FAQs for Tenant Screening Fees
FAQs for Tenant Screening Fees
What you should know about Hawaii Revised Statutes § 521-46
In 2023, the Legislature considered a bill to impose a cap on the costs of a tenant screening fee. During the session, the Legislature removed the cap on costs. The law addresses the problem of landlords charging applicants more than the actual cost of a tenant screening fee to obtain information about the applicant. Under the new law, charges that exceed the costs of obtaining information about the applicant must be returned to the applicant.
The provision authorizing landlords and their agents to charge a tenant screening fee to cover the costs of obtaining information about an applicant takes effect on May 1, 2024.
“Landlord’ means the owner, lessor, sublessor, assigns or successors in interest of the dwelling unit or the building of which it is a part and in addition means any agent of the landlord.” HRS § 521-8.
No, the new law does not require a landlord to charge a tenant screening fee to any person who is applying to rent their residential property. Many landlords consider the costs of tenant screening to be costs that will be paid for out of the rent collected on the property. If you are a landlord and are considering renting out your property, you may wish to review the rental application forms used by your real estate licensee. If any provision of a contract between you and your real estate licensee requires you to charge a tenant screening fee, that provision may be unenforceable or void as a matter of public policy.
The new law allows tenant screening fees to be charged to an applicant who is eighteen years of age or older or an emancipated minor.
The law does not define who is, and who is not, an applicant. One commonly cited legal reference defines an applicant as “someone who requests something; a petitioner, such as a person who applies for letters of administration.” Applicant, Black’s Law Dictionary (11th ed. 2019). Relying on that definition, an applicant for rental housing may be an individual who submits an application for rental housing.
State law provides two different definitions for the term emancipated minor. The first is “a person under eighteen years of age who is totally self-supporting.” HRS § 327E-2. The second is “an individual less than eighteen years of age who is deemed to be emancipated pursuant to section 577-25,” which provides that a minor who has been lawfully married “shall be deemed to be emancipated.” HRS § 327G-2. One commonly cited legal reference defines an emancipated minor as “a minor who is self-supporting and independent of parental control, usu. as a result of a court order.” Minor, -emancipated, Black’s Law Dictionary (11th ed. 2019).
For Persons Applying to Rent
The costs of commercially available criminal background checks, credit reports, and tenant screening services vary depending on the provider. The law authorizes the landlord or landlord’s agent to charge tenant screening fees to cover the costs of obtaining information about the applicant. Although the new law does not set a fixed amount (or a maximum dollar amount) that a landlord or their agent can charge an applicant as a tenant screening fee, the landlord or their agent must return to the applicant any amounts collected from the applicant that exceed the costs to cover obtaining information about the applicant. Imposing a cap could be addressed by future legislation. Arguably if there was a cap, landlords would be more inclined to find a cheaper screener, so to remain competitive, all screeners may lower their prices.
Only an applicant who is eighteen years of age or older, or an emancipated minor, may be charged a tenant screening fee. Since your children ages 14 and 16 are not eighteen years of age or older, and it is unlikely that they are emancipated minors, a landlord or their agent cannot charge a tenant screening fee for them.
Since the new law does not define who is, and who is not, an applicant, it is unclear whether a landlord or landlord’s agent will be allowed to charge two separate fees, one for you and one for your partner. If your partner is an “applicant,” the tenant screening fee may be charged. If, on the other hand, your partner is not an “applicant,” and a landlord or landlord’s agent charges a tenant screening fee to your partner, they may be acting in violation of the new law. The question who is, and who is not, an applicant could be addressed by future legislation.
The current law makes no distinction among applicants based upon whether or not they are working or expecting to contribute toward the monthly rent payment. Defining the term “applicant,” and making clear distinctions between those who do and do not pay rent, could be addressed by future legislation, and thereby spare non-paying applicants from fees charged for their credit reports.
Landlords or their agents are required to provide a receipt for the payment of the tenant screening fee and a breakdown of the costs that were covered by the tenant screening fee, if you make a request. If the receipt indicates that the cost of the tenant screening fee was used to obtain information other than the information authorized by law, then the landlord and their agent risk violating the new law.
Yes. The landlord or the landlord’s agent must return any amount of the tenant screening fee that is not used for the purposes authorized by this section to the applicant within thirty days after the landlord has submitted the screening request. Landlords or their agents who fail to make required refunds risk violating the law. A person who has not received a required refund may sue the landlord for the return of the refund. In your case, since you paid $50 and the landlord used only $35 to obtain information about you, the landlord or their agent must return $15 to you within thirty days after the landlord or their agent submitted the screening request.
You may have a legal claim against the landlord and the landlord’s agent. You may wish to consult an attorney about your legal rights or contact the Judiciary’s Self-Help Center for assistance in protecting your own legal rights. A list of resources is available here, including the contact information for the Office of Consumer Protection’s Residential Landlord-Tenant Code Information Center. You may also file a complaint with OCP here or with the State Attorney General here. If you meet certain eligibility requirements, you may qualify for assistance from the Legal Aid Society of Hawaii. See here for more information.
Landlords and their agents are not required by law to accept your current credit report in lieu of acquiring their own credit report about you. Your prospective landlord may charge you a tenant screening fee to obtain information about you, including a credit report from a credit reporting agency.
In California, Maryland, and Washington, landlords may choose to accept a reusable tenant screening report, sometimes referred to as a “portable” tenant screening report. The reusable tenant screening report is paid for by the prospective tenant and transmitted directly from the tenant screening company to the landlord or their agent. Some reusable screening reports allow reports to be transmitted to an unlimited number of landlords for up to thirty days from the completion date. Portable tenant screening reports could be addressed by future legislation.
A landlord or their agent may, but does not have to, provide you a copy of your credit report that you paid for with your tenant screening fee. In California, landlords are required to provide applicants with a copy of the applicant’s background check, if the applicant asks for it. Providing applicants with background checks could be addressed by future legislation.
Existing state and federal laws require that any business that possesses personal information of a resident of Hawaii, or uses a consumer report for a business purpose, must protect against unauthorized access to or use of the information. Businesses who violate state laws requiring the protection against unauthorized access may be liable for a penalty of not more than $2,500 for each violation in an action brought by the State Attorney General or the Executive Director of the Office of Consumer Protection. See HRS §§ 487N-3(a), 487R-3(a). The Federal Trade Commission enforces the Disposal Rule, which similarly provides for penalties against businesses who violate rules on safeguarding and disposing of protected information. More information on the Disposal Rule is available here.
Many landlords and landlords’ agents use tenant screening services to screen rental applications. The law neither authorizes nor prohibits use of tenant screening fees for the purchase of services provided by a tenant screening company. If the landlord claims that they cannot provide you a breakdown of the costs because the services are being provided by a tenant screening company, however, the landlord may be violating the law. You may wish to consult an attorney or legal services organization about your rights. See here for a list of helpful resources, including a link to the Legal Aid Society of Hawaii.
The law currently does not impose a penalty on a landlord who refunds an applicant who was improperly overcharged. This is another issue that could be addressed by future legislation.
The landlord or the landlord’s agent is required to give the applicant a breakdown of the costs covered by the tenant screening fee if the applicant requests one.
A landlord and their agent may agree on any arrangement not otherwise prohibited by law:
- For providing each applicant with a receipt and a breakdown of the costs of covering information about the applicant; and
- For the return of any amounts of the tenant screening fee not used for the purposes authorized by the new law within thirty days after a screening request is submitted.
If you are a landlord, you may wish to consult an attorney regarding your legal duties, obligations, and liabilities, particularly as it pertains to what you, or your agent, is responsible for. Resources for landlords are available here.
Tenant screening services that charge for screening reports on a per application basis are widely available. Other states, such as California, Minnesota, New York, Virginia, and Wisconsin, require refunds of the amount of fees that exceed the landlord’s or their agents’ actual costs for tenant screening. It is the landlord or the landlord’s agent’s obligation to provide each applicant a breakdown of the costs covered by the tenant screening fee if the applicant requests one. The landlord’s obligation is not excused by the fact that the tenant screening service won’t provide a breakdown. If the landlord wants to charge a fee, the landlord is legally required to provide a breakdown.
State law does not specifically regulate tenant screening services contracts. The landlord or the landlord’s agent must provide the breakdown of the costs covered by each tenant screening fee if the applicant requests one. If a landlord or their agent gives an applicant a cost breakdown that does not clearly provide this information, they may be violating the new law or even existing state laws. You should consult an attorney if you have any questions regarding your legal duties, obligations, and liabilities.
If the landlord or landlord’s agent did not submit a screening request for a specific rental applicant, then the tenant screening fee must be returned to that applicant. Failure to return the tenant screening fee could be a violation of HRS § 521-46 and other state laws pertaining to junk fees. The law does not allow one applicant’s application screening fee to be used to obtain a report about another applicant.
In the normal situation where the landlord or their agent submits a screening request about the applicant, the law requires the landlord or their agent to return to the applicant any portion of the tenant screening fee not used for authorized purposes within thirty days after the landlord has submitted screening requests. If a landlord or their agent never submits a screening request for an applicant, the new law does not state when the landlord or the landlord’s agent is required to return to the applicant the unused amount of the tenant screening fee.
If you are a landlord or landlord’s agent, and you choose to charge tenant screening fees to some applicants, but not others, you may wish to consult an attorney or other resources regarding your compliance with state and federal civil rights and fair housing laws prohibiting discrimination. Find information about the Hawaii Civil Rights Commission here, and the U.S. Department of Housing and Urban Development here. Keep in mind that there are no state laws that require you to charge tenant screening fees to all applicants.