You really do learn something new every day. I, for example, just learned that in many parts of the United States there exists something called a rental application fee, and that those words mean exactly what they sound like they mean. I shouldn’t be because if there’s a way to rip a customer off a business will find it, but I’m gobsmacked, honestly.
If we do this in Canada, I’ve never heard of it. It’s certainly never come up any time I’ve rented a place. If a landlord wanted to run credit or background checks on us before making a decision, that’s an expense they were going to eat, because of course it was. It’s what they call a cost of doing business.
Sky-high rents and a severe housing shortage are a challenge for would-be renters across the U.S. But for many, the first barrier to finding affordable housing has become the rental application fee.
James Lopez of Spokane, Wash., had to suspend a months-long housing search because he simply can’t afford to keep applying to more places.
He and his wife still have three children at home, including a young adult daughter. This means — like it does most everywhere in the U.S. — that for each place they apply, all three adults must pay an application fee to cover a general background and credit check.“And that fee can run anywhere from $35 each up to … I’ve seen $85 apiece,” Lopez says. “Right now, we are not able to put that money out.”
That’s right. Second only to their entire existence, the worst part is that these fees are largely unregulated. And in cases where they are regulated, the rules are so useless that you might as well go ahead and say they’re unregulated, because landlords are out here just charging them anyway without any fear of repercussions. It’s so bad that lawyers are telling clients to go ahead and pay them even though it’s not legal, because at least you might come out the other side living someplace with a roof on it.
Vermont was decades ahead of this trend, actually banning rental application fees entirely in 1999, but legal aid attorneys say their use is still widespread. After an investigation late last year by the news site VTDigger.com, the Attorney General’s Office said it was investigating, but that the issue is “not near the top of the list of the type of complaints” the office gets.
This lack of enforcement is a problem in other places as well.
In 2019, New York set a $20 cap on fees and also allowed reusable 30-day screenings. But Stephanie Rudolph, a staff attorney with the Legal Aid Society in New York City, says, “There’s plenty of ways in which brokers are going around the law.”
Rudolph helps low-income clients who’ve been charged sometimes hundreds of dollars, though it can be difficult because the law doesn’t spell out damages if landlords don’t comply. They also say there’s not been a lot of education about the recent law, so some landlords and tenants may be unaware of it.Even when tenants do realized they’re being scammed, Rudolph says there’s another challenge. “There’s also just the fear that if you don’t do exactly what the broker or the landlord tells you, you’re not going to get the apartment,” they say.
That’s a well-founded fear, Rudolph says, so they’ll often advise clients to just pay the fee, even if it’s not legal.