Crying foul over rental screening fee

Rent it Right

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Sep. 16, 2010

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Rent it Right

Janet Portman
Inman News

Q: I was rejected by a landlord after I gave him a tenant screening fee and went through two interviews. I later learned that the owner was looking for someone who would commit to a two-year lease (I can't do that). Had I known about this requirement, I wouldn't have bothered -- and wouldn't have wasted my money paying the fee. Is there anything I can do about it? --Mikey M.

A: Careful landlords will include the length of the lease in their ad and certainly in any screening conversations. Like the rent, deposit amount and pets, the length of the lease is a key rental term that should be announced at the outset.

Doing so is actually a plus for landlords, as it saves them the time and trouble of interviewing and screening a prospect who, it turns out, can't (or won't) accept one of those terms.

By declining now, your landlord has wasted his time checking you out; and you have not only wasted your time but also lost the application fee.

Unless your state requires landlords to communicate the broad outlines of the deal beforehand, you may have a difficult time arguing that your fee should be refunded. Without such a law, you might try saying that you were misled into paying the fee, because nothing alerted you to this unusual two-year rental term (most leases last for a year).

Your theory would be that the landlord negligently induced you to hand over the fee, which is a contract of sorts -- in exchange for the fee, the landlord agrees to run the screening report.

Under basic contract law, if one side negligently (or intentionally) misrepresents its side of the deal, and that misrepresentation is significant, the other side can cry foul and ask that the deal be called off (and that the payment be returned).

But to get your money back, you may have to go to small claims court, where your recovery (at most, the screening fee) will not be worth the time and trouble it will take to bring the case.

One state has recently directly addressed this problem, giving landlords a heads up that they need to make their rental criteria clear from the start.

In Minnesota, landlords who don't tell tenants "the criteria on which the decision to rent to the prospective tenant will be based" are liable for the screening fee, plus a civil penalty of up to $100, civil court filing costs and reasonable attorney fees (should the tenant have to go to court to enforce his rights). (See Minnesota Statutes Ann. Section 504B.173.)

Under a law like this, "willingness to commit to a two-year lease" could be one of the selection criteria the landlord must disclose. By making landlords liable for court costs and attorney fees, Minnesota has given tenants an incentive to pursue this legal remedy if the landlord fails to disclose the rental criteria.

Once again, however, a reality check makes this arrangement less than perfect: Few lawyers will take a case involving such a small amount of money, so in practice, even though lawyers are allowed to represent litigants in small claims court in Minnesota, most tenants will be heading to small claims court alone. The most they'll recover is the $100 penalty, plus the cost of filing the suit.

There's a lesson here for you, which you've doubtless already taken to heart. If a prospective landlord has neglected to tell you about an important aspect of the tenancy -- be it the deposit, whether pets are allowed, or anything else that's important to you -- ask. And consider what this sloppiness tells you about what it's going to be like doing business with this landlord. Maybe you would be better off with a landlord who's got his act together.

Q: I'm a new landlord and use a lease form that says that the landlord may adopt and amend any "Rules and Regulations," and that the tenant will be bound by them. When the tenants and I signed the lease, I didn't have any rules, but now I realize that having a few rules would help. My tenants have protested, saying that because there were no rules at all at the beginning, I can't create them now. Is this correct? --Ken L.

A: The clause you describe is quite common in residential and commercial leases. In multifamily situations particularly, landlords find it very useful to have "housekeeping" rules that will make the community function smoothly. They don't want to have to negotiate every little change or addition, so they secure their tenants' agreement, at the outset, to go along with new or modified rules when they are announced.

The key to answering your question, however, is not whether you can present a set of rules that did not exist when the lease was signed -- as explained, you can, as long as your lease provides for this -- but the nature of the rules you now want to announce. These rules must be relatively minor, dealing with such things as pool hours, laundry room use, lost key policies, and so on. You can't use a set of house rules to make major changes that have a significant effect on the tenant's ability to use and enjoy the rental premises.

For example, a "house rule" imposing a new late fee or charging tenants to use the previously free pool or parking lot might not pass muster.

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