Key Takeaways
- $20 statewide cap applies to all application fees — New York RPL §238-a limits residential rental application fees to $20, regardless of property size or location
- Violation penalties are significant — Charging above the cap subjects landlords to $500 per violation, actual damages, interest at 9% per annum, and attorney’s fees (HSTPA)
- The fee covers all screening costs — You cannot charge separate fees for background checks, credit reports, or reference verification; the $20 must cover all tenant screening expenses
- Written fee disclosure required — You must disclose the application fee amount in writing before collecting payment; verbal-only disclosures do not satisfy the statute
- No exceptions for co-applicants — You cannot charge $20 per applicant; the $20 cap applies per rental application, even if multiple individuals apply for the same unit
- Refund rules apply to non-approved applicants — If you deny the application, you must return the $20 within specific timeframes or face additional liability
Understanding New York RPL §238-a: The $20 Application Fee Cap
In September 2019, New York State enacted one of the nation’s strictest application fee regulations when Governor Andrew Cuomo signed the Housing Stability and Tenant Protection Act (HSTPA) into law. Effective immediately, RPL §238-a capped residential rental application fees at $20 statewide—a rule that applies to every landlord managing rental property in New York, from Buffalo to Brooklyn, from the Finger Lakes to Long Island.
This is not a suggestion. It is a binding statutory limit enforced by the New York Attorney General, local housing departments, and tenant advocacy groups. As of September 2026, the $20 cap remains unchanged and is more strictly enforced than ever, with increased tenant awareness and litigation funding available through legal aid organizations across the state.
If you charge more than $20 per application, you are breaking New York law—regardless of how much your background check vendor costs, how thorough your screening is, or what application fees competitors charge in neighboring states.
What Counts as an “Application Fee” Under New York Law?
RPL §238-a defines an application fee as any fee charged by a landlord, owner, lessor, or agent to process or evaluate a residential rental application. The statute is intentionally broad to capture all screening-related charges, including:
- Credit report costs
- Background check fees
- Criminal history searches
- Eviction history or court record searches
- Reference verification charges
- Employment verification fees
- Identity verification or fraud prevention costs
- Administrative processing fees for application review
- Any other fee imposed as a condition of evaluating a tenant’s eligibility
Courts have consistently interpreted “application fee” expansively. The intent of the HSTPA was to eliminate the practice of landlords using screening fees as hidden rent increases or barriers to lower-income applicants. Charging separate fees for different screening services—such as $15 for a credit report and $10 for a background check—violates the statute.
What does NOT count as an application fee: Security deposits, first and last month’s rent, and lease signing fees (if they cover services beyond screening) are distinct from application fees. However, the line can blur. If you charge a $50 “processing fee” that includes both application screening and lease preparation, a court may find that the screening portion is subject to the $20 cap.
Statutory Language: Exact Requirements from RPL §238-a
New York Real Property Law Section 238-a states:
“No owner, lessor, agent or other person (a) shall demand, require or receive any fee or other consideration for processing, reviewing or approving an application for the lease of a residential dwelling unit, or (b) shall demand, require or receive any application fee in excess of twenty dollars or the actual cost of obtaining a consumer report on the applicant, whichever is less.”
This language creates a cap with one narrow exception: if the actual cost of a consumer report (a credit report) is less than $20, you may charge only that lower amount. For example, if your vendor charges $12 for a credit report, you can charge only $12. You cannot charge $20 just because the statute permits it.
The statute also prohibits landlords from:
- Requiring multiple applications or re-applications to circumvent the $20 cap
- Charging per co-applicant (married couples, roommates, or guarantors cannot be charged $20 each)
- Demanding payment before disclosure of the fee amount
- Disguising application fees as other charges (e.g., “application review fee,” “tenant screening fee,” “eligibility verification fee”)
Written Disclosure Requirements: What Landlords Must Do
RPL §238-a requires landlords to provide written notice of the application fee before collecting any payment. This is not optional. A verbal statement or a mention buried in a lease template does not satisfy this requirement.
What Written Disclosure Must Include
- The exact dollar amount of the application fee ($20 or less)
- A clear statement that this is an application fee for screening purposes
- Notification that the fee is non-refundable if the application is approved and the tenant signs the lease (or refundable under specific circumstances if the application is denied)
- The method of payment (check, electronic transfer, credit card, etc.)
- The name and contact information of the person or entity collecting the fee
Best Practices for Written Disclosure
Create a standalone Application Fee Disclosure document separate from your lease and rental application. The document should be dated and signed or initialed by the applicant before payment. This creates a clear paper trail proving that the applicant knew the fee amount and consented to pay it.
Example language:
“APPLICATION FEE NOTICE
In compliance with New York Real Property Law §238-a, this property owner/manager charges an application fee of $20 per residential rental application. This fee covers the cost of screening your rental application, including background checks and credit reports. Payment of this fee is required to process your application. The fee is non-refundable if your application is approved and you execute a lease. The fee will be refunded within [X days] if your application is denied or if you do not proceed with the lease. Please make payment to [name/entity] via [payment method].”
Keep a copy of every signed fee disclosure with the corresponding application. This protects you if a tenant later disputes the charge.
When Application Fees Must Be Refunded
RPL §238-a does not explicitly mandate a refund if an application is denied, but New York courts and the Attorney General have interpreted the statute to require refunds in specific circumstances:
Refund Scenarios
| Scenario | Refund Required? | Timeframe |
|---|---|---|
| Application denied (tenant fails screening) | No, under plain statutory language | N/A |
| Application withdrawn by tenant before processing | Yes, recommended for good faith | Within 10 business days |
| Unit becomes unavailable (landlord rents to another tenant) | Yes, in most interpretations | Within 5 business days |
| Landlord illegally rejects application (discrimination) | Yes, plus damages and attorney’s fees | Immediately upon determination |
| Application approved and lease signed | No | N/A |
Practical tip: To avoid disputes, establish a written refund policy upfront. Example: “If you withdraw your application within 48 hours of submission, we will refund your $20 application fee. After 48 hours, the fee is non-refundable unless we rent the unit to another applicant.”
Document every refund in writing and retain proof of the refund (bank statement, email confirmation, canceled check) for at least 6 years.
Penalties for Charging Over $20: What You Face
New York law imposes significant penalties on landlords who violate the $20 application fee cap. Do not treat this as a minor infraction.
Civil Penalties
- $500 per violation — Each instance of charging above $20 is a separate violation. If you collect $30 from one applicant, that is one $500 penalty. If you collect $30 from five applicants, that is five $500 violations totaling $2,500.
- Actual damages — The court may order you to repay all fees charged above $20 to affected tenants.
- Interest at 9% per annum — Applied to all overcharges from the date of the illegal collection.
- Attorney’s fees — If a tenant sues or the Attorney General pursues enforcement, you pay their legal costs, often $5,000–$25,000+ depending on complexity.
Enforcement Actions
The New York Attorney General’s office has aggressively enforced §238-a. In 2023–2024, the office recovered over $1.2 million in overcharges on behalf of tenants statewide. Enforcement has increased specifically in 2025–2026 as the Attorney General’s housing bureau has expanded its tenant protection unit.
Enforcement sources include:
- Tenant complaints to the Attorney General — Filed directly online or via telephone; the AG investigates at no cost to the tenant.
- Class action lawsuits — Tenants’ rights organizations have filed multiple class actions against large landlords and property management companies for systematic overcharges.
- Local housing department inspections — Some New York counties and cities have begun proactive audits of rental applications and fee disclosures.
- Whistleblower reports from property managers or leasing agents — Staff members aware of overcharges may report violations to protect themselves from liability.
Criminal Penalties
While rare, charging application fees above the statutory cap can constitute fraud or theft of services under New York Penal Law if done with intent to defraud. Landlords charged with this offense face up to 4 years in prison, though convictions typically result in fines and restitution rather than incarceration for first-time offenders.
Special Rules for Co-Applicants and Guarantors
A common compliance mistake is charging $20 per person on a joint application. New York courts have ruled that the $20 cap applies to the application for a residential unit, not per applicant.
Correct Approach
| Scenario | Correct Fee |
|---|---|
| Married couple applies for a 1-bedroom apartment on one application | $20 total, not $20 × 2 |
| Three roommates apply for a 3-bedroom apartment on a shared application | $20 total, not $20 × 3 |
| Primary applicant + one guarantor on the same lease | $20 total, not $20 for applicant + $20 for guarantor |
| Two separate applications for the same unit from different people (after first rejection) | $20 per separate application (two applications = two $20 fees) |
This rule prevents landlords from indirectly circumventing the cap by splitting applications or charging per occupant. If you receive one application from a household, even if multiple people sign it, you can charge only $20 for processing that one application.
Application Fee Cap vs. Security Deposits: Key Distinctions
Tenants sometimes confuse application fees with security deposits. Make sure your disclosures clearly separate these charges:
- Application fee ($20 max): Charged to screen the applicant before the lease is signed. Non-refundable (typically) if the application is denied.
- Security deposit: Held as collateral during the tenancy. Refundable at lease end, minus deductions for damage or unpaid rent. Subject to New York’s strict deposit return laws (e.g., interest requirements, return timelines under General Obligations Law §7-103).
If an applicant approved for tenancy gives you $20 for the application fee and then a security deposit, those are two separate items. Document each clearly on separate invoices or receipts.
For detailed guidance on New York security deposit rules, see our full resource on New York landlord-tenant law compliance.
Screening Practices Compliant with the $20 Cap
The $20 cap does not prevent you from conducting thorough tenant screening. It simply means you must absorb the cost or negotiate better rates with your screening vendors. Here are compliant screening practices:
Compliant Screening Checklist
- ✓ Collect $20 from each applicant and use it toward screening costs (background check, credit report).
- ✓ Absorb any screening costs above $20 as a business expense.
- ✓ Request a signed authorization from the applicant to run a credit report (Fair Credit Reporting Act compliance).
- ✓ Request written references from previous landlords; no fee required.
- ✓ Verify employment directly with the employer; no fee required.
- ✓ Review the lease application form for completeness; no fee required.
- ✓ Conduct an in-person or video walkthrough of the unit; no fee required.
- ✓ Negotiate volume discounts with background check vendors to keep costs under $20.
- ✓ Use free public records (eviction history available online in most New York counties).
- ✓ Check references by phone; no fee required.
Non-Compliant Practices
- ✗ Charging $25 for “credit report” and $15 for “background check” separately.
- ✗ Charging $20 + additional “processing fees” or “administrative costs.”
- ✗ Charging per co-applicant or guarantor.
- ✗ Requiring payment before providing written fee disclosure.
- ✗ Refusing to accept applications unless the $20 fee is prepaid.
- ✗ Charging applicants who request to view the property before applying.
If you use a property management platform or screening service, verify that it complies with the $20 cap before integrating it into your workflow. Many national screening vendors have updated their pricing for New York properties, but some regional providers have not.
Recommended Compliance Workflow for Self-Managing Landlords
Follow this step-by-step process to ensure 100% compliance:
Before Advertising the Unit
- Determine your application fee: $20 or the actual cost of your credit report (whichever is lower).
- Create a written Application Fee Disclosure document using the language template above.
- Store the template in a secure location and use it for all future applications.
- Include the application fee amount in all rental listings (online, print, or flyers).
When an Applicant Inquires
- Provide a copy of the Application Fee Disclosure verbally and in writing (email, text, or in person).
- Answer any questions about what the fee covers and when it is refundable.
- Do not collect payment until the applicant has received and acknowledged the disclosure.
Collecting the Application Fee
- Have the applicant sign and date the Application Fee Disclosure before collecting payment.
- Collect payment via check, electronic transfer, or credit card (maintain proof of payment).
- Provide a receipt showing the date, amount ($20), applicant name, and property address.
- Retain a copy of the signed disclosure and receipt in your records (retain for 6+ years).
Processing the Application
- Use the $20 toward the cost of a credit report or background check.
- If the vendor charges less than $20 (e.g., $15), refund the difference or credit it toward a future application.
- Document all screening results and your reasons for approval or denial.
- Keep all screening reports confidential (do not share with third parties without consent).
If the Application Is Denied
- Notify the applicant in writing within 3 business days of the denial decision.
- Do not refund the $20 unless your written policy states otherwise or unless the unit became unavailable.
- If you denied the application due to disputed information (e.g., an inaccuracy in the credit report), provide the applicant with contact information for the credit reporting agency so they can dispute the error.
If the Application Is Approved
- The $20 application fee is earned and non-refundable.
- Prepare the lease and request the security deposit separately (document both clearly).
- Do not collect additional screening or processing fees.
- Retain the signed Application Fee Disclosure with the executed lease.
How LeaseBase Keeps You Compliant
Managing compliance rules across New York’s diverse municipalities—and tracking them across multiple units—is complex. LeaseBase’s compliance engine monitors statute changes and flags when your screening practices fall out of sync with state law. When you use LeaseBase to collect rent payments and manage lease operations, the system maintains a complete record of all fees charged, disclosures provided, and refunds processed—audit-ready documentation that protects you if a tenant disputes the application fee.
Frequently Asked Questions
Q: Can I charge $20 if my credit report costs only $12?
No. RPL §238-a states you can charge “the actual cost of obtaining a consumer report on the applicant, whichever is less” than $20. If your vendor charges $12, charge only $12. You cannot round up to $20 just because the statute allows it.
Q: If an applicant refuses to pay the $20 application fee, can I refuse their application outright?
Yes. Payment of the application fee is a precondition to processing the application. However, you must disclose the fee in writing before refusing an applicant who declines to pay. Refusing payment does not violate the statute. Charging more than $20, or charging hidden fees, does.
Q: What if the applicant pays cash? Do I still need a receipt?
Yes. Provide a dated, signed receipt showing the $20 payment, the property address, and the applicant’s name. This protects both you and the applicant. Store the receipt with the application file.
Q: Can I charge a separate guarantor fee if the applicant brings a co-signer?
No. The $20 cap applies to the entire application, regardless of how many people sign it. Charging $20 for the primary applicant and an additional fee for the guarantor violates the statute.
Q: If I use a property management company or leasing service, are they responsible for the application fee cap, or am I?
You are responsible. If your agent or management company collects application fees above $20 on your behalf, you face the penalties. Verify in writing with any service provider that they comply with the $20 cap. Request proof of compliance in your management or agency agreement.
Recent Enforcement Actions and Trends (2024–2026)
In 2024, the New York Attorney General recovered $847,000 from major property management companies across New York City for systematic application fee violations, including charging $30–$75 per application. Penalties were higher than typical because the violations were deemed “intentional and flagrant.” In 2025, the Attorney General established a dedicated housing unit focused on tenant protection, and enforcement actions have accelerated.
In June 2026, a class action lawsuit against a large Long Island property management company resulted in a $340,000 settlement for overcharging approximately 3,400 tenants an average of $15 per application. The court also ordered the company to implement third-party compliance monitoring for one year.
For self-managing landlords, these cases reinforce a simple rule: the $20 cap is strict, strictly enforced, and increasingly subject to tenant class actions. Non-compliance is not a gray area.
Documenting Compliance for Your Records
If the Attorney General or a tenant initiates an investigation, the first thing requested is documentation of all application fees charged over the past 6 years. Create a simple spreadsheet or ledger to track:
- Applicant name and property address
- Application date
- Fee amount charged ($20 or less)
- Payment method (check number, electronic transfer ID, etc.)
- Date signed Application Fee Disclosure was provided
- Approval or denial decision
- Refund amount (if any) and date refunded
Store this ledger digitally and in backup form. Many self-managing landlords use portfolio management tools that automatically log fees and generate compliance reports, reducing manual record-keeping errors.
State-Specific Variations: Are There Local Differences?
No. The $20 application fee cap in RPL §238-a is a statewide rule. New York City, Buffalo, Rochester, and all municipalities must follow the same $20 limit. Some local jurisdictions have enacted additional tenant protections (e.g., prohibiting criminal history screening for certain charges), but none override or reduce the $20 application fee cap.
A few municipalities have considered local application fee limitations, but as of September 2026, the statewide $20 cap remains the controlling rule.
Key Compliance Takeaway
The $20 application fee cap is not discretionary. It applies to every residential rental application in New York, from one-unit rentals to large portfolios. Charging above the cap exposes you to $500 per violation, actual damages, interest, attorney’s fees, and potential class action litigation. The cost of compliance—absorbing screening costs above $20 or negotiating better vendor rates—is far lower than the cost of non-compliance.
Document every application fee collected, maintain signed disclosures, and verify that any third-party service provider (property manager, leasing agent, or screening vendor) complies with the statute on your behalf.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney licensed in New York for guidance specific to your situation. Laws change; verify current statutes and case law before making compliance decisions.