Application Fee Receipt

Note: This article refers to a form that can no longer be used. Tenants cannot be asked to pay a broker fee unless they hired the broker themselves.

It used to be that a landlord could hire a third-party broker and pass the brokerage fees on to their tenants, including any application fees. The law now states that renters can only be charged a broker fee if they hire the broker. The tenant will never directly give you money for an application fee, so there is no need to have a receipt form.

Application fees, even when lawful from third-party agents, are always a gamble. Unless the apartment is in the top 10% of apartments by price point, most renters are not going to want to pay a broker they hired an additional application fee. In the lower tiers, only the most desperate will pay an application fee, if they even hire a broker in the first place.

Let's Look at the Economics of Fees

The viability of a fee varies by market. Many apartments in the Boston and Cambridge area can get away with charging fees for applications. Fees offset the cost of a CORI and/or credit check. They might cover some of the labor cost in processing the application, and they help the tenant assert to the landlord, "Yes, I should qualify for this place."

But in Boston and Cambridge, a $50 application fee represents a small percentage of the monthly rent.  They're a drop in the bucket. There's competition to get good apartments, so paying 2% more to get an application checked out may seem worth it to some applicants.

That said, if you as the landlord hire the broker, you’re on the hook for all of their fees, not the tenant. It doesn’t make sense for you to pay someone else’s application fee.

Weren’t Application Fees Always Illegal?

We like Richard Vetstein's summary of a recent class action lawsuit, filed against a large landlord, in which application fees, amenity fees and pet fees were all ruled illegal. This is not a specific interpretation of Massachusetts law. You can read the law yourself (this excerpt was current as of September 24, 2014):

(b) 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.

Period. Lessors cannot charge a pet fee, an application fee, or a "take it off the market" deposit. It's first, last, security and locks.

Brokers, on the other hand, can charge more fees than that - but only if the tenant hires them. If you hire a broker to rent out your apartment, you have to pay any and all broker’s fees, including any application fees that they have in place. (2025 Broker Fee Updates).

The question always arises, "What if I'm a lessor and a broker?" The answer is you are a lessor, so you cannot take anything more than the four items listed above. Only a third-party broker can charge an application fee, and only if the tenant, not you, hires them.