Rental Application Fees

_RAFTried to rent an apartment in Amarillo lately? Been asked to pay an “application fee” in order to rent an apartment? Is this legal? This is not legal advice but you might want to read Texas Property Code Section 92.351 entitled, “Rental Application,” to understand rental application fees.

Section 1-a of 92.351 says this: “Application fee” means a nonrefundable sum of money that is given to the landlord to offset the costs of screening an applicant for acceptance as a tenant.” An “Application deposit” means a sum of money that is given to the landlord in connection with a rental application that is refundable to the applicant if the applicant is rejected as a tenant.” Section 92.351 explains who is an applicant and who is a co-applicant. So how does the application fee work? Let’s say you are driving around town and see an apartment or house you are interested in renting. You contact the landlord and ask if it is already leased. If the landlord says no, you then ask to see the unit. The landlord arranges for you to see the unit so you can see if in fact it meets your needs. Let’s say you like the place so you return to the landlord and say I would like to rent it. The landlord can then ask you to fill out an application to rent the unit, but at the same time the landlord requests an “application fee” for each person over 18 who will be living there. The fee I’ve heard for Amarillo is $35 a person. So if you are married with three children under 18 you may be asked to pay a $70 rental application fee—a separate fee for you and your husband—or whoever will be the applicant and co-applicant. So what is this fee for? The fee is for a background check on the adults, people over 18, who will be living in the unit. The rental application fee is not the same as the rental application deposit. The rental application deposit is money you may decide to give to the landlord to hold the unit for you while the background check is being done. If for some reason you do not “pass” the background check the landlord keep the rental application fee because it is non-refundable. But the rental application deposit is refunded if the tenant is rejected.

So can an Amarillo landlord “haul in a bunch of money” just taking rental application fees from a whole string of applicants that the landlord had no intention of renting to? You should read Section 92.3515 that says this: NOTICE OF ELIGIBILITY REQUIREMENTS. (a) At the time an applicant is provided with a rental application, the landlord shall make available to the applicant printed notice of the landlord’s tenant selection criteria and the grounds for which the rental application may be denied, including the applicant’s: (1) criminal history; (2) previous rental history; (3) current income; (4) credit history; or (5) failure to provide accurate or complete information on the application form. If the landlord makes the notice available under Subsection (a), the applicant shall sign an acknowledgment indicating the notice was made available. (b) If the acknowledgment is not signed, there is a rebuttable presumption that the notice was not made available to the applicant. The acknowledgment required by Subsection (b) must include a statement substantively equivalent to the following: “Signing this acknowledgment indicates that you have had the opportunity to review the landlord’s tenant selection criteria. The tenant selection criteria may include factors such as criminal history, credit history, current income, and rental history. If you do not meet the selection criteria, or if you provide inaccurate or incomplete information, your application may be rejected and your application fee will not be refunded.” (d) The acknowledgment may be part of the rental application if the notice is underlined or in bold print. (e) If the landlord rejects an applicant and the landlord has not made the notice required by Subsection (a) available, the landlord shall return the application fee and any application deposit. (f) If an applicant requests a landlord to mail a refund of the applicant’s application fee to the applicant, the landlord shall mail the refund check to the applicant at the address furnished by the applicant.

So if you are rejected for one rental unit and have to keep searching for an apartment can you end up paying several nonrefundable application fees? The answer is yes. Each landlord can request an “application fee” to do a background check. And what exactly is the application fee for? It is for a background check—criminal history, previous rental history, income verification, and credit history from whatever resource the landlord uses to do the background search. Does each search cost $35? Probably not, but the landlord can adds a little extra for his or her time and effort to perform the background check. Can a landlord take the $35 fee, size you up based on “appearances” then toss your application in the trash then tell you that “something” in your “background check” caused the rejection of your application? Yes. Can you ask the landlord exactly why you were rejected? Yes but the law typically says that the landlord does not have to tell you why you were rejected unless it has something to do with your credit history. If it was a denial based on credit history you must be told this so you can find out if there is some type of inaccurate information on your credit file. The law even allows the landlord to reject all the applicants based on “objectionable” background information on just one of the co-applicants. But a landlord can also reject an application because someone else’s application makes for a “better tenant” even though you paid a nonrefundable application fee. Is there room for landlord abuse and graft? Yes, but proving it may be hard to do. If you suspect dishonesty or discrimination you should contact a lawyer to see what you remedies are.

The rental market has changed beyond the days when a person saw an apartment, found out if it was vacant, paid the required rent and deposit and then moved in. Landlords have a right to screen tenants to meet their rental requirements not only to avoid “bad” tenants who won’t pay rent or skip out on rent but also for the safety and welfare of other tenants. Rental application fees are now just another factor to be considered by prospective tenants in finding decent housing.

Copyright 2015 – L. Arthalia Cravin. All rights Reserved. No part of this commentary may be reproduced, stored in a retrieval system, or transmitted by any means, electronic, mechanical, photocopying, recording, or otherwise, without written permission from the author.

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