New York, NY · Member since 2014 · 146 posts · 16 votes
Okay so I know I can't charge a fee for this in MA (so stupid) HOWEVER can I have an intermediary charge a fee?
For example can I tell them I only accept credit reports done by a specific company? I don't want to pay for the credit report for tenants and I don't want them supplying me their own report.
Landlord and Rehabber · Newton, MA · Member since 2010 · 2k+ posts · 877 votes
11y
@Geo A. I agree with @Steve Candor 's citations an interpretation of an "application" fee. I wouldn't do it!
However I have seen people charge an "administrative" fee. Subtle I know, but there is case law saying application fees are a no no.
This administrative fee terminology was blessed supposedly by multiple attorneys and Coakley's office.
In a different approach I have heard several arguments that you could use a service such as SmartMoves to have the tenants basically buy their own report and provide you access. Difference than charging them then running the credit is that they buy it themselves and they can use it multiple times with any place they apply too.
Rental Property Investor · Madrid, Spain · Member since 2014 · 134 posts · 18 votes
11y
Who told you can't? you're allowed to have an "application fee" for around $30 I believe. You can do with it whatever you want. Usually credit reports + background check are around $20-25. I do that for all my tenants who submit applications. I would have been broke if I paid it myself.
Landlord and Rehabber · Newton, MA · Member since 2010 · 2k+ posts · 877 votes
11y
@Geo A. I agree with @Steve Candor 's citations an interpretation of an "application" fee. I wouldn't do it!
However I have seen people charge an "administrative" fee. Subtle I know, but there is case law saying application fees are a no no.
This administrative fee terminology was blessed supposedly by multiple attorneys and Coakley's office.
In a different approach I have heard several arguments that you could use a service such as SmartMoves to have the tenants basically buy their own report and provide you access. Difference than charging them then running the credit is that they buy it themselves and they can use it multiple times with any place they apply too.
Haverhill, MA · Member since 2009 · 293 posts · 157 votes
11y
I'm with @Shaun Reilly on this one. Here's the full outline of the courts decision explaining what you can and can't charge in mass.
"An important ruling has been issued by the Massachusetts Federal Court that has big waves in the residential management community - many of the commonplace "fees" charged to Tenants and Prospects are now unlawful. This includes: move-ins fees, application fees, and up-front pet fees. The decision on August 26th, 2014 against Equity Residential, which manages approximately 6,680 units in Massachusetts, affects not only the bottom line, but the way many communities conduct their leasing.
The decision clarifies M.G.L. c186, s. 15B - the law that addresses security deposits and payments. This law prevents any kind of "up-front charge" that is not specifically listed in the statute, even if that fee is deferred to a later point of the Tenant's occupancy (ie, second month).
The Effects to Massachusetts Property Managers are:
No Application Fee
No Amenity Fee / Amenity Use Fee / Move-In Fee
No Community Fee
No Up-Front Pet Fee
Monthly Pet Fees are permitted: "The monthly pet fee is not incurred up front, but rather each month during which the tenant owns a pet. Because the plaintiffs became obligated to pay the fee after they were already tenants, they may not turn to section 15B(1)(b) for relief."
So, what is allowed under 15B(b)?
Rent for the first full month of occupancy;
Rent for the rent for the last full month of occupancy calculated at the same rate as the first month;
A Security Deposit equal to the first month's rent...; and
Purchase and installation cost for a key and lock.
IREM Chapter 4 recommends that our property management colleagues perform a thorough evaluation of all leasing and marketing materials. Staff should be made aware of the changes as soon as possible. If you have any questions, we suggest you consult an attorney.
Rental Property Investor · Madrid, Spain · Member since 2014 · 134 posts · 18 votes
11y
I still think as @Shaun Reilly mentioned that you can find a loop hole by having them pay for it themselves (e.g. Buildium and many other PMS allow you to enter an email and have the prospective tenant pay for the credit check). It's not really an "application fee" it's a "credit check" that they're willingly paying for themselves.
Rental Property Investor · Madrid, Spain · Member since 2014 · 134 posts · 18 votes
11y
Not a lot but still, I get a high percentage of people wasting my time with really bad checks making me wonder why did they even bother submitting an application. As I mentioned, I use Buildium and I usually give them the option to receive the credit / background check via email and have them pay for it online.
North Andover, MA · Member since 2013 · 8 posts · 2 votes
11y
Steve, with regard to application fees, two Massachusetts courts have concluded that section 15B(1)(b) does not authorize landlords to charge prospective tenants an application fee. See Dolben Co. v. Friedmann, No. 10034, 2008 WL 81549, at *4 (Mass.App.Div. Jan.2, 2008); Broad St. Assocs. v. Levine, No. 12–SP–2041 (Northeast Housing Ct. July 30, 2011).
MGL c.186 § 15B(1)(b) states that “at or prior to the commencement of any tenancy, no lessor may require a tenant or prospective tenant to pay any amount in excess of the following: (i) rent for the first full month of occupancy; and, (ii) rent for the last full month of occupancy calculated at the same rate as the first month; and, (iii) a security deposit equal to the first month’s rent provided that such security deposit is deposited as required by subsection (3) and that the tenant is given the statement of condition as required by subsection (2); and, (iv) the purchase and installation cost for a key and lock."
Keep in mind that there are a number of other fees frequently imposed on tenants, which are actually illegal in Massachusetts. This list includes, but is not limited to: Amenity Fees/Move-in Fees (see Hermida v. Archstone, 826 F.Supp.2d 380, 384 (D.Mass.2011); Community Fees ; and Pet Fees: either (1) up-front deposits, or (2) monthly fees (under Section 15(1)(b)).
Marlborough, MA · Member since 2017 · 2 posts · 0 votes
9y
Is there a legal verdict on this? Can a landlord use a website like Cozy.co and have the Tenant pay for their own credit/background check on that site, and have the report delivered to me, the landlord? This seems like a legal grey area...
Rental Property Investor · Leominster, MA · Member since 2016 · 15 posts · 0 votes
9y
@Shane P. did you find any other info on using cozy and having the tenant pay the credit and background check? We are using cozy for online payments with inherited tenants but are about to do our first screening to fill a vacancy.
Marlborough, MA · Member since 2017 · 2 posts · 0 votes
9y
I spoke to a couple attorneys. The consensus from them was that it is likely fine to do in MA, however they admitted that it was a grey area. Seems like a 100% decisive answer does not exist...