New laws are targeting application, late, and hidden charges in multifamily rentals
Landlord Fees Under New Scrutiny as States Tighten Rules
KEY TAKEAWAYS
- States are introducing new rules to limit or eliminate “junk fees” in rental housing, focusing on application charges, late fees, and hidden costs.
- Reforms in Vermont, California, and New York restrict screening fees, mandate transparency, and require refunds in specific cases.
- Colorado, Oregon, and Nevada have introduced strict limits on late fees and prohibited charges for routine landlord responsibilities.
- As federal efforts stall, state and local governments are becoming the primary regulators of non-rent charges in multifamily housing.
States Step In as Federal Action Stalls
Across the country, states are responding to growing concerns over “junk fees” in rental housing by tightening regulations, per Globe St. While federal action has slowed, state legislatures are moving quickly to protect tenants and clarify fee structures. According to a new National Consumer Law Center (NCLC) report, these state-level initiatives are reshaping the rental landscape and creating a complex patchwork of rules.
Application Fees Face Growing Restrictions
Many states are beginning their reforms at the start of the rental process—by curbing or eliminating application and screening fees.
- Vermont banned application fees outright, removing these charges from the rental process entirely.
- California set a $30 cap on screening fees and requires landlords to refund any unused portion. Additionally, landlords must provide a copy of the credit report if requested.
- New York prohibits most upfront charges beyond capped screening fees and obliges landlords to share documentation for any collected fee.
- Minnesota permits screening fees only if a unit is truly available. If a landlord doesn’t conduct a screening or select the applicant, they must issue a refund.
These measures are intended to prevent landlords from profiting off tenant applications, particularly in high-demand markets.
States Target Recurring and Hidden Charges
After addressing front-end costs, several states are also reining in recurring or less-visible fees that arise during a lease.
- In Colorado, landlords may only charge late fees if rent is more than seven days overdue. The state also caps late fees at the lesser of $50 or 5% of the past-due amount and bars any interest on those fees.
- Oregon ties permissible late fees directly to lease agreements, imposing firm maximums depending on how the fee is structured.
- Rhode Island now requires landlords to list all non-rent fees in the same lease section as the rent amount and give tenants at least 40 days’ notice before making changes.
- Nevada bars landlords from charging tenants for repairs or maintenance they are legally obligated to perform. Furthermore, landlords must offer a fee-free rent payment method before charging any “convenience” fee.
These rules aim to limit surprise costs and make it easier for tenants to understand the full cost of their lease.
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Transparency Rules Gain Traction
To further protect renters, several states are mandating clear disclosure of all potential fees before a lease is signed.
- New Mexico now requires landlords to disclose base rent and all anticipated charges in plain language when listing a rental.
- Utah enforces a similar rule, requiring landlords to list all screening criteria and non-rent costs before accepting payment.
- In both Hawaii and Maryland, landlords must promptly refund any unused screening fees and provide receipts and documentation upon request.
By focusing on transparency, these states aim to ensure that renters understand exactly what they’re paying for—before any money changes hands.
Local Governments Fill the Gaps
In addition to statewide reforms, some cities and counties are introducing their own rules. Montgomery County, MD, and Olympia, WA, for example, have implemented local measures to regulate rental fees more aggressively. These local actions often go beyond state laws, further complicating compliance for landlords operating in multiple jurisdictions.
Why It Matters
For multifamily operators and investors, this evolving regulatory environment presents new risks and responsibilities. With rules varying significantly across states—and even cities—property managers must stay updated and adapt quickly.
Moreover, the absence of unified federal standards has left a vacuum that states and localities are rushing to fill. As a result, landlords face increasing pressure to justify non-rent charges and operate with greater transparency.
Bottom Line
In the absence of federal regulation, states are taking the lead in defining what fees landlords can charge—and how they must disclose them. As this trend continues, property managers must pay close attention to local laws or risk falling out of compliance. Several leasing strategies are already adapting to this push for greater fee transparency in the multifamily market.
Source: CRE Daily
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