Understanding the Impact of Rent Reporting on Residential Property Owners

Effective April 1, 2025, California Assembly Bill 2747 (AB 2747) introduces mandatory rent reporting requirements for certain residential property owners. The legislation focuses exclusively on residential rental properties within the state.

Purpose and Applicability

The core focus of AB 2747 lies in mandating that certain residential landlords offer their tenants the option to have their positive rental payment history reported to credit bureaus.

The driving force behind AB 2747 is to provide an avenue for tenants to build and improve their credit scores through the consistent payment of rent, a financial behavior that has historically been underreported to credit agencies.

Who Must Comply

For residential rental property owners in California, AB 2747 imposes specific obligations based on the size and nature of their properties. Generally, landlords who own residential buildings with 16 or more dwelling units on a single parcel are required to offer their tenants the option to report their positive rental payments to at least one nationwide consumer reporting agency. This requirement takes effect on April 1, 2025, for existing tenants. For new tenancies commencing on or after this date, the offer must be made at the time of the lease agreement and at least once annually thereafter. Landlords must provide tenants with a clear notice outlining the availability of this rent reporting service, explicitly stating that the reporting will be at the tenant’s expense, and including comprehensive information about the specific reporting services being utilized and their associated costs.

However, the law includes exemptions for smaller residential property owners. Landlords who own residential buildings with 15 or fewer dwelling units per parcel are generally not required to comply with AB 2747. Despite this general exemption, there is a significant exception. The mandatory offering of rent reporting applies even to owners of buildings with 15 or fewer units per parcel if both of the following conditions are met: the landlord owns more than one residential rental building, regardless of the number of units in each building, and the landlord is structured as one of the following: a real estate investment trust (REIT), a corporation, a limited liability company (LLC) in which at least one member is a corporation, or an assisted housing development.

This exception suggests a legislative intent to include owners with larger portfolios or specific business structures, even if their individual properties are smaller. It is also important to note that AB 2747 specifically focuses on the reporting of positive rental payment information. Landlords are not permitted to report delinquent rent payments under this law.

Landlords are permitted to charge tenants a fee for the rent reporting service, but this fee is capped at the lesser of $10 per month or the actual cost incurred by the landlord. This provision aims to balance the benefit for tenants with the potential expenses for landlords in offering the service. Beyond the potential cost, landlords will need to establish an administrative process for offering the rent reporting option to their tenants, both initially and on an ongoing annual basis. This likely involves partnering with a third-party rent reporting service that can handle the complexities of data submission to credit bureaus. Clear communication with tenants regarding the availability, cost, and opt-in/opt-out procedures for the service will also be essential for compliance and maintaining positive tenant relations.

While AB 2747 introduces new obligations, it also presents potential advantages for residential property owners who embrace the concept of rent reporting. One significant benefit is the potential to incentivize timely rent payments. Knowing that their positive payment history can contribute to a better credit score can motivate tenants to prioritize rent obligations, potentially leading to a reduction in late payments and the associated administrative burden of managing them.

Furthermore, offering rent reporting can serve as an attractive amenity, potentially helping landlords attract financially responsible renters who are actively seeking opportunities to build or improve their credit. This could lead to a more reliable tenant pool and potentially lower turnover rates. By providing a service that demonstrably benefits tenants’ financial well-being, landlords may also foster stronger tenant relationships built on trust and mutual benefit.

While AB 2747 primarily targets larger residential owners, resources are available that can assist even smaller residential rental property owners who might wish to offer rent reporting voluntarily.

One such resource is CredHub, which is highlighted through the provided link (https://credhub.com/aagla/). CredHub offers services that can integrate with various property management systems and even accommodate manual tracking methods. Their pricing structure includes options where residents may pay as low as $2 per month directly to CredHub, and property managers might pay a monthly or annual management fee. This suggests that even owners of a few properties could potentially utilize such services to offer rent reporting as an added benefit to their tenants. Interested owners are encouraged to contact service providers like CredHub directly to obtain specific pricing and feature details tailored to their individual needs and circumstances.