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New Law on Rental Application Fees

Colorado’s 2019 legislative session resulted in new laws affecting landlords and tenants.  This article is not inclusive of all the changes to landlord-tenant law it focuses on rental application fees. Please contact our office if you have specific questions regarding a particular area of landlord-tenant law.

House Bill 19-1106 – Rental Application Fees

Landlords typically charge people looking to rent a rental application fee. House Bill 19-1106 provides restrictions on rental application fees that may be charged to a tenant with regard to any rental application.  Specifically, the Bill provides that landlords may not charge more than their actual costs in reviewing and processing a prospective tenant’s application.  Under the Bill, Landlords have to charge the same rental application fee to each prospective tenant applying to rent the premises if they are applying to either rent: (1) the same dwelling unit; or (2) if the landlord offers more than one unit for rent, then the rental application fee must be the same for all units offered.

The Bill further requires landlords to disclose the anticipated fees to be used in connection with processing the rental application, or provide an itemization of the landlord’s actual expenses incurred in connection with processing the rental application fee.  An option also exists under the Bill for larger property management companies or similar businesses to charge the average cost of processing a rental application, but the landlord has to then disclose how the “average rental application fee” was determined to the prospective tenants.  Similarly, landlords are also now required to provide a receipt to prospective tenants in connection with the rental application fee charged and to return any unused portion of the fee to the tenant that was not used to cover the landlord’s actual rental application processing fees.  A landlord must return unused application funds within 20 days.

The Bill also limits what criteria a Landlord can consider when reviewing a rental application and the time frame in which the landlord may consider credit history as well as prior arrests and convictions of an applicant.  Under the Bill, a landlord is now prohibited from considering an arrest record or conviction of a prospective tenant that occurred more than five years before the date of the application and is limited to reviewing seven years of credit history.  The Bill provides certain limited exceptions for considering offenses outside of the five-year time frame for more severe or violent crimes, which are specifically defined in the Bill.

The Bill also requires landlords to provide a Notice of Denial for those prospective tenants whose rental applications are denied after processing.  The Notice of Denial must be in writing and state the reason for the denial, or alternatively, provide the actual report from the proprietary screening system in the event that the reasons for the denial cannot be determined due to the proprietary screening system itself. Many Landlords use third-party companies to review a prospective tenant and a Landlord can provide a report from them together with the Notice of Denial to explain why the person/s cannot move into the property.   Landlords are required to make a good faith effort to provide a Notice of Denial within twenty (20) calendar days of the denial.

If a Landlord fails to follow these new laws concerning rental applications, the Landlord will be in violation of the law, so it is very important that landlords understand and seek to comply with these new laws regarding rental applications.

This Bill was signed into law on April 25, 2019 and goes into effect on August 2, 2019.  Please contact me with specific questions concerning compliance with this Bill.   A summary of the Bill can be found here.

 

 

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