Can't Charge Application Fee in MA. Options?

Question

Hi all!

So in Massachusetts it's against the law to charge an application fee or to charge a prospective tenant a fee for a credit check.

So...

What do you do?  I really like SmartMove, but I can't say I'm interested in spending $35 on every possible applicant.  For all of my MA landlords and property managers, what are some ways to legally screen prospective tenants without losing your shirt in the process?

Nathan Gesner · Answer

Boy, you have to love these liberal states!

I would ask an attorney on this one. This ridiculous law says a Landlord can only collect four things from a new tenant: (1) first month’s rent; (2) last month’s rent; (3) a security deposit no greater than first month’s rent; and, (4) the cost of a new lock and keys. There may be a couple ways around this.

1. Require them to apply through a screening service. The screening service charges the fee, not the Landlord.

2. Increase their rent $3 a month which will pay you $36 a year. If you have two applicants, charge them an extra $6 a year. You don't have to say anything about this being an increase due to screening fees. Just move your rent from $1000 a month to $1003 a month and you will know you'll be reimbursed in the long run.

The other option is to sell that property and get out of the nanny state and move to a state where adults are still treated like adults. ;)

Paul Donoghue · Answer

@Mark Nolan,

this is the housing court website.

https://www.masscourts.org/eservices/home.page.2

Go visit them unannounced.  ask for references.

Ask for them to provide a credit report. It is free to potential tenants see url below.

https://www.annualcreditreport.com/index.action

Ask them are you going to find anything.

Good luck.

Dick Stevens · Answer

@Mike Hurney - Please see above question, I used the wrong tag in the original post.

Mike Hurney · Answer

@Mark Nolan Every year when we host the head of the Housing Courts to speak to us, he asks the same two questions:

1. Landlords, why aren't you checking Mass.gov housing site to see if your potential Tenants have ever been there? (I do & would Never rent to anyone who has been there. It's a big leap from a Tenant/Landlord disagreement to actually going to Housing Court) by the way Go to a session at your Housing Court...

2. Are you Landlords well-off, rich? Why do you come to our courts when you're owed 7 or 8 months of rent? You should be there when you're out the first month!

Zoltan Fagyal · Answer

I know everyone has their won system. The way I like to do it and it may be a gray area is that I tell applicants that I will be running background and credit checks and it's $35. If everything works out I will credit back the $35 when we sign the lease. People know their own background and credit history. If they know it's not good, they will not pay, just to hear it from me that it's not good. In other words, in a way they screen themselves. So far I have not run a background check and not refunded the payment.

But even if you refund it (if it doesn't work out) you still have a filter in place.

Kiet N. · Answer

@Mark Nolan

This is how i did before I learned about SM:

* Background:  applicant to submit BG which can be obtained from local / county police station.

* Credit: meet applicant in a public place with free wifi - tenant then pull the free credit report from the government official  anualcreditreport*com.  i would not accept a print out CR.

Robert Gilstrap · Answer

I would simply require them to be screened by a 3rd party company of my choosing. If that costs them money (and it will) then thats on the applicant. secondly, I would band together will several landlords and sue the state challenging the law that seems clearly unconstitutional on it's face. Lots of lawyers who would take that case for free just to make a name for themselves.

Cheryl Gleason · Answer

Hi Mark:

I am in MA as well have been in property management and an investor since 1992, please feel free to reach out, I have two methods, one is free and the other costs $3-$5.  Take care...Cheryl

Thomas S. · Answer

I am also not allowed to charge a fee for credit checks on tenants so I do 90% of my screening in advance of the actual credit check. Once I get to the final step of pulling a credit report they have already pass all other criteria. I then still charge the fee to cover the report, even though it may not be allowed, and to this date have never had a issue. Worse case you may have to say sorry and that you will never do it again. Generally I have developed a rapport of sorts with the applicant by that point and they are eagar to be approved.

Assuming you are thorough and only pull reports on applicants that have otherwise passed the real cost of a single credit report, or two for a couple, is minimal and should be considered simply as part of doing business. If for each turn over you are pulling numerous reports for separate applicants there is something wrong with your screening process.

Can't Charge Application Fee in MA. Options?

Most Popular Reply