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Bill would require rental application fee refunds

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Supporters say the fees are a barrier for renters in competitive markets.

By Eric Dietrich MONTANA FREE PRESS

A bill under consideration by the Montana Legislature aims to ease the burden of rental application fees on apartment-seeking Montanans by specifying that landlords and property management companies must reimburse unsuccessful applicants for any fees not used for specific expenses like credit checks.

House Bill 233, sponsored by Rep. Kelly Kortum, D-Bozeman, would require landlords to provide refunds to any applicant who doesn’t sign a lease “within a reasonable period of time.” The bill, co-sponsored by 29 other Democrats and 15 Republicans, received its initial public hearing in front of the House Judiciary Committee Tuesday.

Kortum and other proponents argued the bill would keep landlords and property management companies from taking undue advantage of the state’s tight rental market, particularly in college towns Bozeman and Missoula. They also said application fees can add up to a significant expense for renters who must often apply for multiple properties in competitive markets, creating a barrier as students and other low-income renters try to obtain housing.

Montana Landlords Association President John Sinrud spoke against the bill as its only opponent at Tuesday’s hearing. Sinrud argued the measure was unnecessary and would make it harder for landlords to fairly recoup their costs for the time they spend reviewing applications.

The bill’s first major procedural hurdle is a vote by the judiciary committee. If it advances, it will then face debate on the House Floor, review by the Montana Senate and scrutiny by Gov. Greg Gianforte.

Kortum said Tuesday that “unprecedented” housing demand has made rental markets so competitive that some apartments receive hundreds of applications, frustrating would-be renters who end up shelling out fees repeatedly.

“Some spend more than a month’s rent just hunting for a place that they’ll never get to live in,” he said.

The bill’s supporters at the Tuesday hearing included representatives of university student governments, renters and parents who said they’d been frustrated by fees faced by their young adult children.

Maggie Bell, a lobbyist for the MontanaAssociated Students, said college students routinely find it necessary to apply to four or five properties hoping their application is accepted at one of them. Many landlords accept applications that they don’t process, she added.

At one point, Bell said, she paid a $150 application fee, an amount that was equivalent to 13 hours of wages for her at the time.

Ronda Wiggers, a longtime Helena lobbyist who said she was testifying Monday on her own behalf, said she had been frustrated when her son and two roommates tried to get a rental in Bozeman some years back. The group, using their parents as co-signers, paid fees for six credit checks but weren’t first in line and didn’t get the property, she said. Then the property management company required the fees again when the group applied for another rental, telling her they hadn’t actually run credit checks on the unsuccessful application.

“I don’t know, when I owned property, why I bothered renting it — this is a great scheme,” she said. “I could have just charged application fees and never let anyone touch it. We would never have had to clean carpets, never would have had any damage done.”

The fee refund bill, Wiggins said, strikes a balance that allows property managers to cover the costs of running credit and background checks on potential renters.

“This bill lets them do that, but doesn’t allow them to just harvest money off of the large number of kids looking for a house every September in Bozeman and Missoula,” she said.

Sinrud, the landlords association president, countered that thoroughly reviewing stacks of rental applications is a time-intensive endeavor for his members. He also said the state’s existing criminal law should cover situations where landlords are charging fees for work they’re not doing.

“But then I would consider that fraud,” Sinrud said. “Because you paid for something that wasn’t done.”

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