Does the law require that apartment application fees are nonrefundable or is this a property management or landlord decision?

There is no Texas law that specifically requires a landlord or property manager to charge a nonrefundable rental application fee. Nevertheless, a nonrefundable rental application fee (also called a rental application deposit) is a fee that landlords almost always request from prospective tenants.

The application fee is normally used by the property manager or landlord to cover the costs of checking your credit, rental history, and other administrative tasks related to your rental application. A rental application fee is usually nominal in comparison to the rent, with most landlords charging between $25-50. In the majority of situations, the rental application signed by the tenant states that the application fee is nonrefundable regardless of whether the application is approved or denied.

If you are concerned about the application fee, be sure to read the rental application form in detail to see whether the fee is nonrefundable. Assuming the application fee is nonrefundable, you may be concerned that your rental application will be denied and you will lose the application fee. If this is the case, you could try to negotiate with the landlord and request that the application fee be refunded in the event that your application is denied. A landlord who in bad faith fails to return a refundable application deposit could be liable for an amount equal to the sum of $100, three times the amount of the application deposit, and the applicant’s reasonable attorney’s fees needed to recover the deposit. However, the landlord is under no obligation to offer a refundable application fee and can refuse to consider your application without the accompanying nonrefundable application fee.

Also keep in mind that the application fee is different from the security deposit. The security deposit, which is normally much larger than the application fee, is designed to protect the landlord and secure performance of the tenant’s lease obligations. Unlike the nonrefundable application fee, the tenant is entitled to a refund of the security deposit if the tenant complies with the terms of the lease.

This article appears in August 27 • 2004.

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