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Application fees should cost anywhere from 20 to 50 dollars. It is not legally necessary to charge an application fee in any state. However, a property management company or landlord will often charge this fee to cover the costs of tenant screening steps.
When a property manager charges tenant fees, there are many steps they must take. Read on to learn more about these.
Be Upfront About Application Fees
Property managers need to be upfront about application fees. The tenant application form should say the exact amount an application fee will cost. It should also mention how the landlord will use the money.
Most of the application fee should go toward tenant screening tests. However, some landlords will have a small "administration fee" on top of the screening test fees. This pays for the labor of running background checks.
Possibly Nonrefundable
Potential tenants should also know that fees may be non-refundable. Most tenants won't get their money back if they withdraw their application. This is fair because the fee pays for nonrefundable services.
Partial Refunds
However, some property managers refund parts of their application fees. This happens when they don't use all the money. Sometimes they're legally required to do this.
Keep Track of Local Laws
Different states have different laws regarding tenant application fees. For example, some states limit application fee amounts. In New York, the fee limit is $20.
Other Laws
Other states don't allow landlords to charge application fees. And others only let landlords charge the exact costs of screenings. In at least one case, landlords must disclose how they spent the fee.
Keep Researching Laws
Memorizing these laws is often not enough. They can change at any time. Landlords must always stay up-to-date on local laws.
Prove Application Fee Use to Tenant
Even if it is legal to use the fees for something other than tenant placement procedures, landlords shouldn't do this. There can be consequences if they do.
Legal Action
Applicants can pursue legal action if they feel their application fee was mishandled. Landlords can end up having to pay damages and legal fees.
Other Punishments
What if mishandling application fees becomes a habit? In this situation, landlords can face more serious repercussions.
How Long It Takes
Certain checks only take a few minutes to run. These include credit checks and criminal background checks.
Reference Follow Up
However, some property managers need to follow up on references. It may take a few days for people to get back to them on this.
We Provide Property Management Company Services
As you can see, application fees are a necessary part of tenant placement. They help landlords avoid paying for the costs of tenant screenings themselves. However, landlords must handle application fees correctly.
Do you need a property management company to handle your Biloxi properties? If so, consider hiring us at Property Management Inc. We're a full-service real estate management company that serves Biloxi and surrounding areas.
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