Rental application fees: what you need to know

Written on June 6, 2018 by

Landlords hate to charge rental application fees as much as tenants hate to pay them. But these fees are necessary.

Experienced landlords, particularly those who’ve been burned by less-than-exemplary renters, screen future tenants to make sure they’re a good fit for their rental property. And that costs money. Thus, the application fee, which funds running background and credit checks on applicants.

Here’s what landlords and tenants need to know about application fees:

For tenants

Landlords can charge rental application fees

Landlords need to know you can pay the rent, act in a financially responsible way, and will treat their property with respect. Running a credit check helps them get a sense of your financial history, and a background check helps them see if you have a history of behavioral red flags.

The application fee covers the screening cost. 

Some landlords accept information directly from you and will give you a break on the application fee. If you bring your recent credit report and recent pay stubs, for example, some landlords will accept that in lieu of running your credit. Keep in mind, however, that landlords typically prefer to run their own credit check, as credit reports and pay stubs can be altered. 

Note that landlords typically charge an application fee to everyone on the lease. Did you hear that, roommates? 

Related: Who should fill out a rental application?

Don’t get scammed

There’s a reasonable and customary charge for rental application fees. They usually cost $30-50, but some landlords may charge you up to $100. You can expect to pay the larger fees in a hot real estate market.

Some landlords, unfortunately, try to take advantage of applicants by charging them exorbitant fees just to apply or, even worse, just for viewing the property. Landlords like this are trying to make the application process a moneymaker, a practice that scrupulous landlords don’t do.

Don’t be afraid to walk away from a landlord who seems to be making a money grab. In fact, some states limit the amount a landlord can charge for an application fee. If your state has those limits, let the landlord know. If your state doesn’t mandate fees, ask if the landlord will lower the fee, so they’re charging enough to cover the cost of screening and that’s it.

Ask if the fee will be refunded 

In some cases, your landlord may refund the cost of a rental application. This may happen if they had multiple applicants and rented the property to someone before they got to your application. In that case, not only will many landlords refund the application fee. Some states mandate they must refund the fee.

Be aware, though, you are not entitled to a refund just because you didn’t get the rental. If the landlord did the screening, they don’t have to refund the fee.

You can ask the landlord if they can put the application fee toward your security deposit, as a negotiation point. But it’s up to the landlord whether that will happen.

Related: Ask Lucas 012: Are Online Rental Applications More Secure than Paper Applications?

For landlords

Charge rental application fees only for the actual cost

Application fees are intended to cover the cost of running a credit and background check. Taking a hard look at an applicant’s credit history, employer, former landlord, and doing a background search on criminal records will give you a good sense of whether someone would be a good tenant. You can and should screen each person on the lease.

Depending on your state, you might only be allowed to charge what credit and background checks cost. You’ll want to check the local and state rules where the rental is located for specific regulations for rental application fees.

If you use Cozy to manage your property, tenant screening reports are free for landlords. The applicant pays $24.99 each for a background check or credit report, or $39.99 for both. Applicants order the reports and share them directly with you, so you both stay on the same page.

To collect your application fee, tenants can pay via cash, check, or card. An advantage of using Cozy is that tenants pay online, so you don’t have to deal with money at all. If you’re accepting payments yourself, make sure to provide a receipt, especially if you provide refunds for application fees.

Don’t use application fees as a profit center

Finding a tenant to rent your property can be a time-consuming task, and you may feel justified charging for your time. It’s important, though, not to overcharge or to use the application as a profit center. Some states, such as California, for example, mandate against overcharging, allowing landlords to charge only their out-of-pocket expenses.

You can ultimately profit from your rental by charging market rates; as a bonus, you avoid potential legal ramifications and damage to your reputation that can come from charging unnecessarily high application fees. 

Related: Should I increase rental rates every year?

Refund the application fee under certain circumstances

In some circumstances, particularly hot rental markets, you might end up renting your property to an applicant while you have the applications and fees of others still pending. If you have application fees from prospective renters and won’t be running their background checks, you should refund the fees.

Renters and landlords: know the laws in your state

State laws about application fees differ widely, so it’s important to know the rules in your state. Both renters and landlords should check into their state laws on this. California, for example, caps application fees at $47.22, and landlords need to provide the results to tenants if they request it. In Wisconsin, a landlord may charge the actual cost of a consumer credit report (up to $20).

There’s a lot to know about rental application fees, but you can master the best practices to make sure you’re charging and paying a fair rate.

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17 CommentsLeave a Comment

  • Chase

    I live in LA, found a place through craigslist went looked and paid for application fee. After calling with in 3 days i found out the place was rented and they didn’t run my credit score. I was told i will be refunded but I have been calling and calling to no avail. The sad part was the Craiglist ad was there weeks after I was notified it was rented imagine this people had made it a business. Which is the appropriate office to log a complaint against this landlord.

    • Eva Bodor

      You should contact your local Fair Housing division. I have worked in some form of housing compliance for 20 + years for public and private companies. It is not unusual that a leasing agent would take an application for an apartment that has already been rented- but after the original applicant didn’t work out (clearly what happened if they are re-marketing the vacancy) they should have contacted the next applicant. I am not saying you were discriminated against, however it would be interesting to know who they rented to , why they didn’t call you and what happened to your application fee.

      • W.C.

        I have an even stronger story. About 12 yrs ago (when I was much more trusting) there was an apartment complex in Louisville, Kentucky near the GE plant. It was in a good area of town & being near the plant people signed up on a waiting list to get in there. And the rent was moderately high. Said complex ran an AD in the local newspaper. I get there & theres 40 ppl lining up to see a “model” unit. They show the unit to one person after another & take a $50~75 application fee from everyone. I dont remember all the details but they accidentally divulged they only had a SINGLE unit avail. Of course I was Denied for a 678 credit score after that!

        So they ran a newspaper ad when 1 qualified applicant could have walked in off the street!

  • Cassandra Swanson

    As an rental investment manager in Idaho, I highly recommend applicants provide application information only by secure means. Websites that take information and show the lock symbol in the address bar are great. Don’t email bank numbers or SS#. It is fine to upload copies of your Drivers license for showings, but you should never do so with a SS card. If fees are too high, walk away – this is not a profit center for good companies.

    Application screening takes time and effort, it can consist of credit, criminal, landlord ver. and employment ver. For investment property owners make sure you speak with your management companies to see what applications cost. Too high of fees, means less interest in your rental and longer vacancies

  • brenda

    Is it common practice for a landlord to charge $50 for a background check on a child that has been living in the apartment for several years, just because she turned 18?

  • Pia Berks

    As a potential renter I think it is not fair that each Rental Company can charge you an application fee and then deny the rental or rent to someone else. Then the renter has to pay another fee to a different company to have the same service done. Why do rental companies not share this information or keep it in a database so the tenants don’t have to pay fees over and over until they can find a rental. That really adds up, especially if 2 or more tenants apply together for one house or apartment. $50.00 per per person per application is not fair. There should be one common database for all tenants to register with and for all Landlords to have access to.

    • DRap

      Just get the information they checked into; you paid for the background check so they have to give you a copy to prove they ran it anyway. And then take it to the next place and show that it was just run, saving them time and money.

  • Jen

    Tucson,AZ. If someone renting a property reaches out to us to see if we are still interested in renting, we fill out applications & see the home & they send us a message 4 days later saying sorry we had someone offer to buy the home can they keep our application fees for renting? They are refusing to give our money back. Also they used the Zillow rental application program which required us to have each one over 18 fill out and pay the fee. They messaged us saying not to fill out anymore because they only needed one, even though they would not have had the info for my boyfriend & I. They said they didn’t know that was how Zillow did it and we rec. an email from Zillow saying they didn’t even open my boyfriends app. Do we have any recourse

  • adam smith

    There is no way it costs $100 to do those checks. Most of those checks are free nowadays, and even on the paid websites they cost a few dollars. They’re doing this to make money. That’s why they’re always taking applications at the luxury buildings, but never have vacancies.

  • Sully

    So I went to see a place and about 6 other people show up. The guy explains to us that we have to fill out the application and submit it with a $500 dollar check or cash. Apparently this would go towards the deposit if in fact we did get the place. I was desperate at this point so I call him 2 days later and he claims that someone has already submitted the application and the fee but that he might have another unit opening soon. A month later I see the exact same apartment reposted. Still being desperate I call him back. He has asked me to come down with the dog that he could possibly allow me to have in the unit with the application and the $500. He also says that the money doesn’t hold the place and it is refundable. Any thoughts?

  • Alyssa Cartagena

    I paid $155 to apply to an apartment which included administration fee. I was supposed to pay $99 due to a special where if I viewed and applied on the same day I’d get the discounted rate. I was told I had to apply online. So I went home, and while applying online I put my reference number from my quote and it showed a total of $155, so I called and asked why it didn’t add the discounted rate. I was told they could not change the fees and they would add the additional $50 towards my first month’s rent. It’s been over a week and I have been calling and e-mailing and keep getting the run around. No one can tell me the status of my application. Legally is there anything I can do about this?

  • Shiela

    I had a tenant pay the application fee through Cozy. After their credit & back ground was pulled, I asked them for a Photo Gov’t ID (they were applying from out of state. Site Unseen). They refused to provide a Gov’t ID & asked for a refund. I explained to them the application fee is non-refundable as stated on the application. They contacted Cozy & Claimed Fraud. Cozy IMMEDIATELY refunded their money & charged me, the Landlord, the fee for running their credit. Cozy says We DO NOT get involved in disputes, even though I provided their signed application as proof. TIME TO CANCEL COZY!!!

  • issy

    It should be ILLEGAL to charge applicants these crazy application fees. I find no justifiable excuse to charge them. This is a scam in and of itself.

  • Kamal Deen

    I found an apartment within my budget in an area I like on Zillow. I requested for a view an a realty agent contacted me immediately. I had a chat with her and she claimed the application fee for the apartment is 600 dollars. Is this normal in New York city? She is also asking for 38 dollars for background checks for me and my wife. Is this also normal? I am supposed to meet her for viewing this weekend.

  • Chuck

    Landlords hate charging application fees? Why? They hate getting free money for no work? Ignorant.

  • Christine Perkins

    I think these application fees are pure crap and should be illeagal 500 people pay it and only 1 person gets the place wow thats alot of money for them to pocket.by the time you pay all the fees your to broke to pay any rent .what a scam to make easy good money and screw over people something needs to be done about this FOR REAL

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