New landlord vetting tenants in Califonia - Help!

[Zhenya Levchenko]

Hi all,

So here i am--just listed my front house for rent for the first time ever. Last night I showed it to my first prospective tenants and am realizing that I made a ton of mistake already. I would really love the community's input on how to handle a few things.

1. A couple showed up and seemed super eager to jump in right away. I was very excited until they filled out the application and I saw that they have two kids. I know that in California I can't discriminate against folks with kids, but how do I hadle these things. It's a 2 br house but very small. My application says: maximum occupants: 2.

2. My property is listed at $2200 and their combined monthly income is $4800.  My application clearly states we require income of 2.5 times the rent. I know that that automatically disqualifies them.

3. They gave me an application fee of $35 each, do I have to process their application by law or should I return their application fee? What's the law?

Anything else? I really appreciate any feedback. Thank you!

[Kyle J.]

You may not be able to limit the occupancy to two people for a two bedroom property.  Suppose a single mother with two small children wanted to rent it.  That'd be three people and prohibited by your occupancy rule of 2 people max, but that's not an unreasonable number of people to rent your unit and it'd likely be considered a fair housing violation.  Here's some more reading on that:

Nolo: Can I Limit the Number of Occupants in a Rental?

Landlord's limit on number of occupants may be fair housing violation

If you're still not sure, consult with a local landlord-tenant attorney.  You definitely don't want to get in trouble with fair housing.

As for your second question about the applicants who don't qualify based on income, as soon as they hand you the application and you see that they don't qualify, you should explain that to them.  Why continue to accept the application fee from them if you already know they don't qualify at the outset?

And to answer your final question, if you didn't use the application fee you collected, California law requires you to return it.  Here's some more reading on that:

Application Screening Fees for California Residential Landlords