Hey, Landlord, Show Me Your Credit Report

I can vividly recall an afternoon in the late 1980s when I was apartment hunting. I went to an open house for a fairly nice one-bedroom in the Inner Richmond, large with a garage, $750 per month (not cheap then). I particularly liked the big working fireplace.  There were a few other people looking at the place, so I was ready. I told the landlord I’d like to fill out an application.

I was just about to dig the wad of C-notes out of my wallet to seal the deal. In those days showing up with enough cash for first, last and deposit usually got you to the head of the line.  I was shocked when the guy asked me for thirty bucks so he could run a credit report. “Are you fucking nuts?” I asked. “Do you actually expect me to pay you to get on your fucking list?” The other folks were getting nervous. When he replied that he did, I walked out and without much trouble found another place, just as nice. Those days are long gone.

Last week, my column, Tenant Troubles in the SF Appeal was entitled, “My Landlord Says He’s Bankrupt, So How Do I Get My Deposit Back?” I couldn’t contain my contempt for the landlord because he seemed to be joyously bankrupt, taunting the tenant, “Neener, neener, neener, you can’t get your security deposit!” It’s the taunt of a greedy landlord, no longer able to play with monopoly money and on his way down from Boardwalk to Mediterranean Avenue.

Since the mortgage meltdown, I hear from more and more tenants who find that their buildings are in foreclosure or close to foreclosure. The landlords are scrambling to squeeze every last dime before the buildings slip from their hands. They continue to collect rent, even after the building is owned by the bank. They refuse to refund security deposits. Even the banks claim (illegally) that they do not have to refund security deposits. Last week I pointed out that a subsequent owner is usually on the hook for security deposits. I have already proposed reforms to current California law to penalize owners who arbitrarily refuse to refund them.

There is another troubling and increasingly common scenario—tenants who have recently rented from a landlord only to find that he’s in foreclosure. That got me thinking.

You show me your credit report and I’ll show you mine.

California Civil Code § 1950.6 specifically allows landlords to check tenants’ credit information and references. It also allows them to charge a tenant up to $30 with CPI adjustments from 1998. I think the typical charges are about $35 these days. Of course the rationale for landlords is that they want to be sure that tenants can and will pay the rent.

I never understood the logic because I know that in real life most tenants understand that you pay your rent before you pay the Macy’s bill. However, there are a growing number of landlords who collect rent and don’t use it to pay the mortgage! The law has no provision allowing tenants to find out if the landlord is a deadbeat!

Given the current financial crisis, it’s time to revise Civil Code § 1950.6 to allow tenants to get landlords’ credit reports. The law should require reciprocity. In other words, a landlord should not be able to get a tenant’s credit report unless he provides one for himself.

These days, tenants need to know if the landlord is qualified to rent his overpriced dump to them.