Rental Application Fees 101: The Lowdown for Apartment Hunters

While going through the process of renting a new apartment or house, you can expect to pay a few different fees. You’re probably prepared to pay a security deposit, but one fee that might come as a surprise to first-time renters is the application fee. Yes, landlords or property managers will charge you to determine your eligibility as a tenant.

“Rental application fees vary depending on location, but are most typically $35 to $75 per person,” says Sarnen Steinbarth, founder and CEO of TurboTenant.

While not all rental properties charge application fees, they are the norm in many large cities. Here are a few things you should know about application fees when you’re on the hunt for your next place.

What the rental application fee covers

If your heart is set on that two-bedroom apartment overlooking the beach, the next step to snagging that rental is to fill out an application form. With your completed application, your future property manager or landlord will run a credit and background check on you through a third-party service.

“Typically a rental application fee will cover the hard costs associated with performing a background, credit, and eviction check to ensure that a tenant is a good fit and meets the landlord’s requirements they have for a tenant, while also abiding by the Fair Housing Act,” says Steinbarth.

Steinbarth says the application fee may also cover “soft” costs for administrative tasks like calling past landlords to check references.

“Whether or not soft costs can be included in an application fee can vary from state to state,” he says.

Application fee ranges have limits

As we’ve stated above, rental application fees vary by state. Several states, such as California, limit by law the amount that can be charged.

“The law specifically states that the screening fee shall not be greater than the actual out-of-pocket costs of gathering information concerning the applicant plus the time spent, and lists an upper limit on the amount that can be collected,” says David Piotrowski, an attorney whose practice focuses on California evictions and interstate household goods transportation matters.

Steinbarth says renters should do a comparative analysis on application fees and ask the landlord what the fee will be used for.

Fees are charged to each person on the lease

Renters may also find, depending on the state, that some landlords or property managers require each person on the lease above the age of 18 to fill out a separate application and pay the fee.

“Typically, anybody who will be on the lease will need to go through the tenant screening process, regardless of their marital status, and therefore may be subject to the application fee,” says Steinbarth. “Because a husband and wife will have different credit and background histories, it is best practice to screen them separately. Many states have fair housing laws that govern this as well.”

Are application fees refundable?

Again, the rules are different in different areas, so before applying for an apartment, read the fine print regarding whether an application fee is refundable.

“There are many state and local regulations regarding fees, including if they are refundable or not. It’s best to communicate with the prospective landlord to understand if the fee is refundable,” says Steinbarth.

You can also do your own research on local rental laws.

Piotrowski says if the fees are more than what is allowed under law, or if the screening fee is used for nonpermitted purposes, “the tenant could request a refund or could take legal action through a small-claims action.”

He says landlords should provide a receipt for the fee paid with an itemized list of out-of-pocket expenses and time spent.

Red flags to avoid

Bear in mind that a landlord asking for a fee to tour a property could be shady business.

“Renters should be cautious of landlords desiring a fee in advance simply to view an apartment. This fee is not common in the industry, and renters should be cautious and use common sense to avoid rental scams if they are being asked for a viewing fee,” says Steinbarth.

Piotrowski says renters should be aware that, in most cases, a landlord or the landlord’s agent may not charge a screening fee if the landlord knows or should have known that no rental unit is available and no rental until will become available within a reasonable time.

The post Rental Application Fees 101: The Lowdown for Apartment Hunters appeared first on Real Estate News & Insights | realtor.com®.

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