Los Angeles CA · Member since 2016 · 3 posts · 0 votes
Lets say I am a landlord in the state of Missouri. I accepted multiple application fees for 1 house which includes both a credit check and background check. I never ran the credit/background check for individuals I never intended to rent to. Several of these individuals want their money back. The credit/background check was listed as non-refundable, however this is a service which did not occur at any point in time.
1.) What is the legality of this from the landlord's perspective? 2.) What recourse exists, if any, for those who pay an application fee and the application is never processed? Is it typical that the applicant is out the money (i.e listed as non-refundable)?
Real Estate Broker · Northeast PA · Member since 2017 · 2k+ posts · 2k+ votes
6y
@Ryan Willer, you state '"I never ran the credit/background check for individuals I never intended to rent to".
When did you decide to not rent to them? What factors caused you to make that decision? You are walking a very fine line here.
Let me provide an example: "I don't like people of the Blue persuasion so I don't intend to rent to them, so I'll take their money for a credit report that I don't have to run, and go have lunch with it."
Believe it or not, that might be considered discriminatory. (sarc)
So again, WHY did you never intend to rent to them? When did that intension come into being?
It seems to me (although I don't have all your facts) you should return the money if you didn't do the job. (Especially after your post in front of millions of sets of eyes on this site.)
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
6y
Couple of different ways to look at this.
1. You took an application, you charged a non refundable application fee. Your application should say this and they sign it.If you have this you are within your rights to keep the application fee as long as your areas has no rules/laws against doing so.
2. If you never intended to rent to some people and you never spent any money on running a background check, just refund their money and be done with it. If they gave you a check make sure it clears first or just give them their check back.
It's your call as long as you are operating within the law.
Real Estate Broker · Northeast PA · Member since 2017 · 2k+ posts · 2k+ votes
6y
@Ryan Willer, you state '"I never ran the credit/background check for individuals I never intended to rent to".
When did you decide to not rent to them? What factors caused you to make that decision? You are walking a very fine line here.
Let me provide an example: "I don't like people of the Blue persuasion so I don't intend to rent to them, so I'll take their money for a credit report that I don't have to run, and go have lunch with it."
Believe it or not, that might be considered discriminatory. (sarc)
So again, WHY did you never intend to rent to them? When did that intension come into being?
It seems to me (although I don't have all your facts) you should return the money if you didn't do the job. (Especially after your post in front of millions of sets of eyes on this site.)
Real Estate Broker · Northeast PA · Member since 2017 · 2k+ posts · 2k+ votes
6y
Hey, didja hear the one about the bandido that after he stole some custom jewelry goes and posts on his Facebook about his newfound 'bling"? He couldn't figure out how he got caught.
Los Angeles CA · Member since 2016 · 3 posts · 0 votes
6y
@Marc Winter, Intent that was not written down isn't even provable, is it? This is the crux of my question... If a given applicant paid to apply, nothing was processed, and does not receive their money back - what then? Wouldn't you agree in this case if the landlord does not give money back there is no legal recourse or battle to be had?
Los Angeles CA · Member since 2016 · 3 posts · 0 votes
6y
@Marc Winter "that's not how you posed your question." Yes, intentionally. I'm curious of your, and others', opinions of landlords who collect app fees and do not process. Legality, ethics and renter recourse. Thanks for chiming in.
Investor · Cleveland, OH · Member since 2017 · 319 posts · 330 votes
6y
Application fees, at least in some states, have to be applied to actual costs - you can't just pocket it.
Charging application fees to people you don't even intend to evaluate or approve (ie, taking people's money and then just throwing their apps in the trash) would be fraud.
That said, not all credit pulls show up as "hard" pulls - so if you're a renter wondering why you don't see the check on your report, this could be why.
Rental Property Investor · Auburn · Member since 2019 · 48 posts · 17 votes
6y
@Russ B. I would say if you check them out on social media, contacted their previous landlords, spent your time looking into them before doing a credit check and the screening then you can charge. Because you spent a half-hour doing that job. If you just taking their money and throwing their application in the trash then that's not fair.
Lets say I am a landlord in the state of Missouri. I accepted multiple application fees for 1 house which includes both a credit check and background check. I never ran the credit/background check for individuals I never intended to rent to. Several of these individuals want their money back. The credit/background check was listed as non-refundable, however this is a service which did not occur at any point in time.
1.) What is the legality of this from the landlord's perspective? 2.) What recourse exists, if any, for those who pay an application fee and the application is never processed? Is it typical that the applicant is out the money (i.e listed as non-refundable)?
Ethically, that's shady as hell!
Yes, their are some operators that do that.
No, their is not much a applicant can do about it because it's tough to prove and a such a small amount of money. It doesn't feel like a small amount of money to the applicant but, to the courts, judges, lawyers, police, and the "system", it's not much.
If you are a landlord, please stop doing this...it's just wrong, and probably illegal in most states, counties and cities.
If you are an applicant and this happened to you, I'm sorry for your experience and I hope you realize that most landlords are not like that.
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
6y
We collect application fees from all applicants. It ensures our applicants are serious about our unit and eliminates some of the unqualified candidates. If an applicant that is before them in the processing queue meets our criteria, the tenants that we did not do any processing get a full refund of their application fee.
However, if we start the processing of their application and for whatever reason they do not become our tenant, we keep the application fee. This is true even if we never ran the credit/criminal check. Here are two common examples: 1) Tenant calls to state they are no longer interested because they found another place but we have already spent time on the application 2) we call the tenant's current Landlord and the reference is not up to our standards so we do not care what their credit score it, they are not tenants that we desire.
We only keep the application fee if we have started to process the application. It is fair as the reason we charge for the application is that processing of applications take time and money (credit/criminal checks are not free: I believe we charge $6 more than our slightly bulk credit/criminal check purchase). In the addition charging the applicant means we get serious applicants and are not processing applications for tenants that applied at a dozen units or know that they do not meet our qualifications.
If we spend no time processing the application, what would we be charging them for? We do not need to make money off application fees. We end up loosing money on applications, even charging a fee, for each application processed that does not become a tenant. We charge $25. I believe our bulk credit/criminal check is $19 (wife does the purchase and I know that is what it used to cost us but unsure what current cost is). It takes over an hour (call existing LL and employer, enter information for the credit/criminal check) to process for $6. No one works for $6/hour.
Return the application fee on applications that do not get processed.
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
6y
It kind of sounds like the OP is actually a renter that might have gotten screwed out of his application fee. No matter if he is a renter or a landlord, I don't like anything about this process that may or may not have happened. I have no respect for landlords that would do this. I don't even like landlords that take multiple application fees at the same time, run all of them, and then deny all but 1. That also takes people money, but gives them back nothing in return.
I process one application at a time, based upon the information the applicant gives me. If I process their application, and it turns out they do not qualify, then they are out the money. And the applicant always knows the full criteria ahead of time. I have had applicants "self disqualify" (not apply) after hearing about the qualifications. But I have never denied anybody that meets the full qualifications just because somebody else walked in the door later and had a better credit score/higher income.
Now, that doesn't mean it's first come first serve necessarily. If I get 3 applications at an open house, I'll review the applications for free, and run what appears to be the best one first.
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
6y
As a follow up, I consider the labor to process applications a "cost" of doing business. You make your money on tenants, not on applicants. If it takes me 2 hours, it takes me 2 hours. I don't charge for the 2 hours.
Lets say I am a landlord in the state of Missouri. I accepted multiple application fees for 1 house which includes both a credit check and background check. I never ran the credit/background check for individuals I never intended to rent to. Several of these individuals want their money back. The credit/background check was listed as non-refundable, however this is a service which did not occur at any point in time.
1.) What is the legality of this from the landlord's perspective? 2.) What recourse exists, if any, for those who pay an application fee and the application is never processed? Is it typical that the applicant is out the money (i.e listed as non-refundable)?
If you did not run it give them back the money. Also why would you take the money if you never intended to rent to them? WHY are you wasting their time ?