Screening Fee amount (is it OK to charge more than $25 in WI?)

[Bruno P.]

Hello!

I'm using a property management software (TurboTenant) for rental applications and screening reports, and they charge each prospective tenant $45 for this service.

However, the Wisconsin State Legislature states that the landlord can only charge the actual cost of a credit report (up to $25). If the tenant is from another state, a background check cost of up to $25 may also apply (sec. 704.085).

It is unclear to me if I am actually in breach of this rule by charging the tenant more than the $25 limit, even though it is through a third party. Additionally, ATCP 134.05 says that if the tenant provides a consumer credit report from an agency that compiles and maintains files on consumers on a nationwide basis and it is less than 30 days old, the landlord may still run a credit check but at its own expense.

When I inquired with the company, they replied: "These laws are in place to ensure that you, as a landlord, are not profiting by incentivizing multiple applicants to apply when you have no intent to rent to them. As a third-party software company that does not own or manage any properties, we charge renters a screening fee, not an application fee. This charge covers the cost of generating the screening and background reports."

I understand that these rules vary depending on the state, but any thoughts on this? It is such a common practice for these management software companies to charge these fees, so I assume it is not an issue, especially since they are a third party and the fees cover more than just the credit checks.

Any insight is helpful!

Thank you!

[Paul Novak]

Bruno, good question and I am glad you asked because this is a law I was unaware of.  My wife and I have used both Zillow and Apartments.com to have candidates apply.  Both of those websites charge the tenants more than $25 and we require all adults living in our units to pay and fill out an application.  For our last single family residence we had a young married couple move in with a brother, all three applied.  We have never had an issue using those services.

We make sure to do initial vetting of our candidates and a showing before we have them apply to not waste their money unless we want to move forward.  The other positive, at least for apartments.com is if they fill out an application it's good for any other unit on the site for 30 days without having to pay the fee again.

Not that it matters for the law but another thing we do for tenants after they are selected is do a gift basket that exceeds that in which they paid in application fees.  I find tenants really appreciate that little extra touch on move in day.