A new law regulating tenant screening fees, in an effort to protect renters and provide more transparency in the rental application process, will take effect May 1.
Signed into law from a bill proposed in the 2023 legislative session, Act 200 will prohibit landlords from charging an applicant for a residential dwelling unit a tenant screening fee that is higher than the actual cost of finding information about the applicant. The tenant screening fee can cover obtaining information through personal reference checks, tenant reports, criminal background checks and credit reports from any consumer credit reporting agency.
If requested, the landlord or landlord’s agent also must provide to an applicant a receipt of payment of the screening fee and a breakdown of the costs covered by the fee. Landlords must return any charges that exceed the actual cost of the screening to the applicant within 30 days of submitting the screening request.
Tenant fees can be charged only at the time the applicant’s rental application is processed. Only those 18 and older or an emancipated minor applying to rent can be charged.
“This new law prevents abuses by landlords who have, in the past, imposed excessive screening fees,” said Thomas Mana Moriarty, executive director of the Office of Consumer Protection. “It helps tenants by giving them an initial remedy they can pursue for a violation of the law.”
Moriarty said OCP has received several inquiries from the public about whether tenant screening fees are regulated, and have heard stories from inquirers about how either they or someone they knew were charged excessive tenant fees during the rental process.
“We also heard from quite a few testifiers last year at the Legislature who asserted that they were either having to pay these tenant screening fees multiple times or that the tenant screening fee was just beyond their means to pay,” Moriarty said. “That, I think, informed the Legislature’s views on the bill that was presented and ultimately enacted into law.”
Landlords are not required to charge tenant screening fees, and fees can differ depending on the landlord. The new law does not establish a set dollar amount that landlords can charge as a tenant screening fee.
The newly enacted Act 200 works hand in hand with the Fair Credit Reporting Act, a federal law that requires a landlord who denies a tenant’s application because of information found in a tenant screening report to inform the tenant.
“If you’re a tenant and you’re concerned that your rights have been violated because you’ve been denied housing due to something in your tenant screening report, you can take it into your own hands,” Moriarty said. “You can find out from the credit reporting companies or the tenant screening company whether that landlord actually pulled your report, and if they didn’t, that’s a problem. That’s something that’s addressed under federal law.”
The Office of Consumer Protection under the state Department of Commerce and Consumer Affairs is encouraging landlords to familiarize themselves with the new law. A copy of the new law and a Frequently Asked Questions document about the new law are available on OCP’s website.
OCP also runs the Hawaii Residential Landlord-Tenant Information Center, a free service that offers information to the public about various laws affecting landlords and tenants. The information center can be reached by calling the Honolulu Office at 808-586-2634, the Maui Office at 808-243-4648 and the Hilo Office at 808-933-0910.
