Applying for a Denver rental property often starts with paying a rental application fee. For many prospective tenants, the big question is what a rental application fee should cover and what it shouldn’t. This isn’t just another charge. The rental application fee charged is meant to reflect the landlord’s actual expenses incurred during the rental application process.
State and federal laws require that a landlord shall be upfront about how this money is used, giving both property owners and applicants a clear picture of where every dollar goes.
Let this post guide you through exactly what those fees include and what they never should.
What a Rental Application Fee Covers
Here are the allowable costs a rental application fee can cover for Denver rental properties. These charges should reflect only the landlord’s actual expenses incurred while processing the rental application and screening prospective tenants.
Screening and Background Check Costs
A rental application fee should reflect the landlord’s anticipated expenses for tenant screening. These include background checks, reviewing rental or credit history, checking eviction history, looking into a criminal history or arrest record, and searching the sex offender registry. Each of these steps helps determine if a potential renter can pay rent on time, has a good rental history, and meets fair housing laws.
Processing and Administrative Fees
Processing fees can be part of the application cost. This covers the proprietary screening system that a landlord or property manager may use to handle multiple rental applications at once. It also includes the review of the application date, verifying details for incomplete applications, and ensuring a good-faith effort to process every applicant on a case-by-case basis.
Legal and Verification Expenses
Reasonable attorney fees, landlord’s court costs, and court costs connected to a deferred judgment relating to a criminal conviction record can be part of the fee. The application process may also require verifying a driver’s license number, bank account details, rental history, and employment records.
What a Rental Application Fee Does Not Cover
Here are the expenses that a rental application fee cannot cover under Denver rental laws. These costs are unrelated to processing a rental application and should never be charged to prospective tenants.
Property Upkeep and Repairs
The rental application fee is not meant to cover repairs or maintenance for the dwelling unit offered or any other dwelling unit. These landlords’ costs are handled separately through rent or the security deposit.
Marketing and Vacancy Costs
Landlord’s costs for advertising, showing the property, or covering lost rent during vacancy should never be included in the application fee. These belong to general property management operations.
Lease Agreement or Security Deposit Charges
A lease agreement, security deposit, or other unrelated costs are separate from the rental application fee. Any unused portion not linked to screening must be returned to the applicant.
Unrelated or Bad Faith Charges
Charging for unrelated services, adding bad-faith fees, or including costs that do not match the average expense of screening is not compliant with fair housing laws. A landlord denies an applicant only for valid reasons, such as insufficient income, poor rental history, a deferred judgment, or a meritless claim.
Key Rules and Best Practices for Application Fees
These rules and best practices help Denver landlords handle application fees reasonably while staying compliant with rental laws.
Consistent Fees for the Same Dwelling Unit
If a landlord offers the same dwelling unit to different prospective tenants, the fee must be the same. This applies when multiple applications are reviewed for the same dwelling unit offered.
Required Disclosures and Receipts
Either a disclosure or a written notice must be given to explain how the entire amount of the fee is used. Applicants should receive an electronic receipt, with a paper copy provided if requested.
Nonrefundable Fee Requirements
If the fee is nonrefundable, it must be disclosed before the initial application. Applicants should be aware of this before paying.
How Property Management Ensures Compliance
Property management professionals, like Mavi Unlimited Property Management, help landlords stay compliant with both Colorado state and federal laws when handling rental application fees. They review the legal requirements, make sure the fee only covers the landlord’s actual expenses incurred during the screening process, and avoid charges that could be considered excessive.
These professionals keep detailed, accurate records, issue receipts to prospective tenants, and document every expense tied to the application fee. By making a good faith effort to ensure all costs are valid, transparent, and supported with proof, property managers protect landlords from potential disputes or legal penalties.
Get Application Fees Right and Keep Your Denver Rentals Compliant
Denver law requires rental application fees to directly reflect the landlord’s actual expenses from screening applicants. By keeping fees transparent, reasonable, and tied to genuine rental application needs, landlords protect themselves from legal issues and build trust with prospective tenants. Clear policies benefit both sides, making the rental process smoother from the start.
At Mavi Unlimited Property Management, we help landlords stay compliant while streamlining every step of the rental process. Call us today to learn how we can simplify tenant screening and protect your rental property.