Application fee and background check fee (lease, tenant, credit, fees)

[imarichards]

I have few questions. I am new Landlord

Is application fee same as background check fee?

If a prospective tenant applied for Lease do I need to go process the application first and decide to go to next application? or can I take applications from multiple people and decide who is the right tenant.

Also do Landlords generally charge application fee? what are pros and cons

thanks

[NoMoreSnowForMe]

Depends on your state laws. Please include your location in your profile, to get good advice.

Some states let you charge lots of application fees. Some don't.

In CA, you can only charge a maximum of around $42 for application fees, which would include whatever checks you do - credit, background, etc.

In states where you can charge whatever you can get away with, it can be lucrative to accept fees from lots of applicants.

As a CA manager, what I would do, is first look through the applications. If I knew someone wouldn't qualify without running their credit/background check, then I saved them the money and the ding on their credit. The reimbursement amount for CA doesn't cover the actual cost of the checks I would run, so I would actually lose money for the LL by running unnecessary checks.

An example might be for instance, if you won't accept people who have had a bankruptcy, and they checked on the application that they have had a bankruptcy, why run the check?

My guess would be that even in a state that allows you to charge lucrative application fees, you better still treat everyone the same, so you don't accidentally get into hot water over fair housing issues.

The rule of thumb to not get in any fair housing trouble, is to process the applications in chronological order. The first one that qualifies gets the apt.

[Electrician4you]

I charge the BG fee to check the person but like NomoreSnow I don't charging/bother running the app if they don't pass the criteria I set up. Even if I could charge a app fee and a BG check fee I would only charge what would cost me to do.

[oregonwoodsmoke]

Originally Posted by imarichards

..........
Is application fee same as background check fee? .............

............do I need to go process the application first and decide to go to next application? or can I take applications from multiple people and decide who is the right tenant...............

Also do Landlords generally charge application fee? what are pros and cons

I've never heard it called a background check fee, but it sounds like it might be the same thing.

You can process all applications at the same time and choose the best applicant. However, be prepared to defend your choice of "best" as also being legal.

Many landlords do the "first in, first served" because that is completely defensible from a fair housing standpoint. If you choose "best". then your idea of "best" can not violate fair housing laws. You might prefer the couple with no children over the couple with two children. If the children are the reason, you open yourself up to a very expensive lawsuit. If you can defend the choice and chose the childless couple because they had better income and better credit, then you will be OK.

But you must be very certain that illegal discrimination has nothing to do with your choice.

Every landlord should have written criteria for selecting a tenant. That criteria should be applied evenly to every applicant and you must be very careful that there is nothing illegal in the criteria. If you always apply your criteria to every applicant, then your position is defensible in court.

Application fee? My opinion, it should be just enough to cover the costs. It should not be an income generator. Yes, charge one. It will help to weed out all the no-hopers who would otherwise give it a try because it doesn't cost them anything. If you don't charge a fee, you could end up with dozens of applicants that you would never ever accept, yet once you have their application, you must process it. It's a huge time waster.

Know your state laws concerning application fees. For example, I can not charge an application fee in Oregon unless I really do have a unit available and I must return fees for applications that were not processed at the time I select a tenant.

[oregonwoodsmoke]

Adding: When you do your written criteria, OP, make it detailed enough so that you can keep out applicants that you really don't want. There are people with good credit and enough income that you genuinely must keep out of your property. So, if all your criteria calls for is good credit and sufficient income, you have no legal means to reject them.