ATTENTION FRISCO LANDLORDS: You Can’t Charge a $49.50 Application Fee – Take a Look at This Example on Page

Here we go:

7J7C7509 copy

Now let’s hear from the California Apartment Association:

“As you consider prospective renters in 2017, remember that your applicant screening fee can only cover the expenses you incur in the process. This includes the actual money spent gathering information, as well as time spent by you or your staff. But no matter how much you pay for tenant screening, your fee to applicants may not exceed $47.72. That figure represents this year’s maximum applicant-screening charge. Each December, the state of California adjusts its cap on applicant-screening fees based on changes to the Consumer Price Index. This year’s adjustment amounted to an increase of $1.05.”

A landlord not following what the CAA says is a bad sign from the get-go.

The kind of people who overcharge on the application fee are the kind of people who do other things wrong as landlords as well.

(OTOH, I’m sure many landlords would prefer naive, moneyed tenants who say, “Take my money, take my money,” as they are less likely to complain about other issues.)

Anyway, the cost of doing a background check has come down over the years, non? So why not just charge prospective tenants the eight dollars or whatever you are out of pocket? Cause I’ll tell you, this isn’t a good look, this nickel-and-diming at the start of a potential $40-something thousand dollar land deal.

Speaking of which, back in the day, Before the Aughts, back during DotCom 1.0, let’s say 1998 or so, you’d see 50 people showing up at open houses. They’d each pay an application fee of $50 or so and then the manager / landlord / agent would have a nice multi-thousand dollar tax-free payday just by depositing a bunch of checks at the bank. Not bad for a few hours “work.” And they wouldn’t even do a background check on you, the sucker prospective tenant, ’cause that would increase costs.

A cite from that era:

“Some landlords in the San Francisco Bay Area were found guilty of charging application fees of $50 or more and/or collecting application fees when no rentals were even available.”

That’s what happens when people treat the application process as a profit center.

Anyway, choose wisely, tenants.

(a) Notwithstanding Section 1950.5, when a landlord or his or her agent receives a request to rent a residential property from an applicant, the landlord or his or her agent may charge that applicant an application screening fee to cover the costs of obtaining information about the applicant.  The information requested and obtained by the landlord or his or her agent may include, but is not limited to, personal reference checks and consumer credit reports produced by consumer credit reporting agencies as defined in Section 1785.3.  A landlord or his or her agent may, but is not required to, accept and rely upon a consumer credit report presented by an applicant.

(b) The amount of the application screening fee shall not be greater than the actual out-of-pocket costs of gathering information concerning the applicant, including, but not limited to, the cost of using a tenant screening service or a consumer credit reporting service, and the reasonable value of time spent by the landlord or his or her agent in obtaining information on the applicant.  In no case shall the amount of the application screening fee charged by the landlord or his or her agent be greater than thirty dollars ($30) per applicant.  The thirty dollar ($30) application screening fee may be adjusted annually by the landlord or his or her agent commensurate with an increase in the Consumer Price Index, beginning on January 1, 1998.

(c) Unless the applicant agrees in writing, a landlord or his or her agent may not charge an applicant an application screening fee when he or she knows or should have known that no rental unit is available at that time or will be available within a reasonable period of time.

(d) The landlord or his or her agent shall provide, personally, or by mail, the applicant with a receipt for the fee paid by the applicant, which receipt shall itemize the out-of-pocket expenses and time spent by the landlord or his or her agent to obtain and process the information about the applicant.

(e) If the landlord or his or her agent does not perform a personal reference check or does not obtain a consumer credit report, the landlord or his or her agent shall return any amount of the screening fee that is not used for the purposes authorized by this section to the applicant.

(f) If an application screening fee has been paid by the applicant and if requested by the applicant, the landlord or his or her agent shall provide a copy of the consumer credit report to the applicant who is the subject of that report.

(g) As used in this section, “landlord” means an owner of residential rental property.

(h) As used in this section, “application screening fee” means any nonrefundable payment of money charged by a landlord or his or her agent to an applicant, the purpose of which is to purchase a consumer credit report and to validate, review, or otherwise process an application for the rent or lease of residential rental property.

(i) As used in this section, “applicant” means any entity or individual who makes a request to a landlord or his or her agent to rent a residential housing unit, or an entity or individual who agrees to act as a guarantor or cosignor on a rental agreement.

(j) The application screening fee shall not be considered an “advance fee” as that term is used in Section 10026 of the Business and Professions Code, and shall not be considered “security” as that term is used in Section 1950.5.

(k) This section is not intended to preempt any provisions or regulations that govern the collection of deposits and fees under federal or state housing assistance programs.

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2 Responses to “ATTENTION FRISCO LANDLORDS: You Can’t Charge a $49.50 Application Fee – Take a Look at This Example on Page”

  1. Chili Recepcion says:

    Hear, hear. Yes, I hear stories of application fees and have wondered about the widespread scam of collecting hundreds of them for various apts. Seems like you should be able to be told you’re pre-approved for tenancy and then pay for the application process.

  2. sfcitizen says:

    Yep. Definitely.

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