Question:  We have a lot of households that apply, but end up getting rejected based on our screening criteria. We spend a lot of money each year on screening costs for households that never end up living here. Can I charge households who fail the background check for the cost of their screening? I don’t want to charge households that pass the background check and are eligible to move in, but want to recoup the costs on those who fail.

-Hillary, Vermont

Answer:  You cannot charge any households for the cost of any background screening, unless the property is a cooperative. If the property is not a cooperative, screening costs are eligible project expenses and should be included in the property’s budget.

If the property is a cooperative, owners may charge prospective members to pay application fees if such fees are permissible under state and local law. The fee must be reasonable in amount and consistently applied and must be approved by the cooperative’s board of directors. If the applicant is accepted for membership, the cooperative must apply the application fee to the purchase of the membership. If the applicant is rejected by the cooperative, the cooperative must refund the entire application fee. The cooperative may only retain the application fee if the applicant backs out of a purchase agreement.