‘Oddball’ Move-in Fees Questioned

by Janet Portman, Inman News

A: This landlord has figured out a way to move some routine business expenses, which most landlords consider to be overhead, to their tenants’ accounts. These fees can add up to quite a hefty move-in cost, and in states that don’t limit their use, only the market will curb the landlord’s greed. If the move-in costs are so high that tenants look elsewhere, the landlord will be forced to lower them in order to attract applicants.

In a few states, charging fees for expenses related to move-ins is illegal. In California, costs associated with processing a new tenant used to be routinely imposed by a notorious San Francisco landlord, who defended his practice as legal under the state’s security deposit law. That law provided that money collected at the start of the tenancy, to remedy damage beyond normal wear and tear and to cover unpaid rent, must be refunded. Fine, said the landlord — these fees are not intended to be refunded, nor do they cover damage or unpaid rent, so they’re not in violation of the law. The state Legislature promptly amended the security deposit statute to state that security deposits include move-in fees, which made them refundable. Thus ended this landlord’s tidy profit center.

Assuming you are not clearly protected by law from this practice, is there anything you can do? Practically speaking, the last thing you want to do is to rent there, then immediately begin a court challenge to the practice. Your best bet is to size up the total amount of the rent, the market, and any available alternatives, then decide whether it’s worth your while to become a tenant. One way of thinking about the fees is to consider them as additional rent spread across the life of, say, a one-year lease. If the resulting monthly rent is still comfortably within market rates (and you have the cash to fork out), you may decide to rent there; but if not, look elsewhere.

What you’ll probably find is that the advertised rent is slightly below market rates (that’s how the landlord attracts interest), but when the fees are added and spread across a year’s stay, the rent rises to market level or above. The landlord is counting on hooking his prospects with a low rent (and a good presentation), and hopes that the added fees will be something prospects will reluctantly swallow after they’ve become attached to the rental.

Regardless of your renting decision, don’t put those fees out of your mind just yet. Especially if they’re excessive, they should be challenged. Your legislator needs to learn about this practice, as did legislators in Oregon recently. That state’s Legislature has passed a landlord-tenant bill (which the governor is expected to sign), which, among other things, limits the amount and purpose of move-in fees. Landlord groups supported the bill, figuring correctly that if landlords need to cover their overhead, they should do so straightforwardly with adequate rent.

Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of “Every Landlord’s Legal Guide” and “Every Tenant’s Legal Guide.” She can be reached at[email protected].

Copyright 2009 Janet Portman

See Janet Portman’s feature, Not All Violations Warrant Eviction.