How to Screen ADU Tenants Without Breaking Fair Housing Laws

How to Screen ADU Tenants Without Breaking Fair Housing Laws

Finding the right tenant for your ADU is one of the most important decisions you will make as a landlord. The screening process directly impacts your rental income, property condition, and quality of life since your tenant will be living just steps from your own home. But tenant screening in California comes with strict legal requirements, and violations of fair housing laws can result in costly lawsuits, fines, and penalties.

In this guide, we will walk you through a legally compliant tenant screening process that protects your interests while respecting applicants' rights. We will cover federal, state, and local fair housing requirements, explain what you can and cannot ask, and provide a practical screening workflow you can implement immediately.

Understanding Fair Housing Laws in California

Fair housing laws exist at three levels: federal, state, and local. As a California ADU landlord, you must comply with all three. The laws prohibit discrimination in housing based on certain protected characteristics.

Federal Fair Housing Act (Title VIII)

The federal Fair Housing Act, enforced by the U.S. Department of Housing and Urban Development (HUD), prohibits discrimination based on:

• Race
• Color
• National origin
• Religion
• Sex (including gender identity and sexual orientation per recent interpretations)
• Familial status (families with children under 18, pregnant individuals)
• Disability

California Fair Employment and Housing Act (FEHA)

California's FEHA, enforced by the Department of Fair Employment and Housing (now the Civil Rights Department), adds several additional protected categories:

• Marital status
• Sexual orientation
• Gender identity and expression
• Source of income (including Section 8 vouchers and other government assistance)
• Genetic information
• Veteran or military status
• Age
• Citizenship status
• Immigration status
• Primary language

The source of income protection is particularly important for ADU landlords. Under California law, you cannot reject a tenant solely because they plan to pay rent using a Section 8 Housing Choice Voucher or other government housing assistance.

Local Protections

Many California cities and counties add their own protected categories. For example, Los Angeles protects tenants based on student status and arbitrary discrimination. Always check your local ordinances for additional requirements.

Step-by-Step Legal Screening Process

Here is a legally compliant screening process that protects both your interests and applicants' rights.

Step 1: Create Consistent Screening Criteria

Before you even list your ADU for rent, establish written screening criteria that you will apply equally to every applicant. These criteria should be based on legitimate business reasons and applied consistently. Common lawful criteria include:

• Income requirement: Typically 2.5 to 3 times the monthly rent in gross income
• Credit score threshold: A minimum score (e.g., 620 or 650)
• Rental history: Positive references from previous landlords
• Employment verification: Current employment or verifiable income source
• Background check: No relevant criminal convictions (with limitations per California law)
• No prior evictions: No eviction judgments within a specified period (e.g., 5-7 years)

Document these criteria and share them with all applicants. This creates a paper trail showing that you applied the same standards to everyone.

Step 2: Write a Non-Discriminatory Listing

Your rental listing is the first touchpoint with potential tenants, and it must be free of discriminatory language. Describe the property, not the ideal tenant.

Do say:

• "1-bedroom, 1-bathroom ADU with private entrance"
• "Close to public transportation and schools"
• "Quiet residential neighborhood"
• "In-unit washer/dryer"

Do NOT say:

• "Perfect for a single professional" (discriminates against families)
• "No children" (violates familial status protections)
• "Christian household" (religious discrimination)
• "Near church" (could imply religious preference)
• "English speakers only" (national origin / language discrimination)

Step 3: Use a Standardized Application

Use the same rental application for every applicant. The application should collect only information relevant to your screening criteria. California law (AB 2559) also sets a maximum screening fee that landlords can charge (adjusted annually for CPI). As of 2026, the maximum is approximately $55-60 per applicant.

Your application should request:

• Full legal name and date of birth (for background check purposes only)
• Current and previous addresses (going back 5-7 years)
• Current employer, position, and income
• Previous landlord contact information
• Authorization for credit and background checks
• Number of occupants (adults and children)
• Vehicle information (for parking purposes)
• Pet information (if applicable)

Step 4: Run Credit and Background Checks

Use a reputable tenant screening service such as TransUnion SmartMove, RentPrep, MyRental, or Experian Connect. These services provide credit reports, criminal background checks, and eviction history in a single package.

Important California-specific rules for background checks:

• Criminal history limitations: Under AB 1008 (Ban the Box) and various local ordinances, you should not ask about criminal history on the initial application. Evaluate criminal history only after a conditional offer or as part of the background check process.
• Individualized assessment: If a criminal record surfaces, California law requires an individualized assessment. You must consider the nature of the offense, how much time has passed, and whether the offense is relevant to the tenancy.
• Arrests vs. convictions: You cannot use arrest records (without convictions) as a basis for denial. Only convictions are permissible considerations.
• Expunged records: If a conviction has been expunged or sealed, it cannot be used against the applicant.

Step 5: Contact References

Always call previous landlords. Ask specific, factual questions:

• How long did the tenant live at your property?
• Did the tenant pay rent on time?
• Did the tenant leave the unit in good condition?
• Were there any lease violations or complaints?
• Would you rent to this person again?

Be cautious with employer references. Verify employment and income, but do not ask questions that could reveal protected characteristics.

Step 6: Make Your Decision and Document It

Apply your pre-established screening criteria consistently. If you deny an applicant, California law requires you to provide an adverse action notice that includes the reason for denial and information about the applicant's right to dispute the information. If the denial is based on a credit report or background check, you must also provide the name and contact information of the screening company.

Common Fair Housing Mistakes ADU Landlords Make

ADU landlords are particularly susceptible to certain fair housing violations because of the close proximity to their tenants. Here are the most common mistakes and how to avoid them.

Selecting Based on "Compatibility"

Many ADU landlords want a tenant who "fits in" with their household or neighborhood. While this is understandable, selecting tenants based on personal compatibility can easily cross into discrimination. You cannot reject someone because their lifestyle, background, or family composition makes you uncomfortable. Stick to your objective screening criteria.

Steering

Steering occurs when you try to direct certain groups of people toward or away from your property. For example, telling a family with children that "this ADU really is not set up for kids" is a form of steering, even if your intention is helpful.

Differential Treatment

Applying different standards to different applicants is a classic fair housing violation. If you require a credit score of 650 for one applicant but accept a score of 600 for another, you could face a discrimination claim. Consistency is your best defense.

Asking Prohibited Questions

During showings or conversations with applicants, avoid asking about:

• Where they are "from" or their nationality
• Whether they are married or have children
• Their age
• Their religion or church attendance
• Whether they have a disability
• Their immigration status
• Their sexual orientation

Accepting Section 8 Vouchers

As mentioned earlier, California law prohibits discrimination based on source of income, which includes Section 8 Housing Choice Vouchers. If a voucher holder meets your other screening criteria (income, credit, rental history), you cannot reject them solely because they use a voucher.

Benefits of accepting Section 8 tenants in your ADU:

• Guaranteed portion of rent paid directly by the housing authority
• Regular property inspections (helps maintain unit condition)
• Lower tenant turnover (voucher holders tend to stay longer)
• Access to a large pool of qualified tenants

The Section 8 program does require your ADU to pass a Housing Quality Standards (HQS) inspection. Most well-built ADUs will pass this inspection without issues. Contact your local housing authority (the Housing Authority of the City of Los Angeles, or HACLA, for LA residents) for more information.

Frequently Asked Questions

Can I choose a tenant based on who I think will be the best neighbor?

You can select the most qualified applicant based on objective, lawful criteria (income, credit, rental history). You cannot select based on personal preferences about who you would "rather" live near. Stick to documented, consistent standards applied equally to all applicants.

Can I reject an applicant because they have children?

No. Familial status is a protected class under both federal and California law. You cannot reject an applicant because they have children, are pregnant, or are in the process of adopting. You also cannot advertise your ADU as "adults only" or "no children."

What if my ADU is a studio and a family of five applies?

You can set reasonable occupancy limits based on the size of the unit, but they must comply with local occupancy standards. HUD generally considers two people per bedroom plus one as reasonable. For a studio, this might mean 2-3 occupants. Check your local building code for specific occupancy limits.

Am I required to accept Section 8 vouchers?

Yes. California law (SB 329, the Homelessness Prevention Act) prohibits discrimination based on source of income, which includes Section 8 vouchers. You must evaluate voucher holders using the same criteria as any other applicant.

Can I do a criminal background check on applicants?

Yes, but with significant limitations in California. You cannot use arrest records without convictions, you must conduct an individualized assessment of any criminal history, and certain convictions (especially old or minor ones) may not be grounds for denial. Many cities have additional restrictions on the use of criminal history in housing decisions.

How much can I charge for an application fee?

California Civil Code Section 1950.6 limits application screening fees to the landlord's actual cost of screening, up to a maximum amount adjusted annually for CPI. As of 2026, the cap is approximately $55-60 per applicant. You must provide a receipt showing how the fee was used.

Step-by-Step ADU Tenant Screening Checklist

Having a structured screening process protects you legally and helps you find reliable tenants. Follow this checklist for every applicant to ensure consistency and compliance with fair housing laws.

Step 1: Create a Written Screening Criteria Document

Before you list your ADU for rent, write down the objective criteria you will use to evaluate every applicant. This should include minimum income requirements (typically 2.5 to 3 times the monthly rent), credit score thresholds, rental history length, and any other measurable standards. Apply these criteria equally to every applicant who submits an application.

Step 2: Use a Standardized Application Form

Every applicant should fill out the same rental application. The form should collect the applicant's full legal name, current and previous addresses, employment information, income details, references, and consent to run a background and credit check. Never ask about protected characteristics such as race, religion, national origin, familial status, disability, sex, or any other category protected under California or federal law.

Step 3: Verify Income and Employment

Request recent pay stubs, bank statements, or tax returns to confirm that the applicant meets your income threshold. For self-employed applicants, ask for two years of tax returns or a letter from their accountant. Contact the employer directly to verify current employment status and income if possible.

Step 4: Run Credit and Background Checks

With the applicant's written consent, run a credit report and background check through a reputable screening service. Review the credit report for patterns of late payments, collections, or judgments. Be aware that California law limits how you can use criminal history in tenant screening. You cannot have a blanket policy of rejecting all applicants with criminal records.

Step 5: Contact Previous Landlords

Reach out to at least two previous landlords to verify rental history. Ask about the applicant's payment reliability, how they maintained the property, whether they gave proper notice before moving out, and whether the landlord would rent to them again. Current landlords may give favorable references simply to move a problematic tenant along, so previous landlords tend to be more reliable sources.

Step 6: Document Your Decision

Record the reason for accepting or rejecting each applicant based on your written criteria. If you deny an applicant based on information from a credit or background check, you must provide an adverse action notice that includes the name of the screening company used. This documentation protects you if a rejected applicant later claims discrimination.

Technology Tools for Tenant Screening

Modern screening technology makes the process faster, more accurate, and easier to document. Here are the categories of tools California ADU landlords should consider using.

Online Application Platforms

Services like Avail, TurboTenant, and Zillow Rental Manager offer free or low-cost online application systems that collect applicant information, process screening fees, and generate standardized reports. These platforms ensure you ask every applicant the same questions and create a digital record of every application received.

Credit and Background Check Services

TransUnion SmartMove, Experian RentBureau, and similar services provide instant credit reports, eviction history, and criminal background checks. Many integrate directly with online application platforms so the entire process is seamless. The cost is typically $25 to $40 per applicant, and California law allows you to charge applicants a screening fee to cover this expense.

Income Verification Tools

Platforms like Plaid and Truework can verify an applicant's income and employment electronically, reducing the risk of forged pay stubs or fraudulent employment letters. These tools connect directly to payroll systems and bank accounts with the applicant's permission, giving you verified data instead of self-reported numbers.

Landlord Communication Apps

Once you select a tenant, tools like Buildium, AppFolio, or even simple property management apps help you manage lease signing, rent collection, maintenance requests, and communication. Having a digital paper trail for all landlord-tenant interactions is invaluable if disputes arise later. For more on protecting yourself as a landlord, see our guide on renting out your ADU in California.

Frequently Asked Questions About ADU Tenant Screening

Can I reject a tenant for having a low credit score?

Yes, you can use credit scores as part of your screening criteria, as long as you apply the same minimum credit score requirement to every applicant consistently. However, you cannot use credit scores as a pretext for discrimination based on protected characteristics. Document your minimum credit score threshold in writing before you begin accepting applications, and apply it uniformly.

Am I allowed to ask prospective tenants if they have children?

No. Familial status is a protected class under both federal Fair Housing Act and California's Fair Employment and Housing Act. You cannot ask whether an applicant has children, is pregnant, or plans to have children. You also cannot refuse to rent to families with children or impose different terms on tenants with children, with very limited exceptions for qualified senior housing communities.

How much can I charge for a tenant screening fee in California?

California Civil Code Section 1950.6 allows landlords to charge applicants a screening fee to cover the actual cost of obtaining a credit report and processing the application. The maximum amount is adjusted annually and is typically between $50 and $60. You must provide a receipt and an itemized list of the expenses covered by the fee. If you do not actually run a credit or background check, you must refund the fee.

Can I use a criminal background check to reject a tenant?

California law significantly limits how landlords can use criminal history in tenant screening. You cannot ask about or consider arrests that did not result in a conviction. You also cannot have a blanket policy of rejecting all applicants with any criminal history. Instead, you must conduct an individualized assessment considering the nature of the crime, how much time has passed, and whether the conviction is directly relevant to the tenancy. Some local jurisdictions have even stricter rules.

What should I do if two applicants are equally qualified?

When two or more applicants meet all of your written screening criteria equally, the safest approach is to select the applicant whose completed application was received first. This first-come, first-served approach is objective and defensible. Avoid making subjective judgments that could be perceived as discriminatory. Document the date and time each application was received.

Do I need to screen tenants if I am renting to a family member?

While you are not legally required to run formal screening on a family member, it is still a good practice to have a written lease agreement that outlines expectations, responsibilities, and terms. Even informal arrangements benefit from documentation. If your family member will be living in the ADU rent-free, review our guide on family members living in your ADU rent-free for important tax and legal considerations.