8 Questionable Rental Fees to Avoid Charging

rental fees

Questionable Rental Fees

Not all fees are created equal. In fact, some stretch the law.

 1. Excessive late-rent fee
The Landlord Protection Agency, a website that provides advice for landlords, has this to say about late-rent fees: “Late charges should hurt. … It should be a painful enough fee that the tenant will not want to pay again. Ever.”

Although the site says its forms are legally credible, this free advice may have bypassed such review. Lawyers in any state will tell you that late-rent fees are not to be used as punishment or deterrent.

“The purpose of the late fee is an attempt to try and compensate the landlord for the inconvenience or cost associated with a late payment,” says Steven R. Kellman, director of the Tenants Legal Center of San Diego. “It is not meant to be a bully stick waved at the tenant. The idea that I’m going to whip you each day you don’t pay, that’s not the intent of the law.”

2. Overnight guest fee
Here’s another fee that doesn’t pass the test.

Plenty of landlord notices lay out a $25 charge for a tenant’s overnight guest, for example, or a $50 rent increase for an additional occupant.

There’s just one obstacle: federal law, says Kellman, who sees plenty of unenforceable lease provisions that naive landlords pull from the Web.

A landlord can limit total occupancy at a point set by law — typically two people per bedroom plus two — to protect his unit. He can also require that a permanent occupant pass a criminal background check. But he can’t tack on arbitrary charges, Kellman says.

“That’s illegal, because it’s discrimination under familial status,” he says. “If you want to have a relative move in or have a baby, that’s your right.”

If landlords are concerned about the extra cost of water or electricity, “then they need to get separate meters and you pay for what you use,” he says.

3. Unnecessary application fee
It’s OK for a landlord to pass along the cost he must incur to run credit and security checks. But some states limit the amount per tenant. And in all cases it is illegal for the landlord to take the fee and not run the check.

4. Repair fees
If you pay to rent an apartment, part of the deal is that the landlord keeps the property in working order. In fact, he is legally responsible for maintaining a fit and habitable dwelling. He cannot charge tenants for repairs.

The exception would be if a tenant broke something through blatant negligence. In that case, the tenant would have to fix it.

If landlords were allowed to charge for upkeep or make tenants do it, some might allow units to fall into disrepair, leaving tenants in substandard housing. Legislators passed laws to prevent that.

“It’s the same reason that we require people who make Cheerios to have clean factories, and why we don’t allow Pintos to have exploding gas tanks,” says Janet Portman, a housing lawyer with Nolo, a publisher of legal guides. “It just comes down to a legal principle that you just can’t do that.”

5. Redecorating or cleaning fee
This is essentially to pay for the extra fix-ups landlords do between tenants, maybe a deep carpet shampoo or repainting the walls. But this is not the tenant’s responsibility. The tenant has covered his own damage through the security deposit. Any scuffing or fading that’s the result of normal wear and tear should not come out of the tenant’s pocket.

This onerous fee might also be called an automatic damage fee, a refurbishing fee or a move-in fee.

“If a landlord generally cleans a unit after one tenant leaves and another tenant moves in, that’s not typically a fee a landlord can assess a tenant,” says Peter Iskin, a lawyer with the Legal Aid Society of Cleveland.

6. Administrative or processing fee
It costs money to advertise a unit, and some managers want to pass this cost along to tenants, although they’re often vague about just what this $50 to $300 is for.

Sometimes it’s used only in lieu of a credit-check fee; other times it’s applied toward advertising, staff and even printing-paper costs.

“There are an immense number of fees being added that 10 years ago we didn’t get from people,” said Del Walmsley, a landlord with multiunit buildings. And this one “is just garbage, a way to get upfront money from people.”

In some states, the law agrees. Massachusetts and California, for example, have strict regulations that prevent landlords from passing along basic overhead costs. Staff and office supplies dressed up as administrative fees? Those won’t get by a judge. Late fees that exceed the reasonable costs incurred by the landlord for that extra trip to the bank? Those also won’t fly.

 

7. Any fee called “a nonrefundable deposit”
A deposit, by definition, is returned when certain conditions are met. A security deposit, for example, is returned to the tenant if the unit is left in good condition. If it won’t be returned, it’s a fee, not a deposit.

If someone asks you for a “nonrefundable cleaning deposit,” for example, tell them that you’ve already given them a security deposit.

8. Finder’s fee or holding fee
This is a fee the tenant pays to supposedly hold the unit, but in many places they’re illegal, lawyers say.

Also, such fees don’t provide the tenant a legal guarantee that he will get the apartment. Landlords can also be harmed, by taking units off the market only to have a tenant change his mind.

“Making these types of agreements that are not clearly legal creates complex situations that very often cause a problem,” says Michael Kelley, director of rental housing resources for the city of Boston.

Only a licensed broker may charge a fee, and that’s for additional assistance in locating an apartment.

Check your state laws
See what fees are legal in your state by checking with the consumer-affairs division. The city, or a university housing office, may also list fees that landlords may legally charge tenants in your area.

“If it’s not listed as a legal fee, then it’s in fact an illegal fee — even if it’s not listed that way,” Kelley says

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