Minnesota applicant screening fee law: no cap, but a receipt, a disclosure and a refund
Minn. Stat. 504B.173 sets no dollar amount for an applicant screening fee. Instead it controls when you may take one, requires written disclosures before you do, and returns the fee when the applicant is rejected for a reason that was never listed.
When can't you charge a fee?
Subdivision 1 lists three limits. You may not charge a screening fee when you know, or should know, that no unit is or will be available within a reasonable future time. You may not collect or hold a fee without giving a written receipt on request, and the receipt can be built into the application form. And you may not use, cash or deposit a fee until all prior applicants have been screened and rejected, or offered the unit and declined it.
That third rule changes how applications work. A check taken from the fifth applicant sits uncashed until the first four are resolved.
What must you disclose?
Subdivision 3 says that if you accept a screening fee, you must disclose in writing before accepting it the name, address and telephone number of the tenant screening service you will use (unless you use none) and the criteria on which the rental decision will be based. After a rejection, you must tell the applicant within 14 days which criteria they failed to meet.
When must you return the fee?
Subdivision 2 requires a refund in two cases: the applicant is rejected for any reason not listed in your required disclosure, or a prior applicant is offered the unit and agrees to rent it. Separately, if you do not perform a personal reference check or do not obtain a consumer credit report or tenant screening report, you must return any part of the fee not used for those purposes. The refund can be mailed, made available for pickup, or destroyed at the applicant's request if paid by check.
Example a made-up landlord takes a $45 fee, discloses the criteria and orders a $30 screening report. The applicant is rejected for a reason that was not in the disclosure. The whole $45 must be returned. If instead the applicant had withdrawn before any report was ordered, $45 minus nothing used would come back.
Pending eviction cases and remedies
Subdivision 3a bars denial based on a pending eviction action, a court file that is not public, expunged or destroyed, or an eviction action that has not resulted in a writ of recovery of premises and order to vacate. A landlord who violates the section is liable for the screening fee plus a civil penalty of up to $100, civil court filing costs and reasonable attorney fees (subdivision 4). An applicant who gives materially false information is liable to the landlord for damages plus a civil penalty of up to $500, filing costs and attorney fees.
A practical order of operations
Put the steps in this order and the statute largely takes care of itself. First confirm a unit is or will soon be available. Next publish your written criteria and name your screening service. Then take the fee, and give a receipt when the applicant asks. Keep each fee uncashed until every earlier applicant has been screened and rejected, or has declined an offer. After the decision, send a rejection with the failed criteria inside 14 days, and return any unused part of the fee. A short checklist saved with each application makes the record easy to produce if a tenant questions a charge later.
Handling it in DoorKeeping
Each unit's public application page can show your written criteria and screening service before any fee. DoorKeeping logs the date of each application, so you can see who is first in line and hold the later fees uncashed. Rejections can quote the criterion that failed, drafted for your approval. DoorKeeping never holds your money and sends a payment only when you approve it. This is general information, not legal advice. Check the current statute or ask a local attorney before you rely on it.
Sources
Questions
- Is there a cap on application fees in Minnesota?
- The statute names no amount, but the fee cannot be taken when no unit is available and must be returned in the cases the statute lists.
- When must a Minnesota landlord refund the fee?
- If the applicant is rejected for a reason not in the written disclosure, if a prior applicant accepts the unit, or for any part not used on a reference check or screening report.
- How fast must a Minnesota landlord explain a rejection?
- Within 14 days of rejecting the application, identifying the criteria the applicant failed to meet.