Landlord-Tenant Legislative Update, July 2023
By: Scott D. Goebel and Annie D. Murphy
The Colorado legislature recently passed a handful of laws that afford tenants new protections, and place additional burdens on landlords. SB23-184 (“Protections for Residential Tenants”), HB23-1095 (“Prohibited Provisions in Rental Agreements”), HB23-1254 (“Habitability of Residential Premises”), HB23-1068 (“Pet Animal Ownership in Housing”), HB23-1099 (“Portable Screening Report for Residential Leases”), HB23-1120 (“Eviction Protections for Residential Tenants”), and HB23-1186 (“Remote Participation in Residential Evictions”), collectively impact landlord-tenant relationships moving forward. And, the Colorado Supreme Court recently issued a ruling on the current applicability of the CARES Act. This article highlights the key aspects of each bill and the CARES Act Ruling and how they may affect you. This article is for informational purposes only.
SB23-184 “Protections for Residential Tenants”
Signed into law on June 6, 2023, and effective this August, this bill restricts landlords (with some exceptions) from considering or inquiring about certain information relating to a prospective tenant’s amount of income and credit history. It also places a cap on security deposits.
Unfair Housing Practice
SB23-184 states that landlords who consider or inquire about a prospective tenant’s amount of income to determine tenant eligibility commit an “unfair housing practice.” Inquiry limitations depend on the source of income of the tenant applying.
If the prospective tenant receives a housing subsidy, landlords are prohibited from inquiring or considering about the tenant’s amount of income and credit score, adverse credit event, or lack of credit score. There are a few exceptions to this law as it relates to tenants who receive a housing subsidy:
1. Landlords can inquire about the amount of income to determine if the prospective tenant’s annual amount of income equals or exceeds 200% of the annual cost of rent;
2. Landlords can inquire about credit scores if they are required to do so by federal law; and
3. If the landlord receives funding from a government entity, quasi-government entity, or nonprofit, and such funding is contingent upon the tenant’s amount of income, landlords can request the tenant’s amount of income.
If the prospective tenant doesn’t receive a housing subsidy, a landlord’s inquiry is limited to
information necessary to determine whether the income equals or exceeds 200% of the annual cost of rent. And, landlords are prohibited from requiring that tenant’s income exceed 200% of the annual cost of rent.
Affirmative Defense
In an eviction action, tenants can now assert as an affirmative defense that the landlord committed an unfair housing practice. If the tenant is successful in this defense, landlords face the following penalties: $50.00 for a first-time offense; and $2,500, economic damages, court costs, and attorney fees for a repeat offense.
Security Deposits
Security deposits can no longer exceed the cost of two-months rent. Whether “last month rent” is considered a security deposit is a question that is not specifically addressed by the legislature.
HB23-1095 “Prohibited Provisions in Rental Agreements”
Signed into law on June 5, 2023, HB23-1095 comes into effect this August. This bill prohibits certain provisions in leases or rental agreements. If your lease contains any of these provisions, they will not be enforceable after the effective date.
Waivers
A tenant may not waive:
1. The right to a jury trial;
2. The right to join or bring a class action relating to terms of tenancy;
3. The implied covenant of good faith and fair dealing; and
4. The implied covenant of quiet enjoyment
In waiving the implied covenant of quiet enjoyment, leases may contain a waiver for acts committed
by third parties outside the control of the landlord.
Attorney Fees
Colorado law already requires a fee shifting provision in the lease in which attorney fees are awarded to the prevailing party in order for a landlord (or a tenant) to recover fees. HB23-1095 now requires additional language, that such an award is made following determination by the court that the party not only prevailed but that the attorney fees are reasonable. We recommend that our clients update this lease provision.
Fees for Notice of Nonrenewal
Gone are the days of requiring fees, penalties, or damages for tenants failing to provide notice of nonrenewal. Now, landlords are only permitted the recovery of “actual losses,” which shifts the burden onto landlords to prove what those actual losses may be.
Fees as Rent
Leases can no longer classify certain fees as “rent” for the purpose of collecting rent or evicting. These fees include utilities, services, and any other charges that are not for the specific purposes of rent. And, if you are a landlord who operates under a local, state, or federal voucher/subsidy program, you are now precluded from evicting a tenant solely on the basis of the tenant failing to pay utilities.
Additionally, landlords cannot require tenants to pay a markup fee for a service for which landlords are billed by a third party. This may include, but is not limited to, fees such as electricity, trash, landscaping, or snow removal.
Exceptions
As always, there are exceptions to the above-described lease prohibitions. If you are a landlord who owns a duplex, triplex, or accessory dwelling unit, and reside in one of the units or the primary residence, the above prohibitions do not apply. And, these prohibitions do not apply to mobile home lot leases.
HB23-1254 “Habitability of Residential Premises”
Signed into law on May 12, 2023, HB23-1254 became effective immediately, and is worth paying attention to. Passed in response to the Marshall Fires, this bill creates an additional definition of an uninhabitable premises and changes how landlords must react when receiving a notice from a tenant that the premises is uninhabitable.
Environmental Public Health Event
When natural disasters, such as a wildfire, floods, or the release of toxic chemicals occur, and such events create negative health and safety impacts for tenants, this is deemed an “Environmental Public Health Event,” or (“EPHE”).
Generally, upon receiving written notice of uninhabitable conditions, landlords have 24 hours to respond. In the event a residential premises is uninhabitable due to an EPHE, landlords will have 72 hours to respond. Upon receipt of notice from a tenant, landlords must now respond by affirmatively telling tenants what the landlord’s responsibilities are. These include providing the tenant with comparable units in either a house or hotel at the landlord’s expense if the tenant requests, until the alleged breach is fixed.
Under the new law, landlords must remedy the EPHE condition within 60 business days to be considered a reasonable time. If a landlord is unable to comply with this timeline, and tenants follow other procedures, they are afforded the right to terminate the lease prematurely. Given this new law, it is a good idea for landlords to review their rental insurance policies for coverage.
Landlord Retaliation
HB23-1254 also expands the definition of landlord retaliation. Under the new law, landlords are prohibited from (in response to a habitability request or notice):
1. Increasing rent or decreasing services;
2. Terminating the lease without the written consent of the tenant, except as otherwise provide by law;
3. Bringing or threatening to bring eviction; or
4. Taking action in any manner that intimidates, threatens, discriminates, or retaliates against the tenant.
If a landlord is alleged to have committed any of the above actions, tenants can now assert as an affirmative defense that the landlord retaliated against them.
HB23-1068 “Pet Animal Ownership in Housing”
Signed into law on June 7, 2023, HB23-1068 is effective on January 1, 2024. This bill attempts to prevent tenants from being separated from their pets, citing that many tenants must choose between keeping their pet or securing housing. Unfortunately, the likely result of HB23-1068 will be a blanket increase in rent, or the blanket ban of pets altogether.
Pet Security Deposits
Pet security deposits are now required to be refundable and cannot exceed $300 (whether this cap is per pet or per unit is unclear). And, landlords can only increase rent in the amount of $35/month or less than 1.5% of monthly rent, whichever is greater, to account for the additional wear and tear on a unit by a pet.
Evictions
Landlords and officers executing a writ of restitution now have new responsibilities. The officer is required to first search the premises for pet animals and, if found, the landlord must return any pets to the tenant if they are present during the eviction.
In the event a tenant is not present during the eviction and a pet is found, officers must contact the local animal control. Landlords will have to provide animal control with access to the premises to secure the pet and contact the tenant if they are able to. Landlords must also post a notice in a visible place on the premises with the name and contact information of where the animals have been taken and provide this information to the tenant if they request it. Finally, pets that are found during an eviction cannot be left unattended on public or private property.
HB 23-1099 “Portable Screening Report for Residential Leases”
Signed into law on May 4, 2023, HB23-1099 is effective this August. This bill largely prohibits landlords from charging tenants with rental application fees if a portable tenant screening report (“screening report”) is provided by the tenant. A screening report is a consumer report that contains the tenant’s name, contact information, verification of employment/income, last-known address, prior residences, credit history, and tenant history.
Landlord-Imposed Requirements
Although a landlord can no longer charge a rental application if a tenant provides screening report, landlords still have the liberty to impose conditions on tenants. These include requiring:
1. That the screening report was completed in the last 30 days;
2. That the screening report is made directly available to the landlord by the consumer reporting agency;
3. That the screening report is made available to the landlord at no cost; and
4. That the tenant provide a written statement that there has been no material changes since the report was issued, including name changes, bankruptcy, criminal history, or eviction status.
In the event a tenant doesn’t provide a screening report, landlords are required to provide the tenant with a copy of any screening report obtained by the landlord free of charge and advise the prospective tenant of their right to dispute its accuracy.
Notice Requirements
Landlords now have burdensome obligations in providing tenants with information relating to screening reports. Landlords must provide tenants with notice, in substantially similar language, that:
1. The prospective tenant has the right to provide the landlord with a screening report; and
2. If the prospective tenant provides a screening report to the landlord, that the landlord is prohibited from: (i) charging the prospective tenant a rental application fee, or (ii) charging the prospective tenant a fee for the landlord to access a tenant-generated screening report.
The onerous requirement is that this notice must be included in the same mediums in which a landlord
traditionally acquires new tenants. These include the following requirements for each medium:
1. Advertisements and other public notices of room availability: The notice must be displayed in 12-point, bold-faced font. If 12-point, bold-faced font is impractical for the advertisement, the notice must match the other font of the advertisement;
2. Landlord Websites: The notice must be displayed in 12-point, bold-faced font.
3. Rental Applications: The notice must be displayed in 12-point, bold-faced font.
4. Verbally: If the landlord provides the tenant with verbal notice, the landlord must obtain written confirmation from the prospective tenant that such notice was given.
Exceptions
Landlords who do not accept more than one application at a time may charge a rental application fee and are not required to provide prospective tenants with notice.
Violations
Landlords who charge a prospective tenant an application fee and receive a screening report must return the application fee within 7 days after the tenant requests its return. If found in violation, Landlords who fail to remit the application fee must pay the prospective tenant $50. Landlords who habitually violate these new requirements are liable for $2,500, plus court costs and reasonable attorney fees.
HB23-1120 “Eviction Protections for Residential Tenants”
Signed into law on June 6, 2023, HB23-1120 is effective immediately. This bill seeks to level the legal playing field for tenants who receive supplemental security income, social security disability insurance, or cash assistance through the Colorado works program. For the purposes of this article, these three sources of supplemental income are referred to as “cash assistance.”
Written Demands
Written demands to tenants, whether it be a demand for compliance or possession, or notice to quit, must now include a statement that tenants who receive cash assistance have a right to mandatory mediation prior to the landlord filing an eviction complaint.
To determine whether a tenant receives cash assistance, landlords are now allowed to request this information from tenants, as HB23-1120 states a landlord requesting this information is no longer committing an unfair housing practice.
Mandatory Mediation
Mandatory mediations must be conducted by a trained neutral third party at no cost to the tenant. Landlords will be responsible for only their costs, and both parties may have legal representation. Upon request by the landlord, the Office of Dispute Resolution (“ODR”) must schedule the mandatory mediation at the first available date, but no later than 14 days after the request is received. Tenants do have the ability to waive their right to mandatory mediation. Currently, these mediations are scheduled out of the ODR in Denver and are conducted remotely for a two-hour block at $50.00 per hour and charge a minimum of one hour.
When landlords fail to offer mandatory mediation, cash assistance tenants can now raise the affirmative defense that no mediation occurred. If landlords are unable to demonstrate they complied with mediation requirements, the eviction action will be dismissed, and landlords will have to start the complaint process over once mediation has occurred.
Leases
As mentioned above, tenants can voluntarily waive their right to mandatory mediation. However, lease provisions that purport to have tenants waive this right will not be enforceable. And, leases cannot contain provisions that purport to allow landlords with recovery of their mediation costs. HB23-1120 also creates a new requirement that leases must contain a statement that: “C.R.S. § 24-34-502(1) prohibits source of income discrimination and requires non-exempt landlords to accept any lawful and verifiable source of income.” Accordingly, we recommend that landlords add this provision to their leases.
Complaint Affidavits
Any eviction complaint filed with a Colorado court must now contain an affidavit of various circumstances, including:
1. The tenant receives cash assistance and the parties completed mandatory mediation but it was unsuccessful;
2. The parties did not participate in mandatory mediation because the tenant: (i) did not disclose or declined to disclose in writing in response to a written inquiry from the landlord regarding cash assistance, or (ii) that the tenant does not receive cash assistance; or
3. The parties did not participate in mandatory mediation because: (i) the landlord is a 501(c)(3) nonprofit organization that already offers mediation to tenants prior to filing evictions, or (ii) the landlord is exempt from participating in mandatory mediation.
Exceptions
Landlords with 5 or fewer single-family residential homes or 5 units are exempt from participating in mandatory mediation, and from providing the required lease provision stated above.
Writ of Execution
Generally, evictions can take place 10 days after judgment is entered. However, if a tenant who receives cash assistance has an eviction judgment entered against them, evictions cannot occur until 30 days after judgment is entered. For exempt landlords, as well as tenants who are evicted for a substantial violation, the 10-day period remains in effect.
HB23-1186 “Remote Participation in Residential Evictions”
Signed into law on June 7, 2023, HB23-1186 comes into effect on January 1, 2024. This bill seeks to provide tenants with more access to the judicial system when facing an eviction action by creating uniform standards for remote participation.
Remote Access
Landlords, tenants, and witnesses in eviction actions may now designate their intent to participate in legal proceedings either in person or remotely by phone or video. Pro-se defendants may also file documents electronically through the court’s e-filing system and can request the court to waive filing fees. In the event a party is disconnected from their remote appearance, and they are unable to reestablish their connection, courts must reschedule the hearing no later than one week after the original hearing to the extent practicable. Default judgments in the event of technological disconnection or failure are now prohibited.
Complaints and Summonses
Complaints and summonses in eviction cases will look different at the start of the New Year. For complaints, landlords must now indicate whether they elect to participate in any hearings in person or remotely by phone or video.
For residential evictions, the summons must now inform the tenant that either party has a right to appear in person or remotely by phone or video. The summons must also inform the tenant that in the event they are disconnected and unable to reestablish connection, the court will reschedule the hearing in person on the first available date within 7 days if possible.
The summons must include a place for the tenant to indicate whether they will participate in the eviction hearing in person or remotely, and information on how a pro-se party can file documents related to the case. Upon the election to participate remotely, courts must provide the party with necessary information to facilitate remote appearance.
We believe that this is a positive change for our clients, particularly our clients in more rural parts of the state.
CARES Act Applicability
On May 15, 2023, the Colorado Supreme Court ruled the CARES Act 30-day notice to vacate requirement is still in effect for “covered properties.” A covered property is typically either: public housing, section 8 housing voucher property, section 202 housing for the elderly, and properties with federally backed loans (FHA, VA, USDA, etc.).
The Court ruled that the "Notice Provision [of section 9058 of the CARES Act] did not include an expiration date" and that the Court could not "insert an expiration date where Congress omitted one." The Court also ruled that the title of this section, "Temporary moratorium on eviction filings," did not "change anything," as a title cannot limit the plain meaning of a more specific provision within a statute. The Court stated that it was not "empowered to 'rescue Congress from its drafting errors'..." (ouch) and that if Congress made a mistake and intended to include an expiration, then Congress should amend the statute. This means that Colorado landlords will be required to give residents in covered properties 30 days' notice of a lease violation before filing for an eviction. This notice period trumps the state's current notice period of ten days.
In June, the Colorado Courts issued an updated form Demand for Compliance that incorporates the new laws, including the CARES Act. You can find it here.
Understanding these new requirements will help ensure landlords remain compliant, avoid fees and litigation, and successfully terminate tenancies and/or evict if necessary. If you would like to speak with an attorney about the new Colorado landlord requirements or would like a lease review, please give our office a call at 970-241-5500.