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Yes, they can keep your fee IF they actually ran a credit report on you. If they didn't, they should return it. We sure don't run credit checks on every applicant. That is nonsense. We base it first on their application and then will determine if we run a credit check if we want to move ahead with applicant. We will take maybe the top 2 or 3 applicants, at most, and then run credit checks if the first applicant doesn't qualify, etc. And we do not charge application fees. It is part of doing business and $40 - $80 tops is not going to break us.
As another poster mentioned/asked about the $200 app fee, and hundreds of applicants, etc that is beyond ridiculous and it should never be happening. There is no way they are running that many credit checks and would have no reason to and the fee is mostly due to actually running credit checks.
Well let us say I have a rent controlled apartment in Manhattan that I am going to lease at a really low rent. And let us say I advertise it heavily and demand a $200 non refundable application fee. And let us say I get 1500 applications. Do I really get to keep the $300,000?
Not even realistic and no way in hell would you ever get away with that because you know you would never run that many credit checks. 1) $200 is totally unreasonable to run a credit/background check and 2) no one in their right mind is going to run 1500 background checks for an apt, let alone 5 - 10.
Collecting non-refundable fees is not meant to be a 'for profit' business for LLs.
......We feel it is wrong to take money if upfront we already know we won't accept that particular tenant..........
Unfortunately, a lot of hopeful tenants seem to have comprehension problems. You can put it in the ad, you can show them your written criteria, you can tell them that you don't accept whatever, and they will still insist upon applying.
Like the group of five who were all standing in the driveway and smoking when I arrived to show the house. The ad says no smoking, the written criteria, which they were given, says no smoking, the application form says no smoking, and I told them several times that the owner of the house would not accept a smoker.
They insisted upon applying because they were sure it would be OK. They all dropped cigarette butts onto my driveway. I figure the $125 they gave me was a stupid tax. When I told them their application was denied, they asked why. I replied that no smoking was allowed and they said "oh."
I've got an ad running right now that clearly says the tenant must do A and B. I tell them that on the phone. They ask what A involves because they don't know how to do it, say they don't have B and then want to make an appointment to see the house and fill out an application.
They show up and I tell them that the tenant must have A and B and they tell me that they don't and they still apply.
I don't know how much clearer that I can be than to say they don't meet the requirements, but they are absolutely certain that I don't know what I am talking about.
.....Can a landlord reject a rental application because of another better application and not return the application fee back?
Absolutely, yes the landlord can. Your fee is for applying, it is not a reservation fee to guarantee you a place.
Different states have different laws. In Oregon, I keep your fee unless I haven't done anything towards the screening and I rent to someone else before I touch your application. If I screen you and decide against you, you don't get a refund. What the law says is that I can't take a fee if I don't have a unit available*. It does not say that I have to return fees to everyone I screened and rejected.
I think that Oregon is probably the strictest state, or very close to being the strictest state, about application fees. If you are in a different state, you can look up your state law online, but no state that I know of says that application fees get returned to rejected applicants.
*an application fee can be taken when no unit is available if the applicant is informed that no unit is available and agrees to that condition. Some of the apartment buildings have "wait lists" and that is legal as long as the applicant knows that no unit is currently available (Oregon law)
Last edited by oregonwoodsmoke; 06-28-2015 at 08:49 PM..
Unfortunately, a lot of hopeful tenants seem to have comprehension problems. You can put it in the ad, you can show them your written criteria, you can tell them that you don't accept whatever, and they will still insist upon applying.
Like the group of five who were all standing in the driveway and smoking when I arrived to show the house. The ad says no smoking, the written criteria, which they were given, says no smoking, the application form says no smoking, and I told them several times that the owner of the house would not accept a smoker.
They insisted upon applying because they were sure it would be OK. They all dropped cigarette butts onto my driveway. I figure the $125 they gave me was a stupid tax. When I told them their application was denied, they asked why. I replied that no smoking was allowed and they said "oh."
I've got an ad running right now that clearly says the tenant must do A and B. I tell them that on the phone. They ask what A involves because they don't know how to do it, say they don't have B and then want to make an appointment to see the house and fill out an application.
They show up and I tell them that the tenant must have A and B and they tell me that they don't and they still apply.
I don't know how much clearer that I can be than to say they don't meet the requirements, but they are absolutely certain that I don't know what I am talking about.
But if you already know they don't qualify by looking at their application and seeing what you did you aren't going to run a credit/background check anyway are you? So why not return their application fee? I know it is referred to as a 'non-refundable' application fee but it should be understood that the fee is primarily, if not entirely, to compensate for the cost of credit checks. So why not return the fee instead of just pocketing it?
.......We will take maybe the top 2 or 3 applicants, at most, and then run credit checks if the first applicant doesn't qualify, etc. And we do not charge application fees. It is part of doing business and $40 - $80 tops is not going to break us........
You must live in a slow part of the world. The last vacancy I had, I rceived over 150 phone calls in less than 24 hours. Made 25 appointments to view the house. Had 18 people apply. That's not $40 tops to run credit reports. If I did not charge an application fee, all 150 groups which might be 300-450 adults would apply even though I made it clear to them that they wouldn't qualify, because it didn't cost them anything to give it a try.
I sure hope you have a defensible legal reason for deciding that 2-3 applicants are the top before you accept an application or do any screening on them. I hope that one of your non-top applicants doesn't turn out to be a HUD tester.
.......it should be understood that the fee is primarily, if not entirely, to compensate for the cost of credit checks. ......
No the application fee is not primarily to pay the credit report. The application fee is to pay for the screening and screening an application consists of a heck of a lot more than running a credit report. Many landlords run a credit check as part of their screening, but it is not a requirement
You must live in a slow part of the world. The last vacancy I had, I rceived over 150 phone calls in less than 24 hours. Made 25 appointments to view the house. Had 18 people apply. That's not $40 tops to run credit reports. If I did not charge an application fee, all 150 groups which might be 300-450 adults would apply even though I made it clear to them that they wouldn't qualify, because it didn't cost them anything to give it a try.
I sure hope you have a defensible legal reason for deciding that 2-3 applicants are the top before you accept an application or do any screening on them. I hope that one of your non-top applicants doesn't turn out to be a HUD tester.
No. Slow has nothing to do with it and we don't decide on any 2-3 applicants before doing 'any' screening on them. We get many, MANY, inquiries via email on our rentals. I screen up front very thoroughly. Every inquiry I get I send a copy of the qualifications from the rental application and have them review it and email me back if they qualify. That screens out TONS of the inquiries. If they email back and say they qualify, I will then book a showing. Once at the showing I talk with them again on what the process is and that a thorough credit, background and reference check, etc., will be run and then give them an application if they still want to apply. Some do and some don't apply after the showing.
This process works great for us and it eliminates a LOT of the initial inquiries and narrows it down to maybe 5 - 10 who complete applications after showings. We start with the first who applied and work from there on down. If we run into an application that seems to check out on paper we then check court records which is free to do. If they pass that then we will run and pay for a background/credit check on the first applicant who qualified on paper and the court records screening. We do not continue to run/order credit checks unless the first applicant does not qualify and so forth and so on. If they do qualify on all aforementioned, we then continue with the rental references, etc. BEFORE we ever move onto the next applicant and order any additional credit reports.
It is beyond wasteful to run a lot of credit checks if your screening process 'prior' to having to run one is done efficiently and effectively.
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