Landlords with established procedures and practices should have little
concern with this ordinance, so I'm a bit perplexed by the strong
reaction, other than the reaction of being regulated, which often
elicits strong reaction no matter what the ordinance or regulation. I'm
guessing that's the gist of the reaction we're seeing rather than a
reaction to specific problems with the ordinance.
I've pasted below the draft ordinance (it's possible it has undergone
additional changes/revisions since I last saw it) as well as existing
state law on application fees. It helps to have both so you get a full
context. But, as we lawyer say, to wit:
1. The ordinance does not prohibit the charging of an application
fee--in the view of the City Attorney, that would conflict with state
law. This ordinance is a compromise from earlier efforts to ban fees
outright, which Salt Lake City has done and Vermont apparently has also
done.
2. The ordinance prohibits landlords from collecting numerous
application fees for a single apartment, cashing them all and only using
one or two to screen and find a tenant. To me, that's a sloppy if not
fraudulent business practice that hurts tenants. Good landlords with
established practices hardly do this. Besides, formal background checks
are done in the matter of hours, not days, so rejecting a tenant based
on a formal screening does not take long--I speak from experience with
Project 504 having been placed in the shoes of a landlord for several
properties and having used Landlord Protection Agency as our tenant
screening service. [Aside: In response to Dennis Plante's question,
generally, landlords use one of about eight or nine different local
tenant screening companies, which provide a wide range of services, from
simple eviction case screening to full out national criminal history
searches. There is also a more recent proliferation of internet-based
screening companies that offer similar services. Generally, the major
credit checking companies are NOT used directly for tenant screening].
I do have some sympathy for landlords (and low-income) tenants in the
application of this provision, in that it makes the actual collection
and payment of the fee complicated for tenants who do not have reliable
transportation or phone, and/or lack of a formal bank account. For
example, when a landlord collects one fee, no other fee can be
collected. The tenant who has bussed her way over to the landlord's
office to drop off an application fee must return home with the money
order or cash and figure out transportation as well as communication
issues to resubmit it later if the landlord rejects the tenant whose
application is pending. To me, that's a difficulty that I believe will
be bypassed (illegally) by landlords and tenants who agree to collect a
fee but 'hold' it to see if the pending application is approved. Again,
it's illegal under the ordinance, but I imagine this will be a common
practice given the practical realities of tenants and landlords in
"collecting" a fee.
3. The ordinance requires upfront written criteria to be given to the
tenant so that the tenant can make an informed choice about submitting
an application. Again, good landlords with established practices should
have no problem with this, and the cost is minimal if the landlord does
not already have this criteria printed up in a checkist or some otgher
form. Any landlord who does not have such criteria is, in my mind, not
quite getting the business of being a landlord. Any tenant who submits
an application and application fee when they know they do not meet the
criteria is, to the same tune, not getting what it means to be a good
consumer/tenant.
4. The cost of landlord screening through various sources ranges from
$18 to $50 per person, depending on what the landlord wants to screen
for. Superdeluxe screening may go beyond $50. Allowing a $25 charge
either covers the expense or splits the difference, and the landlord is
better able to spread costs across tenants (and the vast majority of
tenants would support a small increase in rent if it meant better and
more focused screening practices). I see the cap on fees as a fair
compromise.
A quick comment about Steve Brandt's note of criticsm toward his
colleague: the story did indicate the tenant had an earlier eviction
case in March and had disclosed that to the landlord.
Gregory Luce
St. Paul
__________________________________________
City Ordinance:
Minneapolis Code of Ordinances, Chapter 244, Article XVI, Rental
Dwelling Licenses
To be added to 244.1910, Licensing Standards
(15) Rental Application Fees
a) Before taking a rental application fee, a rental property owner must
disclose to the applicant, in writing, the criteria on which the
application will be judged.
b) If the applicant was charged an application fee and the rental
property owner rejects the applicant, then the owner must, within 14
days of accepting the fee, notify the tenant in writing of the reasons
for rejection, including any criteria that the applicant failed to meet,
and the name, address, and phone number of any tenant screening agency
or other credit reporting agency used in considering the application.
c) No rental applicant may be charged more than $25 to apply for rental
unit.
d) If a rental applicant has paid an application fee for an available
unit, the rental property owner may not collect another application fee
for that unit unless the first applicant has been screened and rejected
for the unit, or the first applicant has been offered the unit and
declined to take it.
e) Violation of this subsection, 244.1910 (15), may result in an
administrative violation fee of $200, or in the denial or revocation of
a rental license.
State Law:
504B.173 Applicant screening fee.
Subdivision 1. Limit on number of applicant screening
fees. A landlord or the landlord's agent may not charge an
applicant a screening fee when the landlord knows or should have
known that no rental unit is available at that time or will be
available within a reasonable future time.
Subd. 2. Return of applicant screening fee. If the
landlord or the landlord's agent does not perform a personal
reference check or does not obtain a consumer credit report or
tenant screening report, the landlord or the landlord's agent
shall return any amount of the screening fee that is not used
for those purposes. The screening fee may be returned by mail,
may be destroyed upon the applicant's request if paid by check,
or may be made available for the applicant to retrieve.
Subd. 3. Disclosures to applicant. A landlord or the
landlord's agent, prior to taking an application fee from a
prospective tenant, must disclose on the application form or
orally the name, address, and telephone number of the tenant
screening service the owner will use, unless the owner does not
use a tenant screening service.
Subd. 4. Remedies. In addition to any other
remedies, a landlord who violates this section is liable to the
applicant for the application fee plus a civil penalty of up to
$100, civil court filing costs, and reasonable attorney fees
incurred to enforce this remedy.
-----Original Message-----
From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On
Behalf Of Dennis Plante
Sent: Wednesday, September 22, 2004 9:49 AM
To: [EMAIL PROTECTED]; [EMAIL PROTECTED]
Subject: Re: [Mpls] Minneapolis to restrict rental application fees.
David Brauer Wrote:
Bill - as one who lives near "problem tenants" (who were later evicted),
I'm
sympathetic to property owners' concerns about over-regulation.
However, reading the Strib article about the renters who paid over $100
for
four application background checks gave me pause. It seems to me the
property owners need to pool their information and resources to lower
background-check fees (for example, one fee good for all applications).
Otherwise, some regulation seems needed. $100 or more for the right to
get
an apartment seems usury for many poorer renters.
Dennis Plante Responds:
Someone must bear the costs associated with the pooling of resources to
reduce the costs to renters in submitting rental applications. Who
bears
the cost? In the current situation, it's the specific renter looking
for
the apartment.
For meticulous landlords operating in poorer neighborhoods that are
actually
trying to be both good business people and good neighbors to the
community,
screening tennants is a costly process.
Maybe it is a trend that will unfold in the future. One application fee
covers all properties. I don't see it happening however, unless
government
is willing to subsidze the program, or a new industry is spawned, which
underwrites (finances) landlords and tennants for the rental
transaction.
Otherwise, if such an ordinance is passed (limiting application fees),
the
costs will eventually get passed-on to the very renters we're trying to
protect - those that are honestly trying to get their feet back-on the
ground, but have "bumps" in their past credit history.
The question begs to be asked, why DID the woman in the story have to
submit
4 applications to get an apartment? And who should pay for this
process?
Dennis Plante
Jordan
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