Landlords Beware: New Pitfalls and Harsh Penalties for the Collection of Late Rent Fee Payments

By Justin Miller
Attorney

Landlords in Colorado may want to think twice before enforcing late fees against a tenant behind on rent. Recent changes in Colorado law place new and heavy restrictions on a landlord’s ability to enforce late fee provisions against residential tenants—and the penalties for violating these new requirements are harsh. For instance, among other penalties, the changes in the law permit a tenant to seek compensatory damages, punitive awards, and reimbursement of their attorney’s fees and costs against any landlord who violates the new restrictions on late fees.

Colorado law now requires a landlord to wait seven days after rent becomes due and provide written notice before they may charge a late fee to residential tenants. Late fees are also capped under the law, limiting late fees for one month’s past-due rent to $50 or five percent of the past due payment, whichever is greater. The changes in the law also prevent a landlord from enforcing any late fee provision that is not specifically identified in the tenant’s lease agreement.

Any landlord who violates these provisions can be taken to court by their tenant, where they will likely be forced to pay a compensatory award that includes payment for their tenant’s attorney’s fees and costs. The law also entitles tenants to an automatic right to collect a $50 penalty payment from landlords who violate the law, while any lease provisions that violate the statutory changes will be stricken as “void and unenforceable.”

Moreover, if the landlord fails to fix a violation within seven days of receiving notice from the tenant, the tenant may sue the landlord for damages that include a penalty of $150-$1,000 for each violation (and recover their attorney fees for the cost of the lawsuit). Violations of these late fee requirements can also be used as a defense by a tenant in eviction proceedings.

The new law also severely restricts a landlord’s ability to enforce late-fee provisions. Under the changes, landlords may not terminate a lease for nonpayment of a late fee, charge interest on a late fee, or collect a late fee by subtracting the fee from a rent payment.

Given the severe penalties, landlords should carefully review changes in the law and confirm their compliance before assessing new late fees against their residential tenants.

This article does not list all the changes in the law that landlords should be aware of, nor is it intended as legal advice that can be relied upon. Landlord-tenant law in Colorado is often case-specific, and readers should consult with their own hired counsel before taking any action.

Caplan & Earnest’s qualified team of attorneys have extensive experience in this area of the law and are available for counsel on any of your landlord-tenant needs.