How Much Can Landlords Charge for Rental Applications in Each State?

The Big Picture On How Much To Charge For Rental Application Fees For Each State:

• • Different states have different laws regarding rental application fee limits. Some states do not have limits, while others, like New York and California, have stated limits and other requirements. No limits don’t mean that landlords can charge what they want, though.
  • Landlords need to be aware of the proper way to charge reasonable rental application fees. Failing to do so may result in a complaint or a lawsuit.
  • Steps to avoid lawsuits and complaints include open communication and transparency, not charging more than is required, and keeping all your documents for proof in case of that eventuality.

Remember when you had to meet prospective rental applicants at the property with a stack of paper rental applications and pens in hand?

Your applicant completed each line and checked each box on the spot to hand it back to you. Once they were done, you collected the rental application fee, which typically included the costs of a credit report, along with your time investigating prior housing history and ensuring your applicant had a real job.

Often, this meant an actual phone call. Perhaps sending the rental application by fax. Not the scan and upload we do today, but a loud clanging fax that sounded like it was catapulting the papers off to who-knows-where.

The tenant screening process usually took several days to a whole week to complete.

Fast forward to today.

You have an open house to cut your showing time down. Several probable rental applicants show up. You provide them with a link to fill out a rental application online and potentially pay for the tenant screening reports. In minutes, you receive several reports for each rental application. Not just a credit check, either; you get criminal, eviction, and employment reports.

No paper. No waiting.

There still begs a question: “How much can a landlord charge for a rental application fee?”

Rental Application Fee Laws by State

Each state has its own landlord-tenant laws covering issues like security deposit fee limits and rental application fees.

To make it easier for you, we’ve broken down each state’s application fee limits by state:

While most state laws impose no limitations, many do, and landlords must be careful if they charge additional tenant screening fees.

Even in states with no stated limitations on rental application fees, landlords must keep the fees “reasonable”—a term defined by whatever judge hears your case if an applicant files a complaint against you.

Tips for Landlords Who Charge Rental Application Fees

The easiest way for landlords to protect themselves is to charge tenant screening fees directly to the applicant. Our tenant screening service offers this option, and you can check a box to choose which screening reports you want to be included along with your rental application.

But for landlords who charge application fees directly to applicants, here are a few tips to keep you on the right side of your local landlord-tenant laws.

Maintain Transparency And Good Communication

Always be direct and upfront about rental application fees. Explain what the fee will be used for in application forms or in person.

Be open to reasonable questions regarding your application process, and clear up anything that has a chance of being up to interpretation.

Be Clear With Refund Policies

Most rental application fees are non-refundable, and most landlords and tenants know that. However, the word “most” won’t save you from a lawsuit.

So, always indicate your rental application refund policy in any formal or informal communication. And make sure it matches with state laws!

Don’t Profit Off Application Fees

Let’s face it: renters are savvier today. They have access to information galore on tenants’ rights. Even though many states do not have declared limitations, many have an undertone of “fair and reasonable.”

This means that charging an exorbitant fee may be challenged in court. Is that few bucks worth the possibility of a lawsuit with fines?

Stay on Top Of Updates

Ignorance is never a worthy plea. Laws change often. And as fast as technology moves is as fast as a legal problem can arise. It only takes one complaint and one win to set a precedent. It cannot hurt to routinely look into the Fair Credit Reporting Act and your State’s Landlord Tenant laws.

Keep It Straight Across The Board

The last headache any landlord wants to deal with is a landlord discrimination suit. Most landlords don’t think of themselves as discriminating, but lawsuits are often brought against a non-discriminating landlord for something miscommunicated or misconstrued.

Make sure you treat every applicant and rental seeker the same. These days, you must even be careful of turning someone away over a criminal background, which HUD protects.

Keep All Your Documents

Hold onto your rental applications in a safe and secure environment. Some officials suggest holding them for ten years. Additionally, keep track of all correspondence between yourself and potential renters.

Do not let the rules and regulations, red tape, and hoops jump through scare you from screening your tenants. Tenant screening is potentially the most important task to protect you and your investment. It separates the landlord from a tenant eviction debacle that can cost thousands of dollars and a huge headache.

Protect Yourself with Firm Tenant Screening Policies

I still hear the talk of newbie and expert landlords, alike, who go by instinct rather than facts. Danger, danger! There are professional tenants lurking who know more about how to landlord than a career landlord.

No need to be afraid. Just protect yourself with these tips and arm yourself with a good real estate attorney. Just in case. Better to ask an attorney a $200 question now than to spend thousands later defending yourself, right?

In summary, better to use an online tenant-screening service and let the applicant pay themselves for the cost of the report! Keep records. Treat everyone across the board exactly the same. Keep up on the changes not only in landlord tenant laws but also the FCRA, that is short for the Federal Credit Reporting Act. Never forego tenant screening, ever!

How do you handle rental application fees and covering tenant screening costs? Has it changed at all over the last 5-10 years? Share your experiences below!