"Nonrefundable" Fees

We got an email recently that made me laugh. The person had a question, and the answer was incredibly simple, but only if you have a good understanding of tenant-landlord law. Our entire work is bridging the gap between what people don't know and what they need to know. But, sometimes we miss the things people need to know because we already (mostly) know what this stuff means.

The question was: "In your site it says non refundable pet deposits are illegal.. What if the landlord is creative and calls it a non refundable pet fee? ... I have looked everywhere and cannot find anything that specifically explains the difference between a fee or deposit."

In this case, a "fee" is the same as a "deposit." When we are talking about the money paid before you start a lease, everything besides the first month's rent has to be treated like a security deposit, including the "non-refundable fee." 


There are two ways that a fee can be treated:

1. Before the lease begins:

When a tenant and landlord are sitting down, signing the lease, and the now-tenant is handing over a bunch of money, it can be hard to tell what will happen with all that moolah. This is how it breaks down:

  • The first month's rent: usually, you pay the first month's rent ahead of time.
  • Everything else: all the other money you pay before you start living there, no matter what the name is, whether it is a fee or a deposit or a guarantee or.... ? All of that is considered to be paid as a security for your obligations as a tenant, and all of it has to be treated like a security deposit, and refunded to you when you leave. (How do security deposits get treated when it's time to leave? That's right here.)

Here's why: The definition of a security deposit under ATCP 134.02(11) is, "the total of all payments and deposits given by a tenant to the landlord as security for the performance of the tenant's obligations, and includes all rent payments in excess of 1 month's prepaid rent." This means that, after the rent that you pay in order to live there for the first month, ALL of the rest of the money that you pay upfront has to be treated like a security deposit.

Also: we've talked about this before! More in Security Deposit Myths Debunked!


2. After the lease begins:

Once the lease has already started, sometimes landlords charge "fees" for rule-breaking or being inconvenient. (For example: a landlord charges $75 for letting a tenant into their apartment when the tenant got locked out.)

Generally, these fees are not legal, especially when they are a lot more than it would actually cost the landlord to deal with the problem. While it is usually okay for a landlord to put charges like this in the lease, it's not allowed for them to charge more than the actual amount of money than they needed to spend in order to resolve the problem.

Some examples:

  • Landlord bills the tenant for $75 to let them back into their apartment. If it was during the day, a staff person was available, they had a spare key, and it was easy to let the tenant in, then it's very unlikely that this full amount is legal. Maybe the cost of the amount of time that it took for the staff person to unlock the door? But even that is arguable if the staff person intended to be in the office anyhow. However, if it was the middle of the night, the staff person had to drive over from their house, or if a locksmith needed to be called, this amount is much more reasonable - it is possible that it cost $75 to resolve that situation.
  • Landlord says that all keg parties automatically receive a $500 charge. Keg parties vary wildly in terms of amount of damage. A sedate party among craft beer enthusiasts is unlikely to wreak as much damage as a beer pong tournament among beginners. The landlord could only charge for actual damage done, as a result of the keg being present.

Here, we are talking about the fees that are authorized in the lease, after the lease starts. These fees are not automatically illegal. However, they are not automatically allowed, either. What you get charged cannot be more than the actual amount of money that the landlord had to spend in order to resolve the problem. (Still curious? We've written more about this! Here's a post on "liquidated damages," which is the technical term for these type of fees.)

Exception: This isn't the same as late fees for late rent, because that's explicitly allowed in tenant-landlord law. So, late rent fees are okay, and all those other fees that are in the lease need to be charged more thoughtfully.


Hi! Did you know that we aren't attorneys here at the TRC? And this isn't legal advice, either. If what we've written doesn't sound right to you, consult with someone you trust. A list of housing attorneys is available here