For many renters, apartment application fees add up. Some are illegal

Sheila Sanchez Ortiz moved from Puerto Rico to New Bedford last year to start a new life with her two kids. On a limited income in a new city, she knew finding an affordable apartment would be a challenge. But she wasn't expecting to have to pay hundreds of dollars in fees — just to see the apartments.

“You want to see a place, first you have to pay," she said in Spanish. "I’d fill out an application, and nobody would even call me back."

Amid a region-wide housing shortage, advocates say application fees are on the rise, even when they're not allowed. Massachusetts is one of the only states where it’s illegal for landlords to charge application fees. But with little enforcement of the law, advocates say these charges are becoming an entry fee to finding an apartment.

Ortiz spent almost a year apartment hunting, she said, and paid application fees four times for places that did not work out. Interviews with multiple New Bedford-area renters suggest her experience is common — and some are paying these fees upwards of a dozen times.

Housing activist and real estate agent Carlos Betancourt spends much of his time helping low-income renters find apartments. He said the majority of places he sees charge application fees.

Betancourt explained how it often works: A listed apartment will come with an application fee of $25 to $70 — per adult. And, he said, that's frequently just to view the place. He remembers attending an open house where everybody interested in the apartment had to pay. The open house lasted three days.

Friday, Saturday and Sunday, "they were taking applications," Betancourt said. "One month later, they did another open house. So how many people went over there?”

The rules can be hard to understand, because brokers and real estate agents are permitted to charge application fees (even though they're often charging a month's rent for their services).

If brokers accept fees from multiple applicants and don't refund them to people who aren't vetted for the apartment, "it's unethical but it's legal," according to Andrea Park of the Massachusetts Law Reform Institute.

The MassLandlords website explains the restriction this way: "Largely because the Realtors have a better lobby than we do, brokers can charge application fees."

Adding to the confusion, scammers are taking advantage of apartment hunters, posing as landlords in online ads that call for fees with applications.

Exploitative application fees have become a problem in many cities. A national survey found nearly nine in 10 renters across the country face these charges. That’s in addition to a host of other so-called “junk fees” — for pets, amenities, late payments and other items — that together can jack up the cost of getting into housing.

Attorney Ariel Nelson of the National Consumer Law Center in Boston co-authored the study on junk fees. She said that, where allowed, application fees can be used for legitimate reasons — like to pay firms that screen criminal, rental and financial records. But renters have no way of knowing what they’re paying for, or if their money will be refunded if they're not selected for an apartment.

“Maybe they get a ton of applications for one unit, and they start going through the stack. They find someone who looks great, and they take them,” Nelson explained. “But did they refund everyone else's fees? Probably not.”

Some states set limits on application fees, but Nelson said Massachusetts and Vermont appear to be the only ones that bar landlords from charging them outright. Here, the only fees landlords can legally charge are first and last month’s rent, a security deposit and the cost of changing locks.

Jeffrey Turk is a local lawyer specializing in landlord-tenant issues. He argues the law is vague and in some situations doesn’t seem to prohibit landlords from charging certain fees.

"I've had several judges say that, 'The statute is so poorly written, I don’t know what’s intended,'" Turk said, adding, however, that he advises landlords it's not worth the risk to charge fees.

Advocates complain it’s often up to tenants to see that the prohibition on application fees is enforced. Ariel Nelson said that’s a tall order for low-income renters struggling to find an apartment. She wants to see attorneys general doing more enforcement.

The Massachusetts AG’s office said the most common complaints it receives involve landlord-tenant disputes. But a spokesperson told WBUR the office has no way to identify how many of the complaints are about fees.

Doug Quattrochi, head of the advocacy group MassLandlords, acknowledges that application fees have cropped up more. A highly competitive rental market is driving some of that, he said. In addition, some landlords feel justified charging for background checks, because it's increasingly difficult to evict bad tenants, and owners have to thoroughly vet applicants before handing over keys.

Going back 40 years, Quattrochi said, landlords barely screened applicants. "But now you need to find out everything you can about a renter."

Quattrochi said his advice to landlords is simple: you pay for the background check. It might cost $150 to vet three adult applicants, but that's the cost of doing business.

With landlords who ignore that advice, tenant advocates say renters can complain to the attorney general's office. They can also try to negotiate on the fees, or sue the landlord. But for renters desperate to find an apartment, those may not seem like great options.

"What good does it do to complain to a landlord that the application fee is unlawful," Quattrochi said, "when you're trying to sweet talk them into letting you sign a rental agreement?"