What Extra Fees Are Allowed for Items or Services
You may want to charge households extra fees for certain items or services, especially ones that cost you money. For instance, you may want to charge households a fee for paying rent late or for transferring to another unit.
But HUD doesn’t let you charge households fees over and above their share of the rent whenever you want. You can only charge extra fees that HUD specifically permits or that your local HUD office has approved [HUD Handbook 4350.3, par. 6-21]. HUD makes clear that you can’t charge certain types of fees at assisted sites.
It’s important to know which items and services you can charge fees for—and which you can’t. If you make a mistake and HUD catches you, you may end up having to reimburse households that paid the extra fees, and attract additional scrutiny from HUD or contract administrator staff.
To help you keep track of what’s permitted we’ll tell you which fees you can and can’t charge.
Fees that Are Allowed
You may charge extra fees for the following items or services:
Late payment of rent. You may charge late fees to households that don’t pay their rent by the end of the fifth day of the month [HUD Handbook 4350.3, par. 6-23(C)]. But HUD sets a cap on the amount you may charge. It says you may charge up to $5 as an initial fee on the sixth day of the month plus $1 for each additional day the household still hasn’t paid the rent. You may ask your local HUD office to approve an initial late fee higher than $5, but the total late fee you charge in any one month can’t exceed $30.
Returned check. If a household gives you a check and the bank returns it for insufficient funds, you may charge the household a fee equal to the amount your bank charged you for processing the returned check only on the second time, and each additional time, a check is not honored for payment [HUD Handbook 4350.3, par. 6-25(B)(1-2)].
In addition, you may be able to pass along to households your own administrative costs for handling a returned check, such as the cost of extra staff time if such charges are consistent with local management practices and are permitted by state and local laws—but you must get HUD approval first [HUD Handbook 4350.3, par. 6-25(B)(3)]. Request approval in writing, and be sure to specify in your request how much, on average, your site incurs in administrative costs to reprocess a returned check.
Pet deposits. HUD Handbook rules let you charge a refundable pet deposit if a household keeps cats or dogs in its unit [HUD Handbook 4350.3, par. 6-24(A)]. But you may not charge a pet deposit for service or companion animals, such as guide dogs or animals that provide emotional assistance to people with mental disabilities.
Repairing household-caused damages. If a household or its guests or pets damage a unit or common area, you can charge the household for the costs of repairing the damages. HUD requires households to pay these charges within 30 days of getting your bill [HUD Handbook 4350.3, par. 6-25(C)(1)]. If they don’t, you can deduct the unpaid balance from the household’s security deposit at move-out [HUD Handbook 4350.3, par. 6-25 (C)(2)].
Extra key and/or lockout calls. HUD lets you charge households for “special management services” and gives as examples responding to lockout calls and providing extra keys [HUD Handbook 4350.3, par. 6-25 (D)(1)]. And HUD says you can charge a fee if a household doesn’t return a key at move-out [HUD Handbook 4350.3, par. 6-25 (D)(2)]. Although HUD sets no amount for these fees, they should be reasonable. Whatever policy and amount you set for these fees, make sure you apply it consistently. For example, don’t charge one household for the first lockout call, then let another household in without charging the fee until the second or third lockout call. Set a policy such as no fee for the first lockout call and a set amount for each call after that and stick with it.
Court filing, attorney’s, and sheriff’s fees that resident agrees to pay to avoid or settle lawsuit. Sometimes households settle with you after you’ve filed an eviction lawsuit, or agree to settle to avoid one altogether. But you may have already spent money on such expenses as court filing fees, process service fees, or attorney’s fees. HUD will let you charge households who agree to pay as part of the settlement the reasonable, actual costs that you’ve already incurred relating to the lawsuit, as long as your state and local laws permit you to charge these fees [HUD Handbook 4350.3, par. 6-25(E)(1)].
You may want to charge households other fees not listed above or fees for optional services or amenities, such as parking or rental of a community room or storage units. Generally, handbook rules require that you get local HUD approval for all other fees not specifically permitted or prohibited and that you list these fees in the lease agreement [HUD Handbook 4350.3, par. 6-25(F)(2)].
Fees that Aren’t Allowed
Don’t charge households extra fees for any of the following items or services:
Processing applications or verifying certification information. You may not charge households a fee to pass on the costs associated with processing applications or with verifying income or eligibility during certifications [HUD Handbook 4350.3, par. 4-7(E)(2)].
Screening. Similarly, you can’t charge households fees to pay for screening costs. These are considered site expenses. Screening costs include the costs of:
- Credit reports;
- Criminal background checks;
- Owner references; and
- Home visits [HUD Handbook 4350.3, par. 6-20(A)].
Bad behavior. Don’t charge households for bad behavior by household members. For instance, you can’t fine households because members were too noisy, used foul language, or didn’t supervise children. But such bad behavior, when serious or ongoing, may be grounds for evicting the household [HUD Handbook 4350.3, par. 6-25(D)(2)].
Reasonable accommodation or modification. If you grant a household’s request for a reasonable accommodation or modification to accommodate a disability, Section 504 of the Rehabilitation Act of 1973, and HUD rules, make clear that you can’t charge the household any fees or other amounts to cover the cost of putting that accommodation into effect or of making the modification [HUD Handbook 4350.3, par. 2-42 (A)]. For instance, you can’t charge fees to cover extra paperwork, additional cleaning costs, installing grab bars, or constructing a wheelchair ramp.
At assisted sites, unlike at conventional sites, the costs of making reasonable accommodations and modifications must be paid by the site [HUD Handbook 4350.3, par. 2-46(B)]. The Section 504 requirements place the responsibility on the owner to pay for requested reasonable accommodations, including structural changes to the premises, and supersede the Fair Housing Act provisions that place the burden of paying for structural changes on the tenant.
In the circumstance where the requested structural modification to an assisted site does constitute an undue financial and administrative burden, and the resident still wants that particular modification to be made, the Fair Housing Act would then authorize the household to make and pay for the accommodation.