New York Application Fee Cap: $20 Maximum Statewide — RPL §238-a Compliance (2026)

What Is the New York Application Fee Cap?

New York Real Property Law §238-a, enacted as part of the Housing Stability and Tenant Protection Act (HSTPA) of 2019, sets a hard cap on the amount landlords can charge prospective tenants for application screening. The statute is straightforward: the total fee cannot exceed $20 per applicant.

This $20 cap covers all screening-related costs, including:

• Credit report fees
• Criminal background checks
• Eviction history searches
• Reference verification
• Employment verification
• Rental history verification
• Identity verification services
• Consumer report fees (as defined under the Fair Credit Reporting Act)
• Any fee marketed as a “screening fee,” “processing fee,” “application fee,” or “tenant fee”

The law applies to all landlords in New York State, regardless of whether they own one property or one hundred. There is no exemption for small landlords, large portfolios, luxury properties, or commercial buildings. If you rent out residential units in New York, §238-a applies to you.

The Text of RPL §238-a and What It Actually Says

The relevant statute reads in part:

“No owner of residential real property shall demand or receive any application fee, application deposit, non-refundable fee or other fee or charge to process an application from a prospective tenant, except that such owner may collect a non-refundable fee of not more than twenty dollars to cover the costs of conducting a background and credit check of the prospective tenant.”

This language is critical. The statute:

1. Prohibits most fees outright — application deposits and non-refundable processing fees are banned entirely, with a single exception for the $20 screening fee
2. Ties the fee to actual background and credit checking — you cannot charge $20 simply for receiving an application; you must actually perform screening
3. Makes the $20 non-refundable by default — applicants cannot expect a refund if they withdraw or are denied
4. Specifies “prospective tenant” status — the fee applies only to people who have not yet been approved as tenants

When Did This Law Take Effect?

The HSTPA was signed into law on June 14, 2019, and §238-a became effective on February 1, 2020. This means the $20 cap has been in force for over six years. If you have been charging higher fees, you may face liability for violations dating back to February 2020.

Tenants have the right to pursue claims for overcharges that occurred after February 1, 2020, and many tenant advocates and legal aid organizations have publicized this right since 2024, increasing enforcement activity.

Statutory Penalties for Overcharging

Violation of §238-a carries significant penalties designed to deter non-compliance:

Penalty Type	Amount / Details
Treble Damages	Three times the amount of the overcharge (not just refund)
Attorney Fees	Full recovery of tenant’s attorney fees and court costs
Example Calculation	If you charged $50 instead of $20 ($30 overcharge × 3 = $90 treble damages, plus $3,000–$5,000 attorney fees)
Class Action Risk	Multiple tenants can join a single lawsuit, multiplying liability

This is not a “pay it back” situation. A tenant who was charged $50 instead of $20 can sue and recover $90 in treble damages plus their attorney’s full fee. If you overcharged 10 applicants over a year, and each one sues, you could face $1,500–$2,000 in direct damages alone, plus $30,000–$50,000 in attorney fees across all claims.

Additionally, violations of §238-a may be cited as evidence of Fair Housing Act violations or Consumer Protection Act breaches, expanding liability beyond the statute itself.

What Costs CAN You Pass to Applicants (If Any)?

The statute allows the $20 fee specifically to “cover the costs of conducting a background and credit check.” This creates a gray area: can you charge additional fees for specific, documented expenses?

New York case law and DHCR guidance on this issue remain limited, but the statutory language suggests that:

Costs You Should Not Charge Separately

• Credit report purchases — these are bundled into the $20 cap
• Background check fees from third-party vendors — included in the $20
• Administrative time — reviewing applications, making calls, or conducting interviews are not separate costs
• Tenant screening service subscriptions — the monthly fee you pay to a screening company is your cost to bear, not the applicant’s
• Marketing costs for the rental listing — never chargeable to applicants

Costs That May Be Recoverable in Limited Circumstances

Some landlords and property managers argue that specific, documented, out-of-pocket expenses should be separable from the $20 cap:

• Certified mail costs to obtain eviction records — if you must pay the court $5 to retrieve a specific public record by certified mail, that actual expense might be passable, but this interpretation is not confirmed by statute
• Court document retrieval fees — some counties charge to search court databases; this is debatable
• Direct government agency fees — fingerprinting or official report requests directly from agencies

Caution: If you charge these “additional” fees, you must:

1. Document the actual cost incurred
2. Disclose it separately and in writing before collection
3. Show the applicant proof if requested
4. Limit it to the exact amount, with no markup

Because case law is sparse, the safest compliance position is to absorb all screening costs in the $20 fee and not attempt to charge extras. This eliminates litigation risk.

Required Disclosures Before Charging the $20 Fee

The statute does not explicitly mandate pre-collection disclosure, but New York rental housing law requires transparency in all fee collection. To stay fully compliant and defensible:

What You Must Disclose in Writing

Before an applicant pays the $20 fee, provide:

1. The exact amount — “$20 application screening fee”
2. What it covers — “to cover the costs of conducting a background and credit check”
3. What it is not — explicitly state it is not an application deposit, security deposit, or lease deposit
4. Non-refundability — “This fee is non-refundable regardless of whether your application is approved or denied”
5. How payment is made — check, card, cash, ACH, or other method
6. What happens next — when screening will occur and how long it may take

Recommended Format

Include this disclosure in:

• The rental listing itself (online and print)
• A separate “Application Terms and Conditions” document
• An email confirmation before payment is collected
• In the lease or move-in packet for reference

Do not bury the fee in fine print or assume applicants know about it. Transparency is both a legal defense and a fair housing best practice.

Compliance Checklist for Self-Managing Landlords

Use this checklist to ensure you comply with RPL §238-a on every application:

Compliance Task	✓ Done	Notes
Set maximum fee at exactly $20 per applicant		No sliding scale; no regional variations
Include fee disclosure in all rental listings		Print, online, social media ads
Create written Application Terms document		Separate from lease; signed by applicant
Obtain written authorization before charging fee		Email confirmation or signed agreement
Do not charge additional screening-related fees		All screening costs must fit in $20
Use a compliant tenant screening service		They absorb the fee; confirm in writing
Maintain clear payment records		Date, amount, applicant name, property, payment method
Keep screening reports filed separately		Document that actual screening occurred
Review your current practices annually		Especially if you use a property manager or service
Be prepared to refund if no screening done		If you withdraw an application or don’t screen, the fee may be refundable

Common Compliance Mistakes Landlords Make

Mistake 1: Charging “Separate” Fees Beyond the $20

The Problem: You charge $20 for the screening fee, then add $15 for “administrative processing,” $10 for “application review,” or $5 for “document handling.”

The Law: All of these are bundled into the $20 cap. Charging separately violates §238-a.

The Risk: A tenant who paid $50 total can sue for $90 (treble damages) plus attorney fees.

Mistake 2: Charging an “Application Deposit” or “Holding Fee”

The Problem: You ask applicants for a $100 “holding deposit” to reserve the unit while you review the application.

The Law: §238-a explicitly bans “application deposit” and “non-refundable fee” except for the $20 screening fee. Holding deposits are prohibited.

The Risk: Treble damages plus attorney fees, plus potential fair housing liability if the fee is applied inconsistently.

Mistake 3: Assuming Your Property Manager or Screening Service Handles Compliance

The Problem: You tell your property manager to “collect whatever screening fees are standard” without verifying they comply with §238-a.

The Law: You are liable for violations, even if a third party collected the fee on your behalf.

The Risk: Tenants sue you, not the property manager. You pay treble damages. The property manager may face separate licensing violations.

Best Practice: Audit your property manager or service quarterly to confirm §238-a compliance.

Mistake 4: Charging Different Fees Based on Property Type, Unit Size, or Location

The Problem: You charge $20 in Manhattan but $30 in rural upstate New York, thinking the cap varies by region.

The Law: §238-a applies statewide. No exceptions for location, property class, or market conditions.

The Risk: Liability in every location where you overcharge.

Mistake 5: Not Disclosing the Fee Upfront

The Problem: You mention the $20 fee only after an applicant has filled out the application form, hoping they’ll pay without questioning it.

The Law: Transparency is required. The fee must be disclosed before collection.

The Risk: Applicants can argue the fee was imposed without informed consent, making it unenforceable. They may refuse to pay and still demand the $20 is returned or waived.

How Screening Fees Work With Third-Party Services

Many self-managing landlords use tenant screening platforms (such as Zillow, Apartments.com, or specialized screening vendors) that collect fees directly from applicants. How does §238-a apply?

If You Use a Third-Party Screening Service

Your responsibility:

• Verify in writing that the service charges no more than $20 per applicant
• Confirm the service discloses the fee clearly to applicants before collection
• Ensure the service does not collect additional processing, application, or holding fees
• Review your agreement with the service to confirm fee caps

Red flags to watch for:

• Service charges $29.99 and calls it “market rate”
• Service passes through a “processing fee” in addition to a “screening fee”
• Service collects the fee but does no actual background check
• Service’s disclosure is buried in terms of service or not shown to applicants

If the service violates §238-a: You are jointly liable. Tenants can sue both you and the service.

Best practice: Require your screening vendor to provide a signed compliance certification confirming they comply with New York RPL §238-a before you direct applicants to them.

What If You’ve Already Overcharged Applicants?

If you charged more than $20 per applicant at any time since February 1, 2020, you face potential liability. Consider these steps:

Step 1: Conduct an Audit

Review your application records from February 2020 to present. Calculate:

• Total number of applicants who paid a screening fee
• Amount charged to each applicant
• Total overcharge (amount charged minus $20)

Step 2: Assess Your Risk

Risk factors include:

• Number of overcharged applicants: 1–3 is a low-risk exposure; 20+ multiplies liability significantly
• Amount of overcharge per applicant: $1–$5 overcharge per person is lower risk; $30–$100 overcharge is high risk
• Geographic location: New York City and dense suburban areas have higher tenant advocacy and enforcement activity
• Knowledge of the law: If you’ve received complaints or inquiries about the fee, you’re on notice

Step 3: Consider Voluntary Remediation

You have a few options:

Option A: Proactive Refunds

• Calculate the overcharge for each applicant
• Send a refund letter and check to each applicant at the address on file, with an explanation
• Document that you took corrective action voluntarily
• This does not guarantee immunity from lawsuits, but it demonstrates good faith and may reduce damages in future litigation

Option B: Wait and Monitor

• Fix your fee structure immediately to comply going forward
• Monitor for complaints or attorney letters
• This increases risk of treble damages liability but may not trigger claims if applicants are unaware of their rights

Option C: Consult a New York Real Estate Attorney

• An attorney can review your specific situation and advise on settlement or dispute options
• This cost is often lower than defending litigation later

Why you should act quickly: The statute of limitations for overcharge claims is typically 6 years from the date of violation. Overcharges from 2020–2021 are still within the window. Waiting increases your exposure.

Enforcing Compliance: Who Can Sue and How

Who Enforces §238-a?

Private right of action: Any tenant or prospective tenant who was overcharged can sue you directly in New York Small Claims Court (if damages are under $5,000) or Civil Court.

Government enforcement: The New York Department of Housing and Community Renewal (DHCR) and the Attorney General’s office can investigate violations but do not typically file cases on behalf of individual applicants. However, they may bring pattern-and-practice cases if you systematically violate the law.

Class action risk: If multiple applicants have similar claims, they can join a class action lawsuit, which can result in six-figure settlements.

How a Tenant Would Pursue a Claim

1. Tenant sends you a demand letter — typically via attorney, demanding refund plus treble damages
2. You refuse or ignore — tenant files suit in civil court
3. Court hearing — tenant presents application records and proof of payment
4. You lose — ordered to pay treble damages plus attorney fees (usually $3,000–$5,000)
5. Payment or collection — tenant collects via judgment, bank account levy, or garnishment

Your only viable defense: Proof that you did not charge the fee, or proof that the applicant authorized a fee higher than $20 as consideration for a lease (this is extremely weak and rarely succeeds).

Fair Housing Intersection: Why §238-a Matters Beyond Rent

Application fees intersect with Fair Housing Act (FHA) obligations in several ways:

Potential Discrimination Risk

If you charge application fees unevenly—for example, $20 to some applicants but $50 to others, or $30 to families with children but $15 to couples—you expose yourself to Fair Housing Act liability in addition to §238-a violations.

Example: You charge $20 to an applicant from a protected class (e.g., a woman with a disability) but $40 to others, claiming it’s for “additional verification.” The applicant can sue under both §238-a and the FHA, claiming the higher fee was discriminatory. Damages under the FHA are not limited to treble damages—they can include punitive damages up to $16,000 per violation.

Transparency Serves Fair Housing Compliance

When you clearly disclose the fee upfront and apply it uniformly to all applicants, you reduce fair housing risk.

FAQ: New York Application Fee Cap

Q: Can I charge $20 plus ask for a credit card processing fee?

A: No. The $20 is the absolute maximum you can collect from an applicant, regardless of how you frame additional fees. If you charge $20 plus a 3% processing fee ($20.60 total), you’ve violated §238-a. You must absorb payment processing costs as your own business expense.

Q: What if the applicant asks to pay the $20 fee later, after I’ve already screened them?

A: You should not screen an applicant without collecting the fee upfront (or at least obtaining written authorization). If you screen without payment or authorization, you likely cannot later enforce collection. Best practice: collect the $20 before running any background check or credit report.

Q: I’m in NYC. Are there additional local rules on top of the statewide $20 cap?

A: No. The statewide $20 cap under RPL §238-a is the only fee limit applicable in New York City. NYC Local Law does not impose a lower cap. However, NYC has other tenant protections (e.g., source of income discrimination rules, third-party fee restrictions) that interact with screening practices, so review local rules independently.

Q: If an applicant is rejected after I charge the $20 fee, must I refund it?

A: No. The statute specifies the $20 fee is non-refundable “regardless of whether [the applicant’s] application is approved or denied.” The applicant approved or denied. However, if you did not actually conduct screening—for example, you accepted the $20 but never ran a credit report—the fee may be refundable as unjust enrichment.

Q: Can I charge $20 per applicant if there are two applicants on one lease (e.g., spouses)?

A: Yes, but only if both are truly separate applicants. The statute says “$20…per…prospective tenant.” If both parties are applying together for the same unit as co-applicants, you can charge $20 each if you are actually conducting separate background checks. If you run one combined report, charging $40 is harder to justify. Best practice: clarify your policy upfront. “Co-applicants on the same lease: $20 per person.”

How to Track Compliance Going Forward

To avoid future violations, implement a simple system to track all application fees:

What to Record

• Date fee collected
• Applicant name and contact info
• Property address
• Amount charged ($20)
• Payment method (check, card, ACH, etc.)
• Screening vendor or service used
• Date screening was completed
• Approval or denial date
• Written disclosure provided (yes/no)**

Storage and Retention

Keep records for at least 6 years (the statute of limitations for claims). Use:

• A spreadsheet (Google Sheets or Excel)
• A dedicated applicant tracking system
• A property management platform like LeaseBase, which can track application fees and compliance workflows in one place

Organized records are your best defense if a tenant claims you overcharged. You can quickly show the fee amount, the disclosure provided, and proof that screening occurred.

Recent Enforcement Trends (2024–2026)

Over the past two years, enforcement of §238-a has increased:

• Attorney General office: New York’s Attorney General has increased tenant outreach about application fee rights, particularly in 2025
• Legal aid organizations: Groups like the Legal Aid Society and Met Council on Housing have publicized §238-a violations and encouraged affected tenants to pursue claims
• Class action filings: At least two class actions have been filed against property management companies charging excessive application fees (2024–2025)
• Social media and tenant forums: Complaints about overcharges are increasingly visible on Reddit, Facebook, and tenant advocacy pages, raising awareness among prospective tenants

This trend means tenants are more likely to notice and challenge non-compliant fees. Staying compliant is not just legally required—it’s now a practical necessity.

Integration With Your Screening Workflow

Compliance with §238-a should be baked into your entire tenant screening process. Consider how the $20 fee fits with your other practices:

Step 1: Listing and Pre-Application

• Include “$20 non-refundable application screening fee” in every rental listing (online and print)
• State what the fee covers (“background and credit check”)
• Make the disclosure prominent, not buried

Step 2: Application Submission

• Provide a written “Application Terms and Conditions” document
• Applicant must sign or electronically acknowledge they understand the $20 fee before paying
• Do not accept an application unless applicant has agreed to the fee in writing

Step 3: Payment Collection

• Collect the $20