Application fees are often tied to an apartment application. If you’re a landlord, you’ve probably already faced this question and if you’re looking for apartments, you’ve probably already had to pay application fees.
So why do apartments charge application fees?
Whenever you rent out an apartment, the landlord needs to know that you are credible and you will pay them their rent every month. They also need to run background checks on each applicant, ensuring they don’t have any criminal past. This is why they need to screen potential clients. This costs money, which comes from the application fees.
It might feel intrusive to your privacy to have to pay someone to run a background check on you. You might find yourself questioning whether this is even legal.
But as you understand the process, all your inhibitions will be laid to rest. Let’s go over the whole process to know what to expect in an already stressful situation.
Is it Normal for an Apartment to Have an Application Fee?
Yes, it is pretty standard for apartments to have an application fee, especially if they are in demand. While this might initially feel like they’re trying to rip you off every last cent, this is a good sign. It means the apartment is in demand, the landlord is proactive, and, most importantly, the other tenants have also had solid background checks.
There are plenty of apartments that won’t ask you for one, so you can check out different apartments if you don’t want to pay this fee. However, an apartment with an application fee is usually the safer and better option all around.
This is often a good sign that you’re in a safe building, and you don’t have to worry about weird neighbors or even dangerous ones. So even if it’s just some extra money down the drain, it’s better to rent out apartments that do have an application fee.
If you’re a landlord, you should consider doing background checks before renting out.
Why Do Apartments Charge Application Fees?
Application fees are set in place to pay for the costs of conducting a background check. As a landlord, you’d only want the ideal tenants who can pay their rent on time and don’t cause problems for you or your other tenants. Without a proper background check on credit history and other things, there’s no telling who you’re renting to.
But running background checks on multiple potential tenants can add up primarily since only one tenant rents the apartment out of all the different background checks.
From the landlord’s point of view, this is a waste of money. It’s only fair that this money is taken from potential clients. So to get the funding for this, application fees are introduced.
You should want your apartment to have an application fee even as a tenant. Even if it means giving up a few extra bucks, it’s better to know that all the tenants in the building have gone through a background check. So this is why apartments have application fees, and it’s desirable.
Can You Get Your Application Fee Back if Denied?
This usually will differ from case to case and depending on which state you are in. Certain states have laws that require the landlord to pay you back the application fee if they do not perform the screening process. And they are also required to give you back whatever is left of it after the screening.
But in most cases, don’t expect to see the money back even if you don’t get the apartment.
This is because if the background check has already been performed, your landlord has already spent the money. So usually, application fees are non-refundable.
If the screening process does not happen, you have a chance of getting your money back. So ask for proof and see whether they have screened you and how much it cost them.
How Do You Pay An Apartment Application Fee?
If you’re a landlord, you can set up different ways to take application fees so that the potential tenants don’t get deterred from applying. Make it as easy as possible. You can take online payment, or cash, or even a card. Some landlords take the processing fees in person when showing the apartment.
As a tenant, you can choose whichever method you are most comfortable with. But remember that you shouldn’t have to pay anything to get a viewing of the apartment. So unless you’re sure you want the apartment, don’t pay up anything at first.
Usually, as a tenant, you would get to check the place out first and then decide if you want it. Then you would contact the landlord to talk about applying for it and finalizing things. That is when they will usually ask you for the application fees.
Are Application Fees Legal?
Yes, application fees are legal, though laws regarding application fees vary from state to state. You need to be aware of the laws in your state and see that all rules are followed. Some states, like California, will limit how much a landlord can ask you as an application fee. So do your research beforehand.
For instance, states like Alabama have no laws regarding application fees. So landlords can charge however they want. But Massachusetts, for example, does not allow its landlords to charge any application fees. However, states like California have much more specific rules and laws regarding application fees.
Here’s a list of some of the states and their laws regarding application fees:
- No Limits: Alabama, Arizona, Arkansas, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Mississippi, Maryland, etc.
- Cannot Collect Application fees: Massachusetts, Vermont, etc.
- Application fee limit: New York (20 USD), Virginia (50 USD), etc.
How Much Do Apartment Application Fees Cost?
While the actual value will differ from state to state and according to the demand of the apartment, you can expect about 20 – 50 USD for your application fees. Landlords should only charge the amount necessary to perform the screening process. If your state has laws regarding a limit, then a landlord can’t charge you more than that.
But in states with no strict rules, the landlord can set their application fee as high as they want. Sometimes these get quite expensive if the apartment is in very high demand.
But if you’re a landlord, you shouldn’t charge extra for your application fees because this fee alone can deter away potential clients.
At the same time, a very low fee isn’t always taken as a good sign either. Potential tenants may assume that the apartment is in low demand, so the application fee is low.
So finding the right balance is essential as a landlord. See how similar apartments are charging for their application fees and stick to something close to that range.
Conclusion
Now that you know why apartments charge application fees, you can rest assured that it is not an unnecessary cost. More so, it’s usually safer to rent a place with an application fee.
Even if it means you’re giving up extra cash, try to go for an apartment that asks for one. Otherwise, there’s no telling who your neighbor might end up being.