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You Thought You Were Just a Trustee? Nope, You Are Also a Landlord.

by | Oct 31, 2024 | Firm News

If you are serving as a trustee, executor, administrator, guardian or conservator and rental property is part of the estate, you may be subject to additional reporting requirements starting in 2025.

Assembly Bill 2747 adds Civil Code Section 1954.07 which requires landlords to offer to report their tenants’ positive rental payments to a nationwide consumer reporting agency.  There are several factors in figuring out if you in your fiduciary capacity must comply with this law.  Basically:

  • It applies to leases entered into on and after April 1, 2025;
  • It applies to leases that are outstanding as of January 1, 2025 (although there is an unexplained gap of time between January 1, 2025 and April 1, 2025 which may be a typographical error in the law);
  • It applies to residential rental buildings that contain 15 or more dwelling units; and
  • It applies to residential rental buildings that contain 15 or less dwelling units if the landlord owns more than one residential rental building regardless of number of units and the landlord is either a real estate investment trust, a corporation, or a limited liability company in which at least one member is a corporation.

It does not apply to “assisted housing developments” (rental housing development of five or more units that receive governmental assistance.) Also, it is likely that trusts that are used for estate planning purposes only do not qualify as a real estate investment trust and will not trigger the need to comply with the new law.

What are the requirements of the new law if you are required to provide the notice?  Starting April 1, 2025, you will need to notify existing tenants of their option to have the fiduciary report positive rental payment information to a consumer reporting agency.  If the tenant does not request it, then you are done.  But, if they do at that time or later, then you are required to provide a notice that complies with Civil Code Section 1954.07(d) which has specific requirements found in the code.  A tenant can opt in and out of the reporting, but there must be a six-month time gap between the opting out and back in.

What must be reported is the “positive rental payment information” (undefined in the code section) of the tenant to at least one nationwide consumer reporting agency. Presumably there will be some additional information provided to clarify parts of the new law such as what is meant by positive rental payment information.

The fiduciary can charge a fee if the tenant opts to have the information reported.  However, the fee is the lesser of the actual cost to report the information or $10.  You will have to consider if it is worth the time to charge the fee – maximum amount $10 – if you anticipate having to spend more time to collect the fee.

If you are a fiduciary who falls under the requirements of this new law and you are not an expert in California landlord tenant laws, you may want to consider hiring a reputable property management company and delegate this duty to it.