Application fees are one of those areas where inexperienced landlords follow common sense instead of the law, and pay penalties as a result.
The law for property owners and managers is clear. It states that prior to the beginning of a tenancy, no lessor may require payment for anything except first, last, security, and locks (MGL Ch 186 Section 15B).
Application fees, pet fees, cleaning fees, amenity fees, and all other charges are forbidden. But wait.
Largely because the realtors have a better lobby than we do, brokers can charge application fees (254 CMR 700).
This substantially muddies the waters, because the average renter doesn’t know the difference between a lessor and a broker. Renters ask everyone if they charge an application fee, as if it were okay for everyone to do so. Landlords are not brokers, so we cannot charge a fee.
What about when the tenant pays for their credit report?
Services like Cozy allow a tenant to log into a website, pay for their credit score, and have it sent to the landlord. Surely this is okay, because the landlord doesn’t collect the fee?
At a MassLandlords Springfield event, Attorney Stanley Komack of Record Title presented the results of his research into this matter. Prior to June 2017, there had not been case law in MA about Cozy or other services where the tenant was asked to pay an online service that sent credit information to the landlord.
However, in the opinion of Attorney Komack and five other attorneys on his local bench-bar, operating in the Western Division of the Housing Court, landlords would be putting themselves at risk if they require (rather than request) that a tenant use Cozy.
At time of writing, we were awaiting receipt of the results of a case where this matter was heard and decided against the landlord. Landlords should not require their applicants to pay a third party.
What about in the City of Boston?
As of September 2017, the City of Boston was providing misinformation that no one may charge an application fee. To the best our knowledge, no municipality has completed a home rule petition of the legislature to override state law in this regard. Brokers are still allowed to charge a fee in Boston. Landlords are still not allowed.
What If I’m my Own Broker?
We are not aware of case law that permits a landlord who is also a realtor to act as their own broker. The court would probably enforce the least favorable interpretation of the law, which is that a landlord-realtor is a landlord first and may not charge an application fee.