New Screening Fee Regulations for 2025: Can I Still Charge a Screening Fee or Application Fee???

What Newport Beach, Costa Mesa, Orange County and California Landlords Need to Know About AB 2493: New Screening Fee Regulations for 2025

As of January 1, 2025, California landlords must comply with Assembly Bill 2493 (AB 2493), which introduces significant changes to how application screening fees can be charged. This law is codified under California Civil Code §1950.6 and applies to all residential tenancies exceeding 30 days. If you’re a landlord in Newport Beach or Costa Mesa, or anywhere in California, here’s everything you need to know to stay compliant and avoid potential pitfalls.

Key Takeaways from AB 2493

1. Two Authorized Screening Fee Procedures: To charge a screening fee, landlords must follow one of these procedures:(A) Sequential Application Process: Applications must be reviewed in the order received, based on clearly disclosed written screening criteria provided to the applicant with the application form. Only the first applicant meeting the screening criteria can be approved. Screening fees can only be charged when an application is actively considered. If fees are inadvertently collected (e.g., multiple concurrent submissions), they must be refunded within 7 days unless the applicant chooses to apply the fee toward another available rental unit.(B) Refundable Screening Fee Process: Screening fees must be refunded to all applicants not selected for tenancy within 7 days of tenant selection or 30 days of application submission, whichever comes first.
2. Mandatory Credit Report Disclosure:If an application screening fee is paid, landlords must provide the applicant with a copy of their consumer credit report within 7 days of receiving the report. This is required regardless of whether the applicant requests it.
3. Receipt Requirements:Landlords must issue an itemized receipt for application fees, detailing the costs incurred (e.g., credit reports, reference checks, or processing time). This receipt can be delivered in person, by mail, or electronically.
4. Reusable Screening Reports:Landlords may accept reusable tenant screening reports and cannot charge additional fees for accessing them. This offers tenants greater flexibility when applying to multiple properties.
5. No Screening Fees Without Available Units: Landlords and agents are prohibited from charging application screening fees when they know or should know that no rental units are available or will be available within a reasonable period. While landlords can still maintain waiting lists, charging a fee under these circumstances is not allowed.

Breakdown As To Application Fees

Let’s focus on what this means for application fees or screening fees.

Foremost, YES, you can still charge fees. BUT, you may have to refund those fees for ALL applicants that are not selected.

Here is the LIMITED exception whereby you could potentially accept application fees that you do not have to refund:

1. You have a written screening criteria, provided to applicant in writing together with the application form;
2. Completed applications are considered, as provided for in the landlord’s established screening criteria, in the order in which the completed applications were received;
3. The first applicant who meets the landlord’s established screening criteria is approved for tenancy.

In this instance, a landlord may reject an applicant that does not meet the landlord’s established screening criteria and is not required to provide a refund of the application screening fee.

However, key to note, applicants are not charged an application screening fee unless or until their application is actually considered. Thus, if multiple fees are collected (e.g., multiple concurrent submissions), they must be refunded within 7 days to any non-selected applicant.

This practically means the landlord must process applications one by one, and not take another fee until the first application has been rejected, and so on and so forth.

In all other instances, any and all application screening fees must be returned to the applicant if they are not selected for tenancy, regardless of the reason, within 7 days of selecting an applicant for tenancy or 30 days of when the application was submitted, whichever occurs first.

What About Third Party Fees Such as RentSpree or Zillow Applications or Reusable Screening Reports

Many landlords do not actually charge application or screening fees, they rely on third-party providers whereby the prospective tenant completes and online application and pays a fee directly, such as RentSpree or Zillow rental applications.

This new law expressly states, “Nothing in this section prevents a landlord from accepting a reusable screening report pursuant to Section 1950.1.”

This author thinks it will boil down to this: If you, as the Landlord cause the fee to be incurred, the provisions will apply mandating a refund. It will not be an excuse to say you did not charge the fee, or collect the fee, if you caused the tenant to pay the fee to a third-party.

However, if, for example, the prospective tenant has already paid a third-party company a screening fee prior to requesting to apply to your unit, and you accept that, and ultimately reject the applicant, then since you did not charge a fee or cause a fee to be incurred, then it would be difficult to imagine the tenant being entitled to a refund in that instance.

Do not get creative here, if you as the landlord mandate the tenant has their own reusable screening report, then these provisions will likely apply. In the cases where a applicant indeed happens to already have one, then great.

Tips For Compliance

Landlords in Newport Beach and Costa Mesa, known for their desirable rental markets, must take note of these new regulations to avoid legal and financial risks. AB 2493 requires heightened transparency in the tenant screening process, ensuring fairness for applicants while limiting unnecessary fees.

To remain compliant:

• Update your application process: Develop clear, written screening criteria and make them easily accessible to applicants.
• Track fee collection: Ensure fees are only charged when applications are actively considered.
• Maintain records: Keep detailed records of refunds and receipts to demonstrate compliance.
• Provide credit reports promptly: Automate this step to meet the 7-day deadline.

Failure to comply could result in tenant disputes, complaints, or even legal action—all of which can tarnish your reputation as a landlord.

Commentary

While the intent of AB 2493 is to ease the financial burden on tenants, it represents yet another challenge for housing providers in California. By mandating refunds and imposing additional compliance requirements, this law adds to the already high costs of doing business as a landlord in the state. Ultimately, these costs will likely be passed on to tenants in the form of higher rents, further straining affordability in an already difficult housing market.

More concerning, policies like this may discourage investment in California’s housing supply at a time when it is critically needed. Striking a balance between protecting tenants and maintaining a viable, competitive rental market is essential to addressing the state’s housing crisis.

Why Trust Lucas Real Estate?

At Lucas Real Estate, we’re not just real estate experts; we’re also well-versed in the legal and regulatory requirements that impact landlords in Newport Beach and Costa Mesa. Our team’s legal and tax expertise ensures you stay compliant with new laws like AB 2493 while maximizing your property’s potential. Whether you’re managing a single rental unit or a large portfolio, we can help you navigate these changes with ease.

We’ve built our reputation by helping landlords succeed, offering services that go beyond the basics:

• Guidance on landlord-tenant laws and compliance.
• Assistance with tenant screening and rental agreements.
• Strategic advice to protect your investments in a competitive market.

Contact Us for Expert Landlord Support

If you own rental property in Newport Beach or Costa Mesa, don’t let the complexities of AB 2493 catch you off guard. Reach out to Lucas Real Estate today for tailored advice and support. We’ll ensure your rental business thrives while staying compliant with California’s evolving landlord-tenant laws.

Contact us anytime via phone (949-478-1623) or email ([email protected]) to schedule a consultation or learn more about our services!

Lucas Real estate specializes in assisting property owners and Trustees with real property.

Devin Lucas is Real Estate Broker, Real Estate Attorney, and REALTOR?, Courtney Lucas is a CPA and REALTOR?. Together, they are experts in California Real Estate sales, capital gains issues, property tax matters including Propositions 13, 58, 193,?60, 90 and new Proposition 19 and property management.

If you’re preparing to sell, lease or manage real property in Newport Beach, Costa Mesa, or nearby communities like Huntington Beach or Laguna Beach, trust Lucas Real Estate to handle your transaction with precision and professionalism. From understanding key landlord tenant requirements, to taxation issues, to disclosure exemptions to fulfilling your obligations, we ensure a smooth and compliant sale.

For more insights and professional real estate services in Newport Beach, Costa Mesa, and the coastal areas of Orange County, contact?Lucas Real Estate?today. Let us guide you through your next property transaction with confidence and clarity.

Contact us anytime via phone (949-478-1623) or email ([email protected])

– Devin Lucas

Author Devin R. Lucas is Real Estate Professional – a Real Estate Broker, Real Estate Attorney, and REALTOR? – specializing in Newport Beach, Costa Mesa and Orange County coastal communities, serving individuals and Trustees in residential real estate.

Lucas Real Estate – Attorney Devin Lucas and CPA Courtney Lucas – are experts in California Real Estate sales, capital gains issues and property tax matters including Propositions 13, 58, 193,?60, 90 and new Proposition 19.

To discuss selling or professionally managing your home:? [email protected]?| 949.478.1623 office |?Or schedule a confidential no obligation call using this link

Legal or Tax Planing Questions??– Paid one-hour confidential legal consultations are conducted daily via Zoom and address virtually all questions, options, tax implications and strategies. (Book a consultation here.)

Sources:

• Official Digest – AB-2493 Tenancy: application screening fee: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240AB2493
• California Association of REALTORS, “2025 New Laws”: https://www.car.org/riskmanagement/qa/New-Laws/2025-New-Laws

Sign up for our Newsletter here

Lucas Real Estate REALTORS? and related Real Estate Law & Tax Considerations

Lucas Real Estate is a unique full-service residential real estate brokerage providing related residential real estate legal services and real estate tax considerations and planning, based in Newport Beach, California. | Devin Lucas is a licensed California Real Estate Attorney, Real Estate Broker and REALTOR? | Courtney Lucas is a California licensed CPA and REALTOR?

Check out our countless 5-star reviews and follow us on social media:

|?Google Reviews?|?Yelp?|?LinkedIn?|?Zillow?|?Avvo?|?Facebook?|?Twitter?|?Instagram?|?YouTube?|?Official Site?|?Blog?|?Newsletter?|

Sign up for our Newsletter here

lucas-real-estate.com |?[email protected] 949.478.1623 office 2901 West Coast Highway Suite 200 Newport Beach | California | 92663-4023

—-Disclaimer —-?The content on this blog is for informational purposes only. Nothing on this blog should be construed to be legal advice, and you should not act or refrain from acting on the basis of any content on this blog without seeking appropriate legal advice regarding your particular situation, from an attorney licensed to practice law in your state. The content on this blog is not guaranteed to be correct, complete, or up to date. Devin R. Lucas’ office is in Newport Beach, California and is only licensed to practice law in California. Please be advised that Devin R. Lucas only provides legal services or advice pursuant to a written legal services agreement. The content on this blog is not intended to, and does not, create an attorney-client relationship between you and Devin R. Lucas, nor does our receipt of an email or other communication from you. Some jurisdictions may consider this site to constitute attorney advertising; accordingly, please be advised this is an advertisement.

IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with requirements imposed by the IRS, we inform you that, to the extent this communication (or any attachment) addresses any tax matter, it was not written to be (and may not be) relied upon to (i) avoid tax-related penalties under the Internal Revenue Code, or (ii) promote, market or recommend to another party any transaction or matter addressed herein (or in any such attachment).