Is the “Application Fee” in Danger?

ApplicationProposed Illinois law to regulate rental application fees

Everyone knows the importance of tenant screening.  In order to offset the cost of screening “the right way”, many landlords collect application fees.  Now, Illinois lawmakers are getting ready to regulate these application fees.

Really?  Another regulation?  Seriously, which industry is more heavily regulated?  Oil and gas or landlord-tenant?

The law, House Bill 4778 has been introduced and purports to require landlords to charge only “actual out of pocket fees” to tenants.  In addition, before taking the fee, a landlord must provide a detail of anticipated costs, a deadline for acceptance or denial of the application and must provide a written receipt for the application fee.  Then, afterwards, the landlord has to provide proof of the actual costs of the application and return any unused fee paid.  A violation of the law will result in a penalty of $200 plus attorney’s fees.

Wow.  Where is all of this going?  More regulation.  More paperwork.  Disclosure, deadlines, receipts, penalties.  More time and trouble for the landlord.  To add insult to injury, the law expressly discounts the value of the landlord’s time!  Shouldn’t a landlord be able to charge, as part of the application fee, for the time and trouble the landlord goes through to evaluate the application?

The Illinois Rental Property Owners Association has sent out an advisory indicating the problems they believe exist with the proposal.  They are advising landlords to contact their state representatives to voice their opposition to the bill.

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4 Responses to Is the “Application Fee” in Danger?

  1. Michael Martin says:

    It seems to me the time a landlord puts into evaluating an application is the cost of doing business.As a landlord ,I don’t think my time is discounted trying to find a good tenant.Also I don’t find it troublesome.

    • Richard Magnone says:

      Some landlords build that time into rent. Some charge for it. There is room for many different business models.

  2. Lindsey says:

    I have a problem with landlords that charge $35 to $50 for an application fee and then can’t provide a clear answer as to why a tenant wasn’t approved. What else is there to stop landlords from collecting application fees for tenants that they didn’t want to rent to in the first place?