Big changes are coming for property owners in California. AB 2747, a new law going into effect on April 1, 2025, will require landlords of 15 or more residential units to offer tenants the option to report their rent payments to credit bureaus.
For tenants, this means a chance to build their credit just by paying rent on time. But for landlords, it comes with new responsibilities. Let’s break it down.
What Does AB 2747 Require?
Here is what landlords need to know:
- Tenants must be notified about rent reporting at lease signing and at least once a year.
- If a tenant opts in, landlords must report both on-time and late rent payments to at least one credit bureau.
- Landlords can charge a fee, but it cannot be more than $10 per month or the actual cost of reporting, whichever is lower.
- Tenants can opt out, but once they do, they have to wait six months before opting in again.
How Will This Impact Landlords?
While this law is great for tenants looking to build their credit scores, it also means landlords need to adjust their processes.
- More administrative work. Landlords will need a system to track and report payments accurately.
- Clear tenant communication. Landlords will need to explain this option to tenants and answer their questions.
- Potential additional costs. If landlords choose to charge tenants for the service, it must stay within the legal limit.
Why Was This Law Created?
AB 2747 builds on SB 1157, an earlier law that required rent reporting for affordable housing. Lawmakers realized rent is one of the biggest monthly expenses for most people, so they wanted to make it count toward building credit.
This change could help renters improve their credit scores, making it easier for them to qualify for loans, credit cards, and future rentals.
What Should Landlords Do Now?
If you own or manage 15 or more rental units, now is the time to prepare.
- Look into rent reporting services that can help you stay compliant.
- Update lease agreements to include tenant notifications.
- Be ready to answer tenant questions about how the process works.
AB 2747 is about making rent payments count, but it also means landlords need to adjust. The good news is that when tenants build credit, they are often more motivated to pay on time, which benefits everyone.
For more details on AB 2747, check out Esusu’s solutions here.
Disclaimer: Esusu is not a law firm and is not authorized to perform services performed by an attorney. Esusu provides general resources to clients to prepare its own customized legal documents. Esusu shall not be liable for any failure by clients to comply with AB 2747 or any other law.