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Minneapolis to regulate rental application fees   |   Re: Minneapolis to regulate rental application fees

Re: Minneapolis to regulate rental application fees
Write-in "Doug Mann" for School Board
Another Option for Minneapolis School Board Voters (2004 General Election)
by Doug Mann, 29 Oct 2004, Submitted to the Star-Tribune for publication 28 Oct 2004

Comments, Text of proposed ordinance, & state law
by Gregory Luce, 22 Sept 2004 (from mpls issues list)


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 theapplication 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 other 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 criticism 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.