California tenants entering into written or verbal leases on or after April 1, 2025 for apartments in buildings with at least sixteen (16) or more rental units must be offered the option to have their positive rental payment information reporting to a consumer credit reporting agency.  Except where landlords incur no costs in fulfilling this obligation, landlords may charge no more than ten dollars ($10.00) per month for the service, or their actual costs.  With this new law, codified at California Civil Code section 1954.07, California tenants have an opportunity to establish their credit simply by paying rent and establish a footing for future financial undertakings, whatever they may be.

How Does Civil Code § 1954.07 Help California Tenants?

California Civil Code section 1954.07 helps California tenants establish their credit history thereby improving – where the individual California tenant timely pays their rent – their credit scores.  Under the law, California tenants leasing a unit in a building with at least sixteen (16) residential units may elect to have their positive rental payment information reported to at least one nationwide consumer reporting agency, as defined by the Fair Credit Reporting Act. California Civil Code §§ 1954.07(a), (j); 15 U.S.C. §§ 1681a(p), (f), and (p).

Please note that landlords that the sixteen (16) unit limitation does not apply to landlords that own more than one residential building, or to landlords that are real estate investment trusts, corporations, limited liability companies (LLCs) where at least one member is a corporation, or assisted housing developments. California Civil Code § 1954.07(j).

What Exactly Is Positive Rental Payment Information? 

As defined, positive rental payment information is, “information regarding a tenant’s complete, timely payments of rent.” California Civil Code § 1954.07(l)(1).  Therefore, to be entitled for reporting, the rent payment must be both timely and complete.

When Does Civil Code § 1954.07 Take Effect?

California Civil Code § 1954.07 applies to written or oral leases commenced on or after April 1, 2025. California Civil Code § 1954.07(b).

Does Civil Code § 1954.07 Apply Retroactively?

No.

When Must Landlords Tender Offers for Positive Rental Payment Information to California Tenants?

Under the law, landlords must tender offer to report positive rental payment information to credit reporting agencies at the inception of a tenancy and at least once annually thereafter. California Civil Code § 1954.07(b).  For leases in existence before January 1, 2025, landlords must offer California tenants reporting services on or before April 1, 2025, and at least once thereafter.  Id.

How Must Landlords Serve Offers to California Tenants Under Civil Code § 1954.07?

Landlords must serve California tenants offers to report positive rental payment information to consumer credit reporting agencies via first-class United States mail or email. California Civil Code § 1954.07(c).

What Must Offers for Positive Rental Payment Information Reporting Contain?

Under the law, offers for positive rental payment information to consumer credit reporting agencies must containing all of the following:

• Informing the California tenant that the service is optional;
• Identification of each consumer reporting agency to which positive rental payment information will be reported;
• The amount of any fees charged for the service;
• Instructions on how to submit the written election of positive rental payment information reporting to the landlord by First Class mail or email;
• Informing the California tenant that they may request the service at any time in the future;
• Informing the California tenant that they may cancel the service at any time in the future;
• Instruct the California tenant as to opting out of the service; and,
• A signature block requesting the California tenant’s signature if accepting the service. California Civil Code § 1954.07(d).

Should the landlord include an offer to opt into the service via first class United States Mail, they must also include a self-addressed, stamped envelope. California Civil Code § 1954.07(e).  Further, a California tenant may request additional copies of the written election of positive rental payment information reporting from the landlord at any time.

May Landlords Charge California Tenants Fees for Reporting Services Under Civil Code § 1954.07?

Yes, landlords may charge California tenants fees for reporting services under California Civil Code section 1594.07. California Civil Code § 1954.07(g).  However, the Civil Code section 1954.07 regulates fees as follows:

• A Civil Code section 1954.07 fee may not exceed the lessor of landlord’s actual costs, or ten dollars ($10.00) per month. California Civil Code § 1954.07(g)(1);
  • Except where the landlord incurs no expenses in providing the service to the California tenant. Where this occurs, they may charge no fee. California Civil Code § 1954.07(g)(1);
• The Civil Code section 1954.07 fee is not considered rent for purposes of California Civil Code section 1954.07 and therefore a California tenant’s payment or nonpayment may not be reported to a consumer credit reporting agency. California Civil Code § 1954.07(g)(1);
• Rent money may not be used to satisfy a California tenant’s obligation under Civil Code section 1954.07. California Civil Code§ 1954.07(g)(2);
• Similarly, a California tenant’s failure to pay a Civil Code section 1954.07 fee may not support a termination of tenancy notice, and presumably an unlawful detainer (eviction) lawsuit. California Civil Code § 1954.07(h)(1);
• Landlords may not deduct Civil Code section 1954.07 fees from security deposits. California Civil Code § 1954.07(h)(2);
• Where a California tenant fails to pay a fee for thirty (30) or more days, the landlord may stop reporting services and the California tenant may not opt back into the service for at least six (6) months after the unpaid fee first became due. California Civil Code § 1954.07(h)(3);
• Where a California tenant opts out of reporting services, they may not opt back into the service for at least six (6) months from the date of their request to stop reporting. California Civil Code§ 1954.07(i).