What Fees Do I Have to Pay Before Signing the Lease?
You can expect to pay an application fee and deposit before you sign a lease for a new apartment. There may also be move-in, broker, and administrative fees.
Wherever you rent, you’ll almost certainly have to make several payments before you sign the lease. We've broken down the most common fees below, but make sure to check your local rental application laws as well. Some states place strict limits on how many fees landlords are allowed to charge prospective tenants.
Plus, it’s always a good idea to get something in writing—signed by both you and the landlord—that explicitly states the purpose of any fee you pay. That way, you won’t end up finding out a fee you thought was refundable, well, isn't.
Here's what you need to know:
- What are application fees?
- What are administration fees?
- What is an application deposit?
- What is a broker fee?
- Are pet fees allowed?
- What is a move-in fee?
- Is the security deposit paid before lease signing?
An application fee is intended to cover the cost of running a credit and background check on you, the prospective tenant. You'll submit this payment with the rest of your rental application.
It is usually non-refundable but this will depend on what it says on the application document as well as any state laws. Here are the states with regulations concerning application fees:
- New York law caps application fees at $20.
- Texas puts no limits on application fees but says that they must be refunded if the applicant isn’t accepted.
- California law caps application fees at $50.
- Colorado doesn’t impose a cap on fees but does require landlords to provide a written report detailing their screening expenses and refund whatever they didn't spend.
- Application fees are illegal in Massachusetts unless you rent through a real estate broker.
- DC: While DC law says that landlords have to give you a receipt for all upfront fees they can charge you however much they want
- In Washington there’s no cap on application fees, but they can’t exceed the landlord's expenses and are only allowed if they come with a written document explaining the landlord’s screening process.
An administrative fee is often charged in conjunction with an application fee when you apply to rent an apartment. Administrative fees are usually attached to larger complexes where a property management company runs the show. Individual landlords who manage their own properties don’t usually charge these kinds of fees.
Your state might impose certain regulations on admin fees that are designed to protect renters. For example:
- In New York, admin fees or any other processing fees are strictly illegal.
- California requires administrative fees and any other fees to go towards the security deposit.
- Administrative fees are strictly illegal in Massachusetts according to Massachusetts General Laws.
- All fees, including administrative fees, in Arizona should be assumed refundable unless it is explicitly stated that they are not.
Not to be confused with a security deposit, this is also known as a “good faith deposit” or a “holding deposit.” If you're interested in renting a particular apartment, the landlord or broker may ask you to put down an application deposit of several hundred dollars. This reserves the unit for you until you're ready to pay the security deposit and sign the lease.
Once you do sign the lease, this money should go towards paying your security deposit or first month's rent.If you decide to back out, the landlord is allowed to keep some or all of your application deposit to reimburse them for any financial losses. (Depending on how long the unit was off the market, they may have lost out on several weeks of rent or may need to put up new advertisements.) However, if the landlord decides not to rent to you for any reason—for instance, a low credit score—they must refund the entire holding deposit.
Broker fees paid by tenants are most common in New York City, although they also pop up in Boston. In most other U.S. cities, the landlord pays the broker fee—a commission the broker earns when they successfully rent out a unit. Most fees are equivalent to 12-15% of the annual rent, although less desirable units might have fees equal to one month’s rent. You'll pay this fee when you sign the lease.
“No-fee” apartments are ones where the broker fee has been paid by the landlord. This sometimes happens in new buildings that are trying to quickly fill up many empty units, although you can also find no-fee apartments offered by small landlords advertising their own properties.
If you have a roommate of the animal variety, expect to pay extra when you sign your lease. The three most common costs associated with animals in rentals are pet fees, pet deposits, and pet rent. Although they sound pretty similar, it's helpful to understand the distinctions. A pet fee is a one-time, non-refundable fee, usually between $200-600. A pet deposit is similar, except that it is refundable—unless your furry friend damages the apartment, in which case the landlord can keep the money to make repairs. Finally, pet rent is a monthly charge of $10-50 that's tacked onto your regular rent.
A security deposit is a sum of money you pay to your landlord or property management company when you sign a new lease, usually equal to one to two months' rent. (Some states actually limit how much money a landlord can request for a security deposit.) Think of it as insurance for the apartment owners. They can keep some or all of the money if you skip out on your rent or severely damage the apartment. But if you leave the unit as you found it—minus normal wear and tear—your landlord should refund your entire security deposit when your lease is up.
You can expect to submit the security deposit along with the first month of rent after your rental application has been approved and you have signed the lease.
A move-in fee is nonrefundable and paid when you sign a lease. Sometimes it’s used to offset the cost of a new tenant—updating mailboxes, changing directories, repairing damage to the hallway paint caused by movers—but other times it could just be a way to make extra money.
In some cities, such as Chicago, move-in fees sometimes take the place of security deposits. Although you’ll never get that money back, it’s usually a smaller fee than a security deposit—several hundred dollars, give or take—so you’re out less money in the short term. In New York, co-ops and condo boards may charge move-in fees in addition to security deposits.
The information provided on this website does not, and is not intended to, constitute legal advice.