State News

I want my money back’: Rental application fees rampant despite Vermont’s prohibition

By Tik Root/VTDigger

When Rae Garcia moved to Burlington for work earlier this year, she knew she would be entering a frenzied housing rental market. But what she didn’t see coming was the deluge of application fees.

“Every place has asked for one,” said Garcia, 42, explaining that the rental applications she submitted have ranged in cost from about $20 to as much as $100 apiece. “There was a point where I stopped applying because I couldn’t keep paying fees.”

Garcia said she has spent at least $400 on application fees and yet remains without a long-term rental. She finds the process particularly dejecting, she said, because she “thought Vermont had a rule against this.”

She’s correct.

Vermont, in fact, has one of the country’s strictest prohibitions on application fees, outlawing them entirely. The law has been in place for more than two decades. But a VTDigger investigation found that rental fees remain rampant and that affected applicants across the state could be eligible for refunds.

“It’s a big problem,” said Jack McCullough, an attorney with Vermont Legal Aid. Landlords, he said, have been known to collect fees for each of the potentially dozens of applicants for a single listing. “The housing market is so tight and tenants are so desperate they don’t have a choice but to pay illegal fees.”

VTDigger has documented numerous rental listings across the state from at least five management companies that included an “application fee,” with the amount varying considerably. Fusion Property Management, for instance, charges $20, while Strong Will Property Management has a $37 fee, according to their applications. One listing on Facebook this spring, for an apartment in Winooski, asked for a $350 “application, credit check and administration fee.”

Many Vermonters have taken to social media to complain about the fees they’ve encountered, or paid, during the rental application process. According to documents released as part of a public records request, the consumer assistance program within the Attorney General’s Office has received at least eight complaints about the issue this year.

“I was charged no less than $100 by multiple property management companies for application fees,” read one consumer complaint. “I want my money back.”

While the Attorney General’s Office confirmed that it “is actively investigating a matter involving residential rental application fees,” there is no evidence that the state has yet enforced the application fee law. “I’m not aware of any, at least in recent memory, lawsuits or settlements about this issue,” said James Layman, assistant Vermont attorney general in the public protection division. “[It’s] not near the top of the list of the type of complaints that [the consumer assistance program] is getting.”

That said, all consumer protection complaints sent to the attorney general are forwarded to the entity in question for a response, which appears to have had at least some effect. Real Property Management Sterling, for instance, eliminated fees after receiving a complaint this spring.

“It’s the law. So we stopped doing it,” owner John Borch said of the fees that the company previously charged. Since the change, the number of applicants he’s seen has increased “quite a bit,” he said. As for whether the company would refund all the fees that customers paid before the change, Borch said, “I don’t have any further comment on that.”

The fees remain prevalent, in part, because a lot of people don’t know about the law. “Many landlords aren’t aware that they aren’t allowed to charge application fees,” McCullough said. Applicants may not know either, and even if they did, a prospective renter may fear that pushing back against a landlord will jeopardize their chances of securing an apartment.

But some landlords who appear to be aware of the law nevertheless charge fees.

In September 2021, Vermont Legal Aid sent a letter to Stone & Browning Property Management about its $25 application fee, writing, “You must stop as this is unlawful in Vermont.” After a consumer assistance program complaint was filed against the company this August, owner Reuben Stone responded that he issued a refund “while my company still incurred the cost.” Nonetheless, the company’s listings continue to show a $25 application fee.

SD Ireland also faced a consumer complaint to the attorney general for charging a $55 application fee. While that complainant chose not to apply because of the fee, another SD Ireland applicant, who asked to remain anonymous, said they did pay $110 (one fee each for them and their partner). The applicant said SD Ireland issued them a refund after they contacted the company and cited the law. But in recent listings, the fee still appeared on the company’s applications.

Farrell Properties and Strong Will Property Management also received consumer assistance program complaints and still show fees on their applications of $25 and $37, respectively.

Strong Will did not respond to multiple requests for comment. Representatives from Farrell, SD Ireland, Fusion and Stone & Browning all told VTDigger that their companies’ fees go toward background and credit checks but the third-party platform they all use — called AppFolio — uses the term “application fee” and won’t change the language.

“I’ve tried. They won’t change it,” said Stone of Stone & Browning Property Management. He said that the application includes a disclaimer about how the fees are used. “That’s the workaround we have at the moment.”

AppFolio did not respond to multiple requests for comment.

Experts, however, say that the language around rental fees is more than semantics. Stakeholders differ on what kind of fees — if any — Vermont statute allows.

“Vermont state law says that application fees are illegal but it doesn’t specify what an application fee is,” said Jessica Hyman, the associate director of statewide housing advocacy at the Champlain Valley Office of Economic Opportunity, also known as CVOEO. “There’s some debate about that.”

Vermont Legal Aid insists that all fees connected with a rental application are illegal, including background or credit checks. McCullough — who remembers being “in the room while the Legislature was working on this bill” — recalls a proposal at the time to allow landlords to pass on the “actual cost” of a credit report, but the measure never made it into the final language.

Rep. Tom Stevens, D-Waterbury, who chairs the House Committee on General, Housing and Military Affairs, said that the law’s intent is to spare renters from paying fees when they are applying to rent. “The language is plain — no fees for application,” he said.

The Vermont Landlord Association agrees that landlords should not label charges as “application fees” but contends that background or credit check fees are allowed under the law. Association director Angela Zaikowski compared the fees to those that banks charge when a person applies for a mortgage. She pointed to longstanding language in CVOEO’s Vermont renters guide — the recent versions of which the association has co-authored —  as saying landlords are able to charge them.

“It seems that we have a fundamental disagreement about whether landlords should be able to collect that charge to begin with,” Zaikowski said of Vermont Legal Aid’s stance. And, she said, if the Legislature were to reopen the issue, the association would push for the fees to be permissible. “If there was legislative action, we’d be asking for that carve-out.”

Zaikowski said landlords should be able to show that credit check fees are being used for that purpose. “If a landlord is collecting a fee for a credit check and they aren’t running a credit check,” she said, “that money should be returned.”

Stone agreed and emphasized that the credit-check fees are not a profit center for his company. But, he said, Stone & Browning has processed more than a thousand applications in the past year alone and the company couldn’t afford to pay for all those background and credit checks itself.

“It can add up to be a very large cost,” he said. He acknowledged that background and credit check costs could be passed on to the property owners, but said “it’s not going to be a fun conversation to have.”

The state Department of Housing and Community Development declined to take a position on what constitutes an application fee. “This is an undefined, unclear, untested sort of situation,” said Commissioner Josh Hanford, who didn’t take a stance on how the rental fee statute should be interpreted. “That’s for the lawyers, the courts and the Legislature to decide.”

The Attorney General’s Office also declined to weigh in on the debate, citing its ongoing investigation, which it said does involve “the actual costs of credit and background check fees.”

But Layman, the assistant attorney general, encouraged any renters who think they were charged an application fee to file a complaint via the consumer assistance program. And, he said, anyone who was charged a fee deemed illegal within the six-year statute of limitations should be entitled to a refund. A landlord, he added, could also be subject to a fine of up to $10,000 per incident for violating the state’s Consumer Protection Act.

Those remedies, though, aren’t always easy to pursue. The costs of filing a lawsuit or confronting a landlord could far outweigh the amount of money in question, said Maryellen Griffin, an attorney with Vermont Legal Aid.

“You can’t be out there as a person who is antagonistic to landlords,” she said.

Hanford would like to see a policy debate about this issue. Stevens said that if the intent of the current law isn’t being followed, it would be appropriate to address the problem. “We need to take a deeper look at them for sure and we need to get it straightened out,” he said.

In the meantime, prospective renters continue to face fees when applying to rent housing in Vermont. “It really is a barrier to people finding homes,” Griffin said. “It’s keeping people homeless.”

Taylor DiMaggio, 22, was crashing with friends and living in hotels last year when she received a housing assistance voucher that allowed her to start looking for an apartment near White River Junction. She said she came across roughly half a dozen listings that charged a fee, but she could only afford to apply for one of them — and even that was with borrowed money.

DiMaggio paid $25 for “tenant screening” to Real Property Management Beacon, which is based in Lebanon, New Hampshire and lists some properties in Vermont. She didn’t end up getting the apartment and it took her weeks to find housing.

While she was glad not to pay a fee for that application, DiMaggio said her search could have been quicker without fees because she would have applied to more places.

“I want my money back if I can,” she said. But more importantly, DiMaggio added, “I want it to stop so it won’t take away from people’s money to have a home.”

After VTDigger contacted the company, owner Weston Thayne said he would revisit whether to charge fees on Vermont properties with his lawyers and, in the meantime, adjusted them to zero.

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