Can an Arkansas city pass an ordinance that limits how much a landlord can charge for rental application fees and background checks?
Subject
Whether an Arkansas city may regulate the fees private landlords charge for rental applications and background checks.
Plain-English summary
Rep. Robin Lundstrum asked the AG about a Fayetteville ordinance (Ordinance 6800, passed October 15, 2024) capping rental application fees at $20 and background check fees at $40, with a refund requirement if a landlord charges for a background check but does not actually run one.
AG Tim Griffin's answer: cities cannot do this. The opinion looks at two state laws that potentially limit Fayetteville's authority.
The first is A.C.A. § 14-54-1409, which prohibits rent control. The AG concludes this statute probably does not reach the Fayetteville ordinance, because rental application fees are not the same as the "amount of rent charged." Rent control is about ongoing tenancy payments; application fees are about gatekeeping the tenancy.
The second statute is A.C.A. § 14-43-608, which is broader. It prohibits municipalities from regulating "prices for goods, rentals, or services sold or performed within the municipality by individuals or firms." The AG reads this as a sweeping price-regulation preemption: any city ordinance that caps what a private party can charge for goods, rentals, or services likely violates it. Application processing and background checks are services. Capping their price is exactly what § 14-43-608 forbids.
The AG notes there are no appellate court cases construing § 14-43-608, but reads the statute's plain language as broad enough to invalidate the Fayetteville ordinance. The opinion also rests on the Arkansas constitutional rule (art. 12, § 4) that municipal corporations cannot pass laws contrary to general state law, and on Protect Fayetteville v. City of Fayetteville, 2019 Ark. 30, which reaffirmed Arkansas's strong Dillon Rule (cities have only the powers the state gives them).
What this means for you
If you are a landlord or property manager in an Arkansas city
You can charge market-based application and background check fees. The AG opinion supports your position that municipal caps on these fees are preempted by state law. The opinion is persuasive authority, not binding precedent, so a court would have the final word in litigation. Practically, if your city has passed or is considering an application-fee cap, your trade association (Arkansas Realtors, AAA, etc.) is the natural channel to push back, and § 14-43-608 is your statutory hook.
That said, charging excessive fees with no real service backing them is not protected by § 14-43-608 from other angles. Federal Fair Credit Reporting Act compliance, state consumer protection law, and the implied covenant of good faith may still constrain how you handle background check refunds and disclosures. The AG opinion only addresses the specific question of whether a city can cap the fees by ordinance.
If you are a renter trying to find housing in a city with high application fees
The AG opinion likely forecloses the local ordinance route. If you want application fee caps, the avenue is the General Assembly, not the Fayetteville city council. State legislators can repeal or carve back § 14-43-608 to allow this kind of regulation, but until then, city ordinances will not stick.
If a landlord refuses to refund a background check fee they did not actually run, you may still have remedies under the Arkansas Deceptive Trade Practices Act or general contract law. Small claims court is one path; the Attorney General's consumer protection division accepts complaints.
If you are on a city council considering this kind of ordinance
The AG opinion is a roadblock, not a final answer. Cities considering price-cap ordinances on private services should expect litigation if they pass them, and § 14-43-608 will be the central statute. The Protect Fayetteville case (2019) is the recent statement of Arkansas's Dillon Rule, and it cuts against expansive readings of municipal authority.
If your goal is consumer protection on application fees, alternative approaches that do not directly cap prices: disclosure requirements (landlords must disclose the fee schedule in writing before collection), consumer protection complaint channels at the city level, or partnerships with state legislators to pursue statutory change. None of these avoid all litigation risk, but none are squarely barred by § 14-43-608.
If you are a city attorney
The opinion is short and direct. Section 14-43-608(a) prohibits regulation of "prices for goods, rentals, or services," with a single exception in (b) for goods and services the municipality itself provides. That exception will not save a private-landlord-facing ordinance. The lack of appellate construction of § 14-43-608 means there is some interpretive room, but the plain text and the AG's reading converge on preemption.
If you are a state legislator
The AG opinion confirms § 14-43-608 reaches well beyond traditional rent control. If you support local regulation of application/background-check fees, you have to amend § 14-43-608 directly or pass a specific carve-out for these fees. If you want to reinforce the preemption, you do not need to do anything because the opinion already reads the statute broadly.
Common questions
Q: Are background check fees regulated anywhere?
A: At the federal level, the Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.) imposes consumer protections on consumer reporting agencies. Some states cap or regulate these fees, but Arkansas does not currently. Under this AG opinion, cities also cannot.
Q: Does § 14-43-608 prevent a city from regulating its own water rates or utility prices?
A: No. Section 14-43-608(b) carves out goods, rentals, or services provided by the municipality itself. Cities can set rates for municipally-provided services.
Q: Why does Arkansas use a Dillon Rule?
A: Arkansas does not have constitutional home rule for cities. Under Ark. Const. art. 12, § 4, municipalities have only the powers the General Assembly grants. Protect Fayetteville (2019) reaffirmed this.
Q: Could Fayetteville pass an ordinance just requiring landlords to disclose application fees in advance?
A: Disclosure-only requirements are different from price caps. The AG opinion does not address disclosure ordinances. They are not categorically barred by § 14-43-608, though they would still face the general Dillon Rule analysis.
Q: Is this AG opinion binding on Fayetteville?
A: No. AG opinions are persuasive authority. Fayetteville could decline to repeal Ordinance 6800 and force a landlord or association to challenge it in court. The AG opinion would be cited, and courts often follow well-reasoned AG opinions, but the legal answer is up to the courts.
Q: What about background check fees that landlords charge but don't actually run a check?
A: That is a consumer protection issue separate from § 14-43-608. The Arkansas Deceptive Trade Practices Act (A.C.A. § 4-88-101 et seq.) and general contract principles apply. The AG opinion does not foreclose those remedies; it only addresses municipal price regulation.
Background and statutory framework
Arkansas's price-regulation preemption sits in two statutes. The narrower one, A.C.A. § 14-54-1409, expressly prohibits rent control: "A local governmental unit shall not enact, maintain, or enforce an ordinance or resolution that would have the effect of controlling the amount of rent charged for leasing private residential or commercial property." The exception in subsection (c) lets local governments "manage and control residential property in which the local governmental unit has a property interest."
The broader one is A.C.A. § 14-43-608. Subsection (a) makes it unlawful for a municipality to regulate "prices for goods, rentals, or services sold or performed within the municipality by individuals or firms." Subsection (b) carves out goods or services that the municipality itself provides.
The constitutional foundation is Ark. Const. art. 12, § 4: "No municipal corporation shall be authorized to pass any laws contrary to the general laws of the state…." Arkansas's Dillon Rule reading of this provision was reaffirmed in Protect Fayetteville v. City of Fayetteville, 2019 Ark. 30, 565 S.W.3d 477, where the Supreme Court of Arkansas struck down a Fayetteville ordinance for going beyond the city's statutory powers.
The Fayetteville Ordinance 6800: caps application fees at $20 (no background check) and $40 (with background check), and requires a refund if the landlord charges a background check fee but does not run a check. The AG concludes this ordinance regulates "prices for … services" within the meaning of § 14-43-608(a) and is therefore preempted.
Citations and references
Statutes:
- A.C.A. § 14-43-608 (no municipal price regulation)
- A.C.A. § 14-54-1409 (no rent control)
- Ark. Const. art. 12, § 4 (Dillon Rule)
Cases:
- Protect Fayetteville v. City of Fayetteville, 2019 Ark. 30, 565 S.W.3d 477 (Dillon Rule)
Source
Original opinion text
Opinion No. 2024-093
January 22, 2025
The Honorable Robin Lundstrum
State Representative
Post Office Box 14
Elm Springs, Arkansas 72728
Dear Representative Lundstrum:
I am writing in response to your request for an opinion regarding an ordinance passed by the
Fayetteville City Council on October 15, 2024, which caps the fees landlords may charge
prospective tenants for rental applications and background checks. You state that "the ordinance
limits background fees to an amount not to exceed $40, and if no background check is done, the
maximum rental application fee is limited to $20. If a landlord charges a background check fee
and then does not obtain the background check, the fee must be returned in full to the potential
tenant."
You report that numerous constituents have raised concerns about this ordinance. Against this
background, you ask the following question:
Can a city propose, pass, and enact an ordinance, like the aforementioned, that
limits, restricts, or hinders what private business may charge for its services, goods,
or contracts?
RESPONSE
A city cannot enact an ordinance that regulates what private individuals or businesses may charge
for goods, rentals, or services sold or performed within the city.
TIM GRIFFIN
ATTORNEY GENERAL
323 CENTER STREET, SUITE 200
LITTLE ROCK, ARKANSAS 72201
The Honorable Robin Lundstrum
State Representative
Opinion No. 2024-093
Page 2
DISCUSSION
Because cities only have the power given to them by statute or the Arkansas Constitution,1 local
ordinances that conflict with state law are invalid.2 There are two State laws that could potentially
prohibit Fayetteville from enacting Ordinance 6800.
First, A.C.A. § 14-54-1409 prohibits local governments from enacting or enforcing rent control
ordinances.3 The ordinance you describe likely does not violate this statute because it caps the fees
associated with an application to rent, rather than "the amount of rent charged" itself.
Second, A.C.A. § 14-43-608 bars municipalities from regulating "prices for goods, rentals, or
services sold or performed within the municipality by individuals or firms."4 The ordinance likely
violates this statute. While there are no appellate court cases construing § 14-43-608, it is my
opinion that the statute's broad wording, which clearly includes "services," prevents a city from
passing an ordinance to cap the fees a private entity charges to process a rental application or to
conduct a background check.
Senior Assistant Attorney General Kelly Summerside prepared this opinion, which I hereby
approve.
Sincerely,
TIM GRIFFIN
Attorney General
1 Protect Fayetteville v. City of Fayetteville, 2019 Ark. 30, 3, 565 S.W.3d 477, 480.
2 Ark. Const. art. 12, § 4 ("No municipal corporation shall be authorized to pass any laws contrary to the general laws
of the state…."); Protect Fayetteville, 2019 Ark. at 3, 565 S.W.3d at 480.
3 See A.C.A. § 14-54-1409(b) ("A local governmental unit shall not enact, maintain, or enforce an ordinance or
resolution that would have the effect of controlling the amount of rent charged for leasing private residential or
commercial property."). An exception exists, however, for local governments "to manage and control residential
property in which the local governmental unit has a property interest." A.C.A. § 14-54-1409(c).
4 A.C.A. § 14-43-608(a). As with A.C.A. § 14-54-1409, there is an exception that allows a municipality to establish
the price for goods, rentals, or services furnished by, or performed by, the municipality. See A.C.A. § 14-43-608(b).