lease-provisions

Part Three | Decoding Rental ‘Junk Fees’ | Recent State Legislation Regarding Upfront Rental Fees

Author: Kasee Godwin
Date: 07.27.2023

Decoding Rental ‘Junk Fees’ | Recent State Legislation Regarding Upfront Rental Fees

Welcome to the third part of our series, Decoding Rental ‘Junk Fees,’ where we delve into the evolving legislation surrounding upfront leasing fees in rental housing across various states in the United States. 

In this installment, we explore the impactful changes of recent efforts to address upfront fees and lower costs for residents. From East Coast to West Coast, we will examine how state governments are taking action to protect individuals from excessive charges and improve transparency in the rental process. Let’s delve into how different states are implementing crucial protections for renters in their housing markets.

Colorado: Reusable Applications

Colorado has made significant strides in empowering prospective renters. Enacted House Bill 1099 allows residents to reuse a rental application for up to 30 days without incurring additional fees. 

This move reduces the financial burden on renters, who often face costs associated with submitting multiple applications when searching for housing options. 

Additionally, House Bill 1095 limits fees when landlords fail to provide nonrenewal notices, curtailing the practice of disguising fees as “rent.” Furthermore, the law limits how property managers can mark renter costs for third-party services, ensuring transparency in all transactions.

Rhode Island: Restricting Rental Application Fees

Rhode Island enacted House Bill 6087 to curb excessive rental application fees. The law limits the fees charged to prospective residents beyond the actual cost of obtaining a background check or credit report, provided that the renter needs to furnish their own report. This legislative measure protects renters from facing unreasonable financial barriers when applying for rental properties.

Notably, it is crucial to recognize local and state apartment associations’ concerns about potential rental application fee restrictions. These associations argue that while transparency is essential and support for a cap is fair, limiting certain fees could hinder their ability to cover necessary operational costs, potentially affecting rental prices and housing availability.

Minnesota: Transparent Lease Agreements and Advertisements

Minnesota’s Senate File 2909 brings transparency to the forefront of rental agreements. The legislation mandates that landlords must clearly display the total monthly payment and all non-optional fees on the first page of the lease agreement and in all advertisements. By doing so, prospective tenants can easily discern the actual cost of renting a property, promoting a more honest and straightforward rental process.

Connecticut: Prohibiting Excessive Rental Fees

Connecticut’s Senate Bill 998 tackles excessive rental fees. The law prohibits landlords from charging residents for processing, reviewing, or accepting rental applications, ensuring that unjust charges do not burden renters during the application process. 

Furthermore, the legislation sets a cap of $50 on the amount charged for tenant screening reports, protecting renters from excessive costs related to background checks or credit reports. Additionally, the law prohibits move-in and move-out fees and specific fee-related lease provisions, including certain late fees tied to utility payments.

Maine: Limiting Rental Application Fees

Maine’s Legislative Document 691 protects renters by limiting rental application fees. Landlords are prohibited from charging application fees that exceed the actual cost of a background check, credit check, or other screening processes. Moreover, the law restricts landlords from charging more than one screening fee within 12 months, preventing potential renters from facing repeated and unnecessary financial burdens.

California: Promoting Transparency in Rent Disclosures

California’s Senate Bill 611 focuses on promoting transparency in rental transactions. The law mandates the mandatory disclosure of monthly rent rates, including payments, fees, deposits, or charges. Additionally, specific expenses are prohibited from being charged to renters, safeguarding them from hidden and potentially burdensome costs.

It is certainly worth noting that this has been met with concerns from local and state apartment associations. Industry officials express genuine concerns about the requirement to list all fees in rental advertisements. They worry that including optional fees could confuse renters and give an inaccurate impression of the actual costs. Certain expenses and fees, such as electricity, gas, water, WIFI, cable, telephone, satellite charges, parking, and others, cannot be precisely quantified upfront as they vary based on a tenant’s usage or individual choices. These challenges pose a dilemma for property managers in providing transparent information while accounting for the dynamic nature of these expenses. 

The Culmination of Efforts: Striving for Fairer Renting Practices

Across the United States, state governments are taking crucial steps to address upfront fees in rental housing. These legislative efforts aim to protect renters from excessive charges, promote transparency, and create a more balanced and equitable renting experience. These evolving laws signify progress toward a more renter-friendly landscape by empowering renters and promoting fairness in the rental process. 

However, it is important to acknowledge that these legislative efforts have not been without pushback from local, state, and national apartment industry professionals. Concerns have been raised about the potential unintended consequences of these laws on the multifamily housing industry and on renters.

One major concern voiced by industry professionals is the impact of limiting upfront fees on their ability to cover operational costs. Property managers and landlords have various expenses associated with processing rental applications, preparing units for new occupants, and providing essential services. They worry that capping or restricting certain fees might hinder their ability to sustainably manage rental properties, potentially leading to financial strain and implications for housing availability.

Another point of contention centers around the disclosure of all fees in rental advertisements. While transparency is seen as a positive aspect, industry professionals fear that including all fees, including optional ones, might create confusion for renters and appear misleading.

As discussions continue, striking a balance between the rights and interests of residents and the multifamily industry remains paramount. Collaborative efforts between policymakers, industry professionals, and resident advocacy groups are crucial in finding equitable solutions that address concerns while safeguarding the well-being and rights of all parties involved.

While the road to fairer renting practices may present challenges, continued dialogue, and proactive measures can pave the way for a rental housing market that prioritizes transparency, affordability, and equal opportunities for residents. By understanding and addressing the concerns of the multifamily industry, we can foster a rental landscape where renters’ rights are protected, property managers can thrive, and communities can flourish.

Don’t forget to read the series’ first and second parts, and remember to check the Qira Insights page for up-to-date multifamily and rental news.

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Kasee Godwin

Position: Director of Marketing
Social Networks

Kasee is the Director of Marketing for Qira. She has nearly 15 years of experience in the real estate marketing industry, including 10 years on the client side. In her spare time, she enjoys reading science fiction, exploring new wineries, and fostering Golden Retrievers.

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