When applying to rent, potential tenants usually pay an application fee. But what exactly is this fee, and is it legal?
According to the California Apartment Association, it is legally acceptable for rental property owners to collect fees to cover the costs of screening an applicant. These fees pay any potential credit score reporting or other screening services. However, there are strict rules property managers must follow when charging and collecting fees.
Firstly, the amount of the fee cannot be greater than the actual cost of receiving the information. Thus, a property manager cannot charge more than what it costs them in time and money to obtain the information. If a tenant ends up paying more than was needed, the property manager is legally required to reimburse them with the unused portion of the fee. In addition, property managers may not charge fees if they know no rental units are available in the time-frame desired by the potential tenant.
To keep fees more consistent and fair among rental properties, Civil Code Section 1950.6 states that as of December 2013 the amount of the application fee charged by the owner cannot be greater than $45.16 per applicant.
When fees are collected, the property manager must legally provide an itemized report of the out-of-pocket expenses and time spent by the manager. Along with this itemized receipt, if the tenant pays the fee and requests it, the property manager must provide a copy of the tenant’s credit report.
To make things easier on both tenants and property managers, the California Apartment Association has developed two forms which include the legally required receipt; CAA Form 3.5 which shows the tenant screening and/or credit reporting fees and the CAA Form 3.0-R which is an application to rent that offers a tear-off screening fees receipt. Both are available at http://www.caanet.org/forms.
CheckPoint Screening also strives to make the application process easier for both tenants and property managers. CheckPoint Screening services offer affordable tenant screening services including credit checks, eviction record, criminal background data, sexual offender searching, and social security verification. They also offer a QuickLease online lease generator and a QuickApp online rental application generator. For property managers that require renter’s insurance, CheckPoint in partnership with ePremium Insurance, offer online options for both tenants and property managers.
Though the application fees may be a nuisance, they serve to provide services which protect both tenants and property managers.