On August 2, 2019, Colorado’s Rental Application Fairness Act came into effect and now applies to certain rental applications submitted on or after that date. This articles explores the Act’s history, the obligations it imposes on landlords, and the remedies available to tenants.

History

The Act was first introduced as a House bill in January 2019 where it was assigned to the House Business Affairs and Labor Committee. It’s prime sponsors in the House were Rep. Titone (Dist. 27-Jefferson Co.) and Rep. Gonzales-Gutierrez (Dist. 4-Denver); Sen. Pettersen (Dist. 22-Jefferson Co.) was the bill’s prime sponsor from the state Senate. The bill passed along largely partisan lines in both the House and the Senate and was signed into law by Gov. Polis on April 25.

Supporters of the bill argued that the unregulated collection of rental application fees had perpetuated the state’s affordable housing crisis. 9to5 Colorado, an advocacy group for working women, testified in support of the bill. In their 2016 survey, the group found that the majority of respondents cited application fees as a barrier to housing and that such fees could sometimes reach as much as $145 per applicant.

Rental Applications and Fees

The Act covers only those applications submitted for residential rentals, specifically “home[s], residence[s], and sleeping place[s].” Commercial leases and leases for storage units, for example, are not covered by the Act. The Act broadly defines an application fee so as to cover any amount of money charged in connection with a rental application or any nonrefundable fee that precedes the on-set of the tenancy. It should be noted that this definition is intended to exclude refundable security deposits.

When a landlord, property manager, or other lessor charges a fee, any unused portion of the fee must be returned to the applicant within twenty calendar days after processing the application. The landlord is required to make a “good-faith effort” in timely returning the unused portions. Although the courts have not defined “good-faith effort” as it is used by the Act, there are cases that may be instructive on the matter. In Woodsmall v. Regional Transp. Dist. (Colo. 1990), the Court looked to statements made during a legislative committee hearing to determine the degree of compliance necessary to conform to a statutory requirement. The Court noted that where absolute compliance is not required under a statute, an inadvertent omission of a minor detail would not defeat good faith efforts to comply with the statute.

Any rental application fee charged must be based on either the actual expense the landlord incurs in processing the application or, if the landlord processes multiple rental applications at a time, the average expense incurred per prospective tenant. Fees charged cannot differ in amount from application to application whether such applications are for the same dwelling unit or are for different dwelling units being offered by the same landlord at the same time.

Landlords that charge an application fee must provide prospective tenants either a list of anticipated costs or actual costs incurred in processing the application. A paper or electronic receipt for the fee must also be provided to the prospective tenant. If a tenant requests a paper receipt, then the landlord must provide a paper copy.

Criminal, Rental, and Credit Histories

In addition to regulating application fees, the law also regulates the rental and criminal histories of a prospective tenant that may be considered by a landlord. The use of rental and credit histories are limited to seven years immediately preceding the date of the application whereas conviction records are limited to five years immediately preceding the application. The law prohibits the use of arrest records in considering a prospective tenant. The regulations for criminal histories do not apply to convictions and deferred judgments involving certain methamphetamine offenses, homicide, felony and misdemeanor assault, menacing, aggravated extortion, reckless endangerment, kidnapping, human trafficking, stalking, and various sex offenses.

If a landlord denied a rental application, the landlord must provide the prospective tenant with a written notice of the denial stating the reasons for the denial. Similar to receipts, the landlord may provide an electronic copy but must provide a paper copy if one is requested by the applicant. The landlord must make a “good-faith effort” to provide the notice within twenty calendar days after deciding to deny the application.

Remedies for Aggrieved Applicants

A landlord who violates any provision of the Act may be liable for three times the amount of the rental application fee, plus court costs and reasonable attorney fees. Plaintiffs do not have standing to sue unless the landlord has received written notice of intent to sue at least seven days prior to commencing the suit. A landlord may avoid liability by correcting or curing violations of the Act within seven days of receiving the notice of intent to sue and may recover their court costs and attorney fees incurred in defending a meritless claim brought purposefully and in bad faith.

Our firm is experienced in advising both landlords and tenants on Colorado’s Rental Application Fairness Act. Contact us today by phone at (417) 350-6994 or by email at Andrew@Lipscomb.Law.

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