What occurs when an application fee is paid and the application is rejected?

When an application fee is paid and the application is rejected, the appropriate outcome is that the application fee is non-refundable. This means that the fee is retained by the landlord or property management company regardless of the application's outcome. Application fees are typically used to cover the costs associated with processing the application, such as background checks, credit checks, and administrative expenses.

Real estate practices often establish these fees as non-refundable to ensure that applicants are serious and committed to pursuing the rental property. This approach also helps landlords manage the expense of processing multiple applications, as re-evaluating applications can be costly in time and resources. Consequently, even if a candidate does not secure the rental, the applicant fee is retained to compensate for the incurred costs, solidifying the position that this type of fee is generally non-refundable.