Jul 29

There was a recent question about the legality of imposing a non-refundable $40 application fee in Wisconsin even if the prospective tenant was providing their own, current credit report.

ATCP 134.05(4)

(4) Credit check fee.

(a) Except as provided under par. (b), a landlord may require a prospective tenant to pay the landlord’s actual cost, up to $20, to obtain a consumer credit report on the prospective tenant from a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis. The landlord shall notify the prospective tenant of the charge before requesting the consumer credit report, and shall provide the prospective tenant with a copy of the report.

(b) A landlord may not require a prospective tenant to pay for a consumer credit report under par. (a) if, before the landlord requests a consumer credit report, the prospective tenant provides the landlord with a consumer credit report, from a consumer credit reporting agency that compiles and maintains files on consumers on a nationwide basis that is less than 30 days old.

Note: Paragraph (b) does not prohibit a landlord from obtaining a more current consumer credit check at the landlord’s expense.

Here, the $40 fee fails on two points.  1) It exceeds the $20 cap, and 2) You can’t charge a fee at all if the tenant is providing a copy of their credit report that is less than 30 days old.  Could the tenant forge a copy of their report that they are providing … sure.  So I would not rely on that report, but would run my own at my cost.  I would also compare the two copies as an honesty check.

How about if you call the fee something else like a processing fee?  Can you keep the money then? Again the Wisconsin landlord-tenant law is clear.

ATCP 134.02
(3) ”Earnest money deposit” means the total of any payments or deposits, however denominated or described, given by a prospective tenant to a landlord in return for the option of entering into a rental agreement in the future, or for having a rental agreement considered by a landlord. “Earnest money deposit” does not include a fee which a landlord charges for a credit check in compliance with s. ATCP 134.05 (3).

Some owners feel that they can ignore this and charge the fee to offset the rerental costs. What tenant will go after you in court because you kept 20 or 40 bucks that you may not have been entitled to?  The risk here is that if a tenant does sue,  you owe the tenants’ court fees and attorney’s costs.  So you are risking perhaps thousands of dollars to keep a couple of bucks here and there.

Personally, I find it more important to attract tenants and quickly fill vacancies with the best applicants than it is to recover the minimal amount of a credit report.  If I were looking for an apartment I would start with the ones that do not have an app fee.  That makes those owners charging the fees less competitive and they will lose more than the fees charged.  The old saying pennywise and pound foolish kind of fits here.

 

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