SB1116 SD1

SECTION 1. The legislature finds that landlords have been charging prospective tenants for the opportunity to apply for housing units. These fees are frequently not returned to unsuccessful housing applicants and are a serious detriment to low-income housing applicants who must also contend with the costs of security deposits and higher rental rates.

The legislature also finds that accurate information on tenant screening reports may make the difference between finding and not finding a rental unit, especially for tenants who are unaware of their rights under federal fair credit reporting laws that allow applicants to dispute inaccurate information.

The purpose of this Act is to regulate the imposition of tenant application fees by landlords and to require landlords to inform prospective tenants of their right to dispute inaccurate tenant screening report information.

SECTION 2. Chapter 521-8, Hawaii Revised Statutes, is amended by adding three new definitions to be appropriately inserted and to read as follows:

""Applicant" means any prospective tenant who applies to rent a dwelling unit.

"Application fee" means a fee or deposit charged by a landlord to a prospective tenant to apply for a dwelling unit. The application fee includes, as provided in this chapter, a fee charged to conduct a background check or a credit check on a prospective tenant.

"Screening service" means a service hired by a landlord that verifies the information provided in a prospective tenant's application for a dwelling unit."

SECTION 3. Chapter 521, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§521- Application fees. (a) A landlord shall not charge an application fee when the landlord knows or should have known that a dwelling unit is not available or will not become available within a reasonable period of time.

(b) A landlord shall not charge an application fee more than once to a prospective tenant within a six month period.

(1) A reasonable explanation of the landlord's procedure for screening prospective tenants;

(2) An applicant's right to dispute the accuracy of information provided by a tenant screening service or any other information provided in response to inquiries regarding a prospective tenant's application; and

(3) If applicable, the name and address of the tenant screening service hired by the landlord.

(d) An application fee shall not exceed:

(1) The actual cost of hiring a tenant screening service; or

(2) If a landlord conducts a personal reference check on an applicant the lesser of:

(A) Charges for similar services in the area the dwelling unit is situated; or

(B) The actual costs for long distance phone calls and reasonable costs for time spent verifying information contained in a prospective tenant's application.

(e) Any charges made by a landlord that are in excess of the application fee charges allowed under this section shall be returned to the applicant within days; provided that if applicable, refunds may be:

(1) Returned to the applicant by mail;

(2) Destroyed upon the applicant's request, if payment of the fee was made by check;

(3) Made available for the applicant to retrieve; or

(4) Used as credit to satisfy payment to the landlord, if the applicant is selected to occupy the dwelling unit.

(f) Where an applicant is not offered the unit applied for and the application fee is not returned, the landlord must provide the applicant with a written notice explaining the reasons the applicant was not offered the unit. The notice must be in sufficient detail to permit the applicant to dispute the accuracy of potentially false information. Where applicable, the notice shall also comply with the federal Fair Credit Reporting Act, 15 United States Code 1681, et. seq.

(g) In addition to any other penalties provided by law, a landlord who violates this section shall be subject to damages of three times the application fee or $1,000, whichever is greater, and civil court filing costs and reasonable attorney's fees.

(h) This section shall not apply to landlords that rent less than four dwelling units."

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

THE SENATE	S.B. NO.	1116
TWENTY-FOURTH LEGISLATURE, 2007		S.D. 1
STATE OF HAWAII