65863.10 of the Government Code; and (2) “Landlord” means an owner of residential real property containing five or more dwelling units.

This law remains 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.

The law firm of Wallace, Richardson, Sontag & Le, LLP represents landlords, property management companies, institutional and private lenders, employers and insurance companies throughout the State of California in real estate, business and employment litigation. The information provided herein is for general interest only and should not be relied upon or construed as legal advice.