When applying for an apartment rental, most landlords require payment of an admin fee, also sometimes called an application fee. This fee helps cover the costs associated with processing a rental application. But what happens if your application is denied - are you entitled to a refund of the admin fee?
In this article, we will explore whether apartment admin fees are refundable if a rental application is denied.
What is an apartment admin fee?
An apartment admin fee, also known as an application fee, is a fee that landlords or property management companies charge tenants who are applying to rent an apartment or rental unit. Admin fees help cover the costs incurred by landlords when processing and reviewing a tenant's rental application.
Fees typically need to be paid upfront as part of the application process and are usually non-refundable. Admin fees generally range between $75 to $100 but can be higher or lower depending on the landlord and local laws.
Related: What Is A Re-letting Charge?
When do you pay the admin fee?
Tenants usually pay the admin fee when first submitting their rental application. Once received, most landlords will take the apartment off the market and begin processing the application. It typically takes one to three business days to get an approval decision. By paying the fee, the apartment is reserved for the applicant during the review period.
Are admin fees the same as application fees?
Yes, apartment admin fees and application fees are effectively the same thing. Both terms refer to the upfront, non-refundable fee charged by landlords to cover application processing costs like credit and background checks. Landlords may use either term interchangeably.
Is the admin fee refundable if the application is denied?
No, apartment admin fees are generally not refundable even if a rental application is ultimately denied. When the fee is paid upfront, tenants are paying landlords to undertake the time and resources needed to review their application qualifications.
This can include things like running credit and background checks, speaking to references, and more. Since landlords incur these costs whether an application is approved or denied, the fee is non-refundable and is kept by the landlord to offset application processing expenses.
Admin fee vs. security deposit
While similar upfront fees, the admin fee and security deposit serve different purposes. The admin fee covers costs associated specifically with application review. Meanwhile, the security deposit is collected to cover potential damages if the tenant breaches the lease agreement. As long as the tenant fulfills lease obligations, the security deposit is refundable upon move-out. But the admin fee is always non-refundable.
Are admin fees legal?
Admin fees are considered legal in most areas as long as they remain reasonably priced and landlords use the funds only for permissible application-related purposes. However, some states and municipalities place caps on maximum admin fee amounts that can be charged to tenants. For example, in New York the cap is $20. Fees are an important way for landlords to recoup costs of vetting new tenants.
Why do landlords charge admin fees?
Processing rental applications involves various administrative tasks for landlords like reviewing submissions, running background and credit checks, contacting references, and more. These activities require both time and money on the landlord's part.
The non-refundable admin fee is meant to offset some of the inevitable expenses associated with bringing new tenants on board. This allows landlords to properly vet potential renters without shouldering 100% of application costs themselves.
Conclusion
In summary, apartment admin fees help landlords cover the price of evaluating tenants and are almost always non-refundable. This is because the costs incurred in reviewing an application exist whether or not the rental is approved. Unless local laws mandate otherwise, tenants typically will not get their admin fee returned even if an application is denied in the end.
