Application Fees: How and Why to Collect Them

By E-Renter Tenant Screening
Posted on December 15, 2008 under Rents and Deposits | Be the First to Comment

It’s not only acceptable to charge a rental application fee to those who want to rent your property, there are several reasons why it’s a good idea:

• Probably the most obvious reason is that is pays for your time and expense to screen applicants.
• It will also reduce the number of unqualified applicants you get. Most will not bother to apply if they know you are going to check credit and they are unlikely to qualify.
• In addition, it will let all tenants know that you are serious about the business of managing your rental (even if you have only one).

Guidelines for Rental Application Fees
Even though you are entitled and should charge the fee, there are some guidelines for doing so.

• It should be a reasonable fee to cover costs (in many states it is against the law to be profiting from these fees).
• You must inform the applicants what kind of check you will do and inform them of their rights regarding the information you gather.
• If you use a tenant screening service, you must inform them of the name of that company.

You should also become familiar with the Fair Credit Reporting Act and other laws affecting credit reporting (a good tenant screening service can provide assistance with that information). The application fees themselves may only be charged if you actually have (or will have in a short period of time) a unit available to rent, and if you actually do screen the tenant.