One of the most critical jobs of being a landlord is selecting the right tenants for your rental property. You want to know that the applicant is serious about renting rather than just browsing. Additionally, you want to make sure the applicant has a clean criminal history, no prior evictions, and a solid financial history.
However, these tenant screening precautions take time and money. To help cover these costs, most landlords charge an application fee. This charge is above and beyond a security deposit and the first and last month’s rent that many tenants are accustomed to paying.
Whether you are a landlord or a renter, this article will explain the basic information you need to know about rental application fees.
What is a Rental Application Fee?
Landlords typically use a rental application fee to pay for the costs associated with processing a lease application. In most cases, the fee covers the cost of running a background check and a credit history. To obtain these reports, landlords must go through third-party companies that charge for their services.
Application fees also can cover the time the landlord or administration staff member spends reviewing and checking the information the renter filled out on the rental application. For example, if the screening cost is $20, a landlord might charge an additional $10 for administrative time.
Rental application fees help protect the landlord, but they protect existing tenants as well. Here are the primary purposes of rental application fees:
- Verify credit history
- Reveal any criminal record
- Identify previous evictions
- Ensure applicant is safe and responsible
If a landlord does not conduct these searches, applicants should not charge an application fee. The fees are not intended to serve as a source of revenue for property owners.
How Much Can be Charged for an Application Fee?
The average fee in the U.S. is $30 per applicant, with the location and real estate market value of the rental property playing a major role in how much landlords charge.
Some states have specific limits on these fees, while others have no restrictions on them at all. Please see the list we provide later in this article.
Who Should Pay the Rental Application Fees?
Once again, state laws can vary on this point, but typically every person whose name is on the rental lease agreement must pay the application fee.
Some landlords may choose to waive fees for secondary renters, and others might require the applicants to pay directly for their own background checks.
Are Rental Application Fees Refundable?
Most states do not restrict rental application fees, and they typically are not refundable. Here are some exceptions:
- Massachusetts – Application fees are not allowed.
- Minnesota – Any extra money beyond what is needed for screening should be refunded.
- New York – There is a $20 limit for application fees.
- Vermont – Application fees are not allowed.
- Washington – The application fee must equal screening service cost exactly.
- Wisconsin – There is a $20 limit for application fees.
Is It Possible to Avoid a Rental Application Fee?
The short answer is probably not. Rental application fees are a way to discourage people with prior eviction notices or with criminal backgrounds from applying to rent a property. Waiving application fees for some applicants and not for others could be viewed as a violation of the Fair Housing Act.
If someone has trouble paying for multiple application fees as they search for an apartment, they might be able to apply for help with a local housing organization. Some groups offer stipends to help cover the costs of rental application fees. These opportunities vary state by state and even from community to community.
Rental Application Fee Law
Since, as we have seen, state laws can vary greatly when it comes to application fees, you should be sure to find out about the rules that govern your state. That way, you will know you are not overcharging (or being overcharged) for a rental application.
Here is a list of the 50 U.S. states and their rental application fee regulations:
| State | Fee |
|---|---|
| Alabama | No limitations |
| Alaska | No limitations |
| Arizona | No limitations |
| Arkansas | No limitations |
| California | Fee changes each year according to the Consumer Price Index (CPI) (CA CIV § 1950.6) |
| Colorado | No limitations |
| Connecticut | No limitations |
| Delaware | Fee is 10% of the monthly rent or $50 (whichever is greater) (DE Code § 7020). |
| Florida | No limitations |
| Georgia | No limitations |
| Hawaii | No limitations |
| Idaho | No limitations |
| Illinois | No limitations |
| Indiana | No limitations |
| Iowa | No limitations |
| Kansas | No limitations |
| Kentucky | No limitations |
| Louisiana | No limitations |
| Maine | No limitations |
| Maryland | No limitations |
| Massachusetts | Only a licensed broker can charge an application fee (MA G.L. c 186 § 15B(b)). |
| Michigan | No limitations |
| Minnesota | Fee must not exceed the actual cost of the screening. |
| Mississippi | No limitations |
| Missouri | No limitations |
| Montana | No limitations |
| Nebraska | No limitations |
| Nevada | No limitations |
| New Hampshire | No limitations |
| New Jersey | No limitations |
| New Mexico | No limitations |
| New York | Fee must not exceed $20.00, and the fee must be waived if applicant provides a copy of a background check or credit check conducted within the past 30 days (NY Real Prop. L. § 238-a) |
| North Carolina | No limitations |
| North Dakota | No limitations |
| Ohio | No limitations |
| Oklahoma | No limitations |
| Oregon | No limitations |
| Pennsylvania | No limitations |
| Rhode Island | No limitations |
| South Carolina | No limitations |
| South Dakota | No limitations |
| Tennessee | No limitations |
| Texas | No limitations |
| Utah | No limitations |
| Vermont | No limitations |
| Virginia | Fee must not exceed $50 (VI Code § 55.1-1203) |
| Washington | Fee must not exceed the actual cost of the screening (RCW § 59.18.257) |
| West Virginia | No limitations |
| Wisconsin | Fee must not exceed $20, and the landlord must provide applicant with a copy of the report (ATCP § 134.05) |
| Wyoming | No limitations |
Dos and Don’ts for Rental Application Fees
Now that you know more about rental application fees, here are some dos and don’ts for landlords:
- Make sure you are up-to-date on rental application fee regulations in your state.
- Be transparent about your rental application fees. Include the exact fee amount in the application.
- Specify whether the fee is refundable if you do not choose to rent to the applicant
- Only cover your costs with the fee. Don’t use the screening fees as a way to make money.
And here are some dos and don’ts for renters:
- Find out the laws in your state regarding rental application fees.
- Ask if the fee is refundable if your application is not accepted.
- Clarify the price if you have any questions.
- Pay attention to any red flags that the landlord may be participating in any fraudulent activity with the fees.
If you would like help in drafting a rental application form for your rental property or a rental lease agreement, LawDistrict can help. Please visit LawDistrict.com to find templates that will make this part of your job easier and more convenient.
One of the most critical jobs of being a landlord is selecting the right tenants for your rental property. You want to know that the applicant is serious about renting rather than just browsing. Additionally, you want to make sure the applicant has a clean criminal history, no prior evictions, and a solid financial history.
However, these tenant screening precautions take time and money. To help cover these costs, most landlords charge an application fee. This charge is above and beyond a security deposit and the first and last month’s rent that many tenants are accustomed to paying.
Whether you are a landlord or a renter, this article will explain the basic information you need to know about rental application fees.
What is a Rental Application Fee?
Landlords typically use a rental application fee to pay for the costs associated with processing a lease application. In most cases, the fee covers the cost of running a background check and a credit history. To obtain these reports, landlords must go through third-party companies that charge for their services.
Application fees also can cover the time the landlord or administration staff member spends reviewing and checking the information the renter filled out on the rental application. For example, if the screening cost is $20, a landlord might charge an additional $10 for administrative time.
Rental application fees help protect the landlord, but they protect existing tenants as well. Here are the primary purposes of rental application fees:
- Verify credit history
- Reveal any criminal record
- Identify previous evictions
- Ensure applicant is safe and responsible
If a landlord does not conduct these searches, applicants should not charge an application fee. The fees are not intended to serve as a source of revenue for property owners.
How Much Can be Charged for an Application Fee?
The average fee in the U.S. is $30 per applicant, with the location and real estate market value of the rental property playing a major role in how much landlords charge.
Some states have specific limits on these fees, while others have no restrictions on them at all. Please see the list we provide later in this article.
Who Should Pay the Rental Application Fees?
Once again, state laws can vary on this point, but typically every person whose name is on the rental lease agreement must pay the application fee.
Some landlords may choose to waive fees for secondary renters, and others might require the applicants to pay directly for their own background checks.
Are Rental Application Fees Refundable?
Most states do not restrict rental application fees, and they typically are not refundable. Here are some exceptions:
- Massachusetts – Application fees are not allowed.
- Minnesota – Any extra money beyond what is needed for screening should be refunded.
- New York – There is a $20 limit for application fees.
- Vermont – Application fees are not allowed.
- Washington – The application fee must equal screening service cost exactly.
- Wisconsin – There is a $20 limit for application fees.
Is It Possible to Avoid a Rental Application Fee?
The short answer is probably not. Rental application fees are a way to discourage people with prior eviction notices or with criminal backgrounds from applying to rent a property. Waiving application fees for some applicants and not for others could be viewed as a violation of the Fair Housing Act.
If someone has trouble paying for multiple application fees as they search for an apartment, they might be able to apply for help with a local housing organization. Some groups offer stipends to help cover the costs of rental application fees. These opportunities vary state by state and even from community to community.
Rental Application Fee Law
Since, as we have seen, state laws can vary greatly when it comes to application fees, you should be sure to find out about the rules that govern your state. That way, you will know you are not overcharging (or being overcharged) for a rental application.
Here is a list of the 50 U.S. states and their rental application fee regulations:
| State | Fee |
|---|---|
| Alabama | No limitations |
| Alaska | No limitations |
| Arizona | No limitations |
| Arkansas | No limitations |
| California | Fee changes each year according to the Consumer Price Index (CPI) (CA CIV § 1950.6) |
| Colorado | No limitations |
| Connecticut | No limitations |
| Delaware | Fee is 10% of the monthly rent or $50 (whichever is greater) (DE Code § 7020). |
| Florida | No limitations |
| Georgia | No limitations |
| Hawaii | No limitations |
| Idaho | No limitations |
| Illinois | No limitations |
| Indiana | No limitations |
| Iowa | No limitations |
| Kansas | No limitations |
| Kentucky | No limitations |
| Louisiana | No limitations |
| Maine | No limitations |
| Maryland | No limitations |
| Massachusetts | Only a licensed broker can charge an application fee (MA G.L. c 186 § 15B(b)). |
| Michigan | No limitations |
| Minnesota | Fee must not exceed the actual cost of the screening. |
| Mississippi | No limitations |
| Missouri | No limitations |
| Montana | No limitations |
| Nebraska | No limitations |
| Nevada | No limitations |
| New Hampshire | No limitations |
| New Jersey | No limitations |
| New Mexico | No limitations |
| New York | Fee must not exceed $20.00, and the fee must be waived if applicant provides a copy of a background check or credit check conducted within the past 30 days (NY Real Prop. L. § 238-a) |
| North Carolina | No limitations |
| North Dakota | No limitations |
| Ohio | No limitations |
| Oklahoma | No limitations |
| Oregon | No limitations |
| Pennsylvania | No limitations |
| Rhode Island | No limitations |
| South Carolina | No limitations |
| South Dakota | No limitations |
| Tennessee | No limitations |
| Texas | No limitations |
| Utah | No limitations |
| Vermont | No limitations |
| Virginia | Fee must not exceed $50 (VI Code § 55.1-1203) |
| Washington | Fee must not exceed the actual cost of the screening (RCW § 59.18.257) |
| West Virginia | No limitations |
| Wisconsin | Fee must not exceed $20, and the landlord must provide applicant with a copy of the report (ATCP § 134.05) |
| Wyoming | No limitations |
Dos and Don’ts for Rental Application Fees
Now that you know more about rental application fees, here are some dos and don’ts for landlords:
- Make sure you are up-to-date on rental application fee regulations in your state.
- Be transparent about your rental application fees. Include the exact fee amount in the application.
- Specify whether the fee is refundable if you do not choose to rent to the applicant
- Only cover your costs with the fee. Don’t use the screening fees as a way to make money.
And here are some dos and don’ts for renters:
- Find out the laws in your state regarding rental application fees.
- Ask if the fee is refundable if your application is not accepted.
- Clarify the price if you have any questions.
- Pay attention to any red flags that the landlord may be participating in any fraudulent activity with the fees.
If you would like help in drafting a rental application form for your rental property or a rental lease agreement, LawDistrict can help. Please visit LawDistrict.com to find templates that will make this part of your job easier and more convenient.
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