Chapter III: Understanding Rental Applications and Rental Agreements

A. Rental Applications

It is a common practice among landlords to have you fill out a rental application wherein you consent to have the landlord look into certain aspects of your background before he signs a rental agreement with you. The three types of checks that you see done most often are credit checks, arrest record checks, and rental history checks. It is not uncommon for the landlord to charge a non-refundable application fee for performing these checks on you. Generally this fee is
around Twenty Five or Thirty Dollars per person.

Read these rental applications before signing them. Sometimes they have these little bombs hidden at the bottom near your signature wherein by signing you make a promise to enter into a contract regarding the rental property. The Eighth District Court of Appeals in the case of White v. Boyd 1993 Ohio App. LEXIS 5660 (November 24, 1993) Montgomery App. No. 13757, unreported, found that these clauses are unconscionable:

Under these circumstances, we agree with the referee’s conclusion that there was never a valid, binding, or enforceable lease agreement between the parties, even though the application signed by the Boyds contained their agreement “to sign a lease or rental agreement” on approval of the application. If no terms of the lease agreement, other than the monthly rental, were discussed with the Boyds, as the referee found upon conflicting evidence, then their open-ended agreement to sign a lease upon approval of the application was not supported by sufficient consideration, was unconscionable, and was, therefore, unenforceable. If we were to hold otherwise, then a landlord receiving such an application could require the
applicants to sign a lease having a perpetual term and many onerous undertakings, none of which had been previously disclosed to the tenants. Id. at 7-8

I know that you’re not a lawyer, but there generally isn’t a lot of wording in a rental application. I have a good feeling that you understand English well enough to tell when there is wording that is trying to commit you to signing a lease. Here’s an easy rule. If it looks like a duck talks like a duck, and walks like a duck, it’s most likely going to swim in your pond, eat a
lot of bread, and crap on your golf course. If you have a doubt about what you are signing, then don’t sign it. If the landlord protests that he just wants certain information, then fill out the information he wants on a blank sheet of paper. If what the landlord is explaining to you does not sound like what you are signing, then do not sign it. Listen to your gut feelings, they are rarely wrong. If it doesn’t sound right to you, WALK.

There are landlords who will try to get you to first put down a security deposit on an apartment in the amount of one month’s rent as a precondition for showing you the apartments that they have open. They will tell you orally that if you do not sign with them, then they will give you the security deposit back. It is unwise to do this. Think about it. You are about to give a perfect stranger one month’s rent. Hmmm.

If you read the rental application closely, it will probably tell you that the “security deposit” is really a non-refundable application fee. The landlord will argue in Court that your failure to sign a lease agreement for an apartment caused him damages in the amount of one month’s rent. Of course, he cannot point to any lease agreement that requires you to pay rent, but that is no matter. There is case law in Ohio that says that provisions in a rental contract charging such rates for an application fee is in reality a penalty clause. In the case of Robertson v. Rossing, 1999 Ohio App. LEXIS 365 (February 8, 1999) Butler App. No. CA98-02-035 ( unreported) a tenant failed to disclose that she had been evicted on a past rental application. The landlord found it out, and refused to rent to her, but wanted to keep her one month’s rent/application fee [of $200.00] as per a clause in the contract. The Court stated as follows:

However, even if this had been an enforceable contract, the clause in issue would not have been enforceable because it is not a legitimate liquidated damages clause. Generally, contract clauses providing for reasonable liquidated damages are valid and enforceable. Samson Sales, Inc. v. Honeywell, Inc. (1984), 12 Ohio St. 3d 27, 28, 465 N.E.2d 392. However, reasonable compensation for actual damages is the legitimate objective of such a provision, and where the amount is manifestly inequitable and unrealistic, courts will ordinarily regard it as penalty and such a
provision will not be enforced. Id. See, also, In re Graham Square, Inc. (C.A.6, 1997), 126 F.3d 823, 828.

In this case, the face of the instrument bears no evidence that the stipulated amount constitutes reasonable compensation for actual, foreseeable damages. Generally, an instrument is to be strictly construed against the person who prepared it, and favorably to the person who had no voice in the selection of the language. See Davidson v. Bucklew, (1992) 90 Ohio App. 3d 328, 331, 629 N.E.2d 456. Thus, construing this clause strictly against appellant, we must conclude that the $200
amount bears no reasonable relation to actual damage suffered by appellant as a result of Harrison’s failure to fully disclose all of her prior evictions. Accordingly, even if the parties had formed a binding contract, we find that the clause at issue would not be enforced because it constitutes a penalty. Appellant’s first
assignment of error is overruled. Id. at 6-7.

As such, these clauses will not be enforced by the courts, but you will still have to sue the landlord to get your deposit back. Whoopee! You are now the proud owner of a lawsuit upon which it will take you months to collect rather than having your rent money in hand. There are some cases which hold that in such suits, the double damages and attorneys fees provisions of the landlord tenant act do not apply. This effectively leaves you without an attorney when you
argue your case. It’s also a real hassle to go to court over one month’s rent. There are filing fees and days of missed work for pre-trial hearings. There are motions and cross-motions which have to be filed. There are days when you will show up for the trial and the matter will be continued to another day without warning of any kind. It’s a huge hassle. Best to move on to another landlord if the one you are negotiating with tries to get you to put down a significant amount of money as
an application fee.