New Tenant Screening Law for Hawaii Rental Applicants

Background on Tenant Screenings

Starting on May 1, 2024, a new tenant screening law will be enforced. This law relates to the fees that a homeowner, landlord, or property manager may charge to a tenant to assess their ability and credit worthiness to rent. These charges typically range from $25-$100. There are some platforms that property managers use for thorough tenant vetting, including background checks. Often, property managers and landlords simply run a credit report. For these checks, third party vendors are used, so there is a fee, and this is usually paid by the potential renter.

New Tenant Screening Law

There is no cap on how much can be charged for the tenant screening process. This has been unfair to tenants who have to go through the process of multiple credit checks at the various rental units they apply for. With the new law, you will have to return any amount that is not used in the screening process. For example, if you charge $50 for the screening but you run a credit report which costs $20, you must refund $30 to the potential tenant. If you use a digital platform to send and conduct these screenings, make sure the settings are changed to set up the refunds.

Why Run a Credit Check

There are no requirements to do any vetting of potential renters. Landlords also have the option of paying for the screening process themselves. However, it is best practice to at least get a credit report and call a previous landlord to see how the tenant was at that rental property. There are multiple factors to consider when filling a vacancy at your rental property.

Finding the best tenant for the rental unit means, among other things, a tenant who always pays their rent on time. Typically, a good credit score indicates a good renter who pays their rent on time. We have seen many examples of tenants with low credit scores who do not pay rent on time and must be chased down each month.

We are Your Hawaii Rental Management Experts

Staying on top of new laws and handling tenant screenings, paperwork, and showings is on of the many benefits of using a property management company for your rental portfolio. Learn more about our full-service concierge management department here. You can also call or text our Lead Property Manager, Doug Davis, directly at (808) 596-4883 or email concierge@caronb.com . Visit our YouTube channel to watch our property management series, Ask Doug! in which Doug answers common property management questions.

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