In its 2023 legislative session, the Colorado General Assembly passed several bills that impact relationships between residential landlords and tenants. Governor Polis subsequently signed many (but not all) of these bills into law. Some of these new laws may require updates to residential lease agreement templates. Others may not require direct changes to lease agreements but will impact the way business must be conducted by landlords and property managers. Some of the legislation is not completely clear and judicial interpretations will need to be monitored.
Below are summaries of some of the new laws that potentially affect Colorado residential lease agreements and relationships. This article does not cover all 2023 legislation in this area, such as changes to eviction proceedings and responses to certain property contaminations.
If you purchased a Residential Lease Agreement from our firm prior to mid-June 2023, it needs to be updated to comply with these changes. Contact me to discuss updates. All residential landlords and property managers need to start providing the Colorado Radon Disclosure described below.
These summaries are not intended to be exhaustive. Statutory text should be reviewed for specifics and certain exceptions may apply that are beyond the scope of this article.
SB23-206: Disclose Radon Information Residential Property (effective Aug. 7, 2023)
Radon is a is a naturally-occurring radioactive gas that is found in soil and groundwater, is recognized by the World Health Organization as a carcinogenic toxin, and is a leading cause of lung cancer. As a result, this law requires sellers and landlords of residential Colorado real estate to make certain disclosures regarding the known existence of radon in the property. The bill tasks the Colorado Real Estate Commission (CREC) to create necessary disclosures for purchase and sale transactions. However, the statute does not require the CREC to create a disclosure for leasing transactions.
Landlords and property managers of residential Colorado real estate must disclose and provide the following to potential purchasers or tenants:
1. A warning statement (included in the statute) about the dangers of radon and recommendation to conduct testing.
2. Any knowledge the owner has about radon concentrations in the property, including:
- a. Whether radon tests have been performed in the property;
- b. The most current records and reports pertaining to radon in the property;
- c. A description of any radon detected, mitigated, or remediation performed;
- d. Information regarding any radon mitigation system in the property; and
- e. A copy of the most recent brochure published by the Colorado Department of Public Health and Environment that provides advice about radon in real estate transactions.
If a landlord or property manager fails to provide the necessary disclosures or fails to make a reasonable effort to mitigate radon concentrations of more than 4 pCi/L, then the tenant may void their lease and vacate the premises in accordance with Colorado’s Warranty of Habitability laws. Property managers should require that owners complete and provide the necessary radon disclosures, so that property managers can then provide the disclosures to prospective tenants.
Need a Radon Disclosure form? Our firm created a Colorado Radon Disclosure form for rentals to comply with these new requirements. Contact me if you need a Colorado Radon Disclosure form for your rentals. We will provide the Disclosure free of charge to past and future purchasers of our Residential Lease Agreement or Residential Property Management Agreement.
HB23-1095: Prohibited Provisions in Rental Agreements (effective Aug. 7, 2023)
A residential rental agreement may now not contain:
1. A clause that assigns a penalty to a party stemming from an eviction notice or an eviction action that results from a violation of the rental agreement.
2. A one-way, fee-shifting clause that awards attorney fees and court costs to only one party. Any fee-shifting clause must award attorney fees to the prevailing party “following a determination by the court that the party prevailed and that the fee is reasonable.”
3. Waiver of any of the following:
- a. A jury trial;
- b. The ability to pursue, bring, join, litigate or support any kind of joint, class or collective claim or action;
- c. The implied covenant of good faith and fair dealing; or
- d. The implied covenant of quiet enjoyment.
4. A provision that purports to affix any fee, damages, or penalty for a tenant’s failure to provide notice of nonrenewal of a rental agreement prior to the end of the rental agreement.
5. Except for the set monthly payment for occupancy of the premises, any provision that characterizes any amount or fee as “rent,” which could lead to remedies such as eviction in the event of non-payment.
6. A provision that requires a tenant to pay a “fee markup or for a service for which the landlord is billed by a third party; except that a written rental agreement may include a provision that requires a tenant to pay either a markup or fee in an amount that does not exceed two percent of the amount that the landlord was billed or a markup or fee in an amount that does not exceed a total of ten dollars per month, but not both.”
The statutory text is quoted here because it’s not completely clear. Application of the language to property managers and property management agreements is also potentially ambiguous. Respectfully, it appears that a word or two were unintentionally added, omitted, or jumbled in the final text.
Recommendation: Residential lease agreement templates should be reviewed and updated to confirm that they do not include any prohibited terms. Any provision that violates these terms is void and unenforceable.
HB23-1068: Pet Animal Ownership in Housing (effective Jan. 1, 2024)
Limits the amount of additional security deposit that a landlord can demand as a condition of permitting the tenant’s pet to reside at the property to no more than $300. The additional pet deposit must be refundable to the tenant. Further, the amount of additional rent that can be charged as a condition of permitting the tenant’s pet to reside at the property cannot exceed the greater of: (i) $35 per month, or (ii) 1.5% of the monthly rent amount.
This Act also prohibits insurance companies from refusing to issue, cancelling, refusing to renew, or increasing premiums or rates for a homeowner’s insurance policy or a dwelling fire insurance policy based on the breed or mixture of breeds of dog that is kept at the dwelling. However, these prohibitions do not apply if a particular dog kept at the dwelling is known to be dangerous or has been declared to be dangerous and the decision is “based on sound underwriting and actuarial principles.”
Recommendations: Lease agreement templates containing a blanket lump sum additional pet charge that is not treated as a refundable deposit should be modified to comply with the statute. Landlords and property managers must be aware of the maximum amounts that can be collected as an additional pet security deposit or additional monthly pet fee.
HB23-1099: Portable Screening Report for Residential Leases (effective Aug. 7, 2023)
Requires landlords to accept a “portable tenant screening report” as part of the application process, in which case the landlord may not charge the prospective tenant an application fee. A portable tenant screening report includes information about the applicant from a consumer reporting agency, including the applicant’s:
- Contact information;
- Verification of employment and income;
- Last-known address; and
- Rental, credit, and criminal background histories, in compliance with Colorado law.
Landlords may require that the portable tenant screening report meet certain criteria, including that the report was:
- Completed within the last 30 days;
- Made directly available to the landlord by the consumer reporting agency or through a third-party website regularly engaged in the business of providing consumer reports, in compliance with all applicable consumer reporting laws;
- Provided to the landlord at no cost; and
- A statement from the prospective tenant that there has not been any material change in the information provided in the report.
Before taking any rental application for which the landlord would typically charge an application fee, landlords must advise applicants that they have a right to obtain a portable tenant screening report. Required language, timing, and placement of the advisement is included in the statute.
Landlords are exempt from these requirements if the landlord:
- Does not accept more than one application fee at a time for a dwelling unit, or if a dwelling unit is rented to more than one occupant, does not accept more than one application fee at a time from each prospective tenant or tenant group for the dwelling unit; and
- Refunds the total amount of the application fee to each prospective tenant within twenty calendar days after written communication from either the landlord or landlord’s agent or the prospective tenant declining to enter into a lease agreement for the dwelling unit.
This Act in particular contains many specific details that are not included in this brief summary. Contact FJGG attorney Zac Grey for information and questions about Rental Application Fairness Act compliance matters.
SB23-184: Protections for Residential Tenants (effective Aug. 7, 2023)
If landlords use rental or credit history when considering prospective applicants, this Act limits the landlord’s ability to consider or inquire about certain aspects of the applicant’s income. Landlords renting to prospective applicants who are seeking to rent without the assistance of a housing subsidy shall not require that the applicant’s annual income exceeds 200% of the annual rent amount. The Act also limits the security deposit that can be required of residential tenants to no more than two (2) monthly rent payments under the lease.
Conclusion: Legislation governing the relationship between residential landlords and tenants was a major priority for the Colorado General Assembly in 2023. This host of new legislation directly impacts the way that landlords and property managers must conduct business in order to remain in compliance with current laws.