Landlords, Take Note! Legislature Adds New Regulations to the Rental Application Process

By Justin Miller
Attorney

Colorado lawmakers continue to craft new regulations that govern the way landlords interact with both current and prospective tenants. (You can read more about last year’s changes to the law in a previous post.) Several laws recently went into effect that add additional restraints to the rental application process, the provisions of lease agreements, and tenant income and deposit requirements. Landlords found in violation of the law could face thousands in fines, damages, and costs, including a hefty bill for both their own and their tenant’s attorneys’ fees. 

Newly enacted HB23 1099 limits the fees landlords can collect from rental applications. It requires landlords to standardize their application fees across properties they own or between applicants for the same dwelling or unit. Landlords are also required to accept portable background screeners that are at least 30-days current, and they cannot charge application fees for tenants who make use of a portable screening report. If a landlord rejects a prospective tenant, they must tell them why they rejected their application and provide a copy of any report, such as a credit report or background screener, they relied upon free of charge. A prospective tenant may challenge the contents of the report. 

Lawmakers also limited terms landlords can incorporate into their lease agreements. HB23 1095 forbids landlords from assigning tenant’s eviction-related penalties or any kind of attorney fees and costs. They are also prohibited from requiring tenants to waive their right to most jury trials, class action litigation, and implied covenants of good faith and fair dealing or quiet enjoyment. Any clauses affixing any monetary amount related to a tenant’s failure to provide non-renewal notice are null and void unless actual damages can be proven. The new law also limits how much landlords can charge in third-party fees, such as for pest control or trash collection. 

Finally, SB23 184 limits the considerations a landlord can make when reviewing a tenant’s rental application and also how much a landlord can require as a security deposit. Under the law, no landlord can charge a security deposit that equals more than twice the amount of one month’s rent for the unit. Landlords are also barred from inquiring into a prospective tenant’s income except to see if it equals or exceeds double the cost of rent. The law further limits a landlord’s ability to review a prospective tenant’s credit history, which is now limited to seven years’ worth of rental and credit history. Landlords who accept housing subsidies are subject to even stricter requirements.  

As always, the devil is in the details and these new laws contain several exceptions. This article does not list all 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.