Rental Application Fees in California - The Basics

Do you know the ins and outs for Rental Application Fees in California? You can find the original article here: http://www.fastevictionservice.com/blog/rental-application-fees-california-laws/

Hi there, and welcome back to another tips for landlords and property managers video. On today’s episode, we will quickly go over some important things to keep in mind while calculating how much you will charge for rental application fees. We’d like to remind you that this video is for informational purposes only and it is not intended to be legal advice.
What is a rental application fee and why should you have one? A rental application fee is a fee that a landlord charges any prospective tenant that wishes to go through the selection process of renting your property. Why should you have one?
There are a couple of benefits of charging a rental application fee
• Running background checks cost money. This will prevent you from going broke while finding your perfect tenant.
• Gets rid of some people that would otherwise just waste your time. People with bad credit scores, have an eviction on their record or are convicted sex offenders. They most likely will not apply since they know it will be just a waste of their money.
While this may seem like a quick way to make a few quick bucks, there are some very important things you need to keep in mind.
First off, there are laws which govern the maximum amount you can charge for rental application fees. This amount is updated every year and is based on the Consumer Price Index or CPI. For 2019, this max amount was set at $50.94. Most experienced landlords charge between $30-$50.
This fee is designed to cover “actual out of pocket costs” of obtaining a credit report and background check. It also covers the “reasonable value of time spent” by the landlord checking references and information provided by the prospective tenant.
The landlord must provide an itemized receipt to the prospective tenant and refund any of the unused money.
The prospective tenant has the right to ask for a copy of their consumer credit report. If a copy cannot be provided and the landlord did not check references, the entire amount of the fee must be refunded.
If the landlord selects another tenant before running this credit check, the landlord is required to refund this fee. A prospective tenant, however, is not entitled to a refund if the credit check has been run and the landlord checked references and the applicant was not selected.
No application fee may be received if there are no current vacancies for your rental property unless you have express written permission of the applicant. These cases present themselves when the applicant is willing to wait for an extended period of time before a unit becomes available.
Although it seems harmless, charging a “couple” a reduced rate for this fee can be an issue as this can be considered discrimination. Charging this fee on a per person basis is the best bet.

Rental application fees can be a sensitive issue, especially for the applicants. It is very important to understand, however, that running credit and background checks are a very vital step in selecting your next tenant. Evictions can be very expensive, so making sure you don’t make a mistake here can save you a lot of money and headaches in the future.
Thanks for watching, make sure you subscribe, like and share this video if you found it useful. My name is Cesar, i’ll see you on the next one.