rental application and security deposit fee laws

What should a security deposit be?  How much should you charge as an application fee?

Knowing what to charge for a rental application fee & a security deposit is really going to boil down to state law.  Once you understand what you can charge, then you’ll have to sort out what you should charge.  Links to different state laws can be found at the end of this post.

Why charge an application fee at all?

A big part of ensuring you’re renting to quality tenants is doing a background check on all applicants.  Getting insight into a applicant’s credit, criminal & eviction history will allow you to make a well-informed decision on whether or not to approve them.

Running a background check, however, costs money, and the purpose of the application fee is to cover the cost.  Many states don’t spell out application fee laws in terms of how much you are allowed to charge although some states don’t allow the landlord to profit from the application fee.  The average application fee for a rental property seems to be around $15-$35.

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Some landlords choose to waive the application fee in an attempt to attract more applicants.  I strongly advise against this. Anyone who is serious and qualified to rent from you will not have a problem paying a nominal fee to submit an application.  Charging an application fee will help filter out the people you don’t want as tenants.

How do you collect an application fee and run a background check?

There are a number of tools on the market to help you screen potential tenants, but I strongly recommend Buildium.

Buildium makes tenant screening incredibly easy, and you get the results quickly.  However, Buildium does a lot more than just tenant screening.

You can easily collect application fees and rent payments online.  Buildium also allows you to promote your vacant rental properties on major real estate sites with ease. I use Buildium for all my rental property management, and I suggest you do as well.  Learn more about Buildium.

How much should a security deposit & application fee be?

The amount you charge for a security deposit & application fee, apart from what the law allows, will really depend on the location, the type of property and what the results of the tenant screening look like.  

While the average application fee is around $15-$35, you may want to charge more for the security deposit if you feel an applicant would make a higher risk tenant.

Click on your state below to learn more about security deposit laws and rental application fee laws.

Alabama Alaska Arizona
Arkansas California Colorado
Connecticut Delaware Florida
Georgia Hawaii Idaho
Illinois Indiana Iowa
Kansas Kentucky Louisiana
Maine Maryland Massachusetts
Michigan Minnesota Mississippi
Missouri Montana Nebraska
Nevada New Hampshire New Jersey
New Mexico New York North Carolina
North Dakota Ohio Oklahoma
Oregon Pennsylvania Rhode Island
South Carolina South Dakota Tennessee
Texas Utah Vermont
Virginia Washington West Virginia
Wisconsin Wyoming

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