All Forum Posts by: John Ramos

Thanks Spencer, my understanding was that we could not deduct late fees from their rent payments, but it sounds like the tenant would first need to notify us in writing that they do not want late fees being deducted from the rent, is that correct?  

Colorado Senate Bill 21-173 was a quasi omnibus renters rights bill that limited the amount of late fees to $50 or 5% of monthly rent, whichever is greater, late fee cannot be charged until 8th calendar day of month (must give 7 calendar days to pay rent), cannot be deemed as additional rent for next monthly rent payment, cannot be deducted from rent payments, cannot be charged interest on and cannot be used as a reason to evict a tenant.

This leaves landlords three options, issue an invoice to demand payment, if issued invoice is not paid then bring tenant to small claims court to collect OR deduct all legitimate late fees at end of lease period from the deposit.  So, I wanted to see what other landlords are doing to collect late fees and which avenue they are using.

We are now into a couple of years living with "SB21-173, Concerning Rights Related to Residential Rental Agreements" and as a landlord I wanted to see how others are actually recouping/collecting any late fees from your renters?  Are you sending a separate invoice to renters?  Are you waiting until the end of the lease term to recoup/collect late fees from the deposit?  Please share your process, thanks.

Quote from @Bob Vollmer:

@Greg Weik I think your email to Ruby Dickson was spot on. You provided an excellent argument which, in my opinion, she would have a tough time refuting. Thank you for reaching out to your representative and I hope others follow suit. 

@John Ramos I see it as the typical "overreaching offer". The original bill asked for too much with the anticipation of settling somewhere in the middle. If these politicians remain in office, I would expect them to stair-step their way back to their original terms over time under the same "fair housing" flag. 

As someone who only has a few properties here in CO, I am absolutely tempted to liquidate and move on. Why risk it or deal with it? I know that I provide quality housing at a fair price (relative to market rates). Yet if I can't control the property that I own and see growing risks in owning it, why fight the uphill battle when I can move my money to something more reasonable? You're spot on saying that there will be a reduced rental stock in the future if this goes through. Unfortunately, most people don't take the time to critically think through the repercussions of these laws. 

Bob,

There are literally hundreds if not thousands of landlords like yourself who will leave the market after this legislation is signed off by the governor.  Let’s say in the first year of passage 1,000 landlords choose to stop leasing their places and sell after their tenants move out, if average household size is 2-3 people per unit then that’s 2K-3K people displaced in a year.  That’s a very modest projection, too bad our politicians don’t understand math.

Quote from @Henry T.:

All they care about is votes from renters, and there's a lot. I've been watching Colorado because I'd like to exit Seattle for some of these same reasons. Thought it might be a fairer place to landlord. When I read various states "just cause" laws, I fail to see anything fair or just about them. Too bad for Colorado. Maybe there's hope if the Gov is not a progressive. I never thought I'd fall into a conspiracy crowd, but I'm honestly starting to wonder, it's spreading like a disease.  When we all quit the business, and the big boys win, only then will the laws be reversed.

Apparently the sponsors of the bill have accepted some amendments, one of which is an exemption from having to provide a tenant relocation compensation.  If the Landlord can prove that their rental income, less HOA dues and mortgage, is no more than $6500 then they do not need to provide relocation assistance in the event of a no-fault eviction.

Landlords who have 2/3+ rentals will eventually leave the market.  The repayment risk on their mortgages will become too great.  The larger companies will move in and purchase a large swath of these properties/rentals that get pulled out by landlords exiting the business.

in the end the rental stock will be reduced.  The people who supported these politicians will get crushed by the financial might of the large companies that become the new landlords.

Representative Dickson is also my Rep and I received the exact same response as you did, I responded with a thanks and forgot about it as she is not interested in having a productive discussion.  The people of Colorado don’t really understand, and especially our misguided/inexperienced state legislators, that these laws will reduce the supply of housing.  Renters will need a minimum 750 credit score and some landlords may start requesting the entire lease be paid upfront.  This bill and the rent control bill will reduce the rental stock by at least 20% in the first year.

Of all the proposed housing bills proposed during the 2023 legislative session this bill has the ability to single handedly push more landlords out of the business and reduce the number of available properties for rent in one fell swoop.  As you will see below this bill has elements of rent control and was structured as such that a landlord would be unable to raise rent very much or if at all from one lease period to another.  So, lets dig into this proposed legislation outlining what is "Just Cause" for eviction.

HB23-1171  Just Cause Requirement Eviction Of Residential Tenant

This defines the "just causes" for eviction as tenant continues to not pay rent even after landlord provides written notice of nonpayment, tenant commits a "substantial violation" that is not cured in 10 days and allows for a "no-fault" eviction whereby, in certain instances,  the landlord must compensate the tenant.

Tenant Continues To Not Pay Rent After Delivery Of Written Notice

After serving your tenant with notice of failure to pay, if they continue to NOT pay rent during the stated period of cure, normally ten days, then the landlord can proceed with the actions authorized in CRS 13-40-104 to remove the tenant from the property--otherwise knows as eviction.

1. This is standard however, there does now exist a fund at the State level and in the certain municipalities whereby a tenant can receive legal representation.  What his means is now the DIY landlord that used to handle their own evictions without legal assistance may need to obtain legal counsel thereby driving up the costs to be a landlord in Colorado.

Tenant Commits a "Substantial Violation" and Does Not Cure Violation Within Ten (10) Days

1. Substantial Violation is defined by CRS 13-40-107.5 (3), which basically says that if actions of the tenant endanger the property, other tenants, neighbors, is a drug related felony, or is an offense that would result in incarceration of 180 days or more, or is a public nuisance as declared by the health department and occurs near or on the property, or on the common/parking areas of the property. So, in essence, punching holes in the drywall may not qualify as "endangerment" of the property, although it would cost the landlord money to repair. Cooking Meth in the living room and selling it in the common area of the apartment complex would be a substantial violation, but here's the rub--the burden of proof is on the landlord, so if you only have suspicion and no police report to back you up then you are out of luck.

Just Cause No-Fault Eviction (No Compensation To Tenant Required)

1.  Tenant continues to refuse entry to Landlord after Landlord has provided written notice, in both English and Spanish, at least 48 hours before attempting entry unless a longer period is specified in the lease agreement; OR

2. Tenant refuses to sign a new rental agreement (lease extension) with terms that are substantially identical to the tenant's current agreement, including a rental amount that is the same as the current agreement or in a reasonably increased amount, so long as the new rental agreement is delivered/offered to the tenant at least thirty (30) days before the end of the current lease term.

Well, well, well. here we are at the section that basically is a back door to rent control.  Firstly, if your tenant refuses to grant access the property then you can claim a just cause no-default eviction, make sure to use Spanish & English in the notice, even if your tenant failed Spanish in the 10th grade and barely passed English you must make the notice bilingual for it to pass muster in the courts.  Why wouldn't refusal of entry to the individual who pays the mortgage/taxes/insurance/repairs/maintenance be classified as plain old Just Cause, who is the true beneficial owner of the property?

The second part of Just Cause No Fault is the section that makes this entire bill a wolf in sheep's clothing (apologies to all Wolfs out there  who are offended by being compared to politicians in Colorado).  If your tenant refuses to sign a lease whereby all of the terms, including the rent, as long as rent is the same or increased in a reasonable amount, then a landlord can proceed with a no-fault eviction.  Who will determine what is a reasonable rental increase?  The state? Municipalities? The cast of the View?  Javier Mabrey himself?  The Courts?  This is not clear in the bill and is not defined in the bill so whatever authority has the power to decide can literally put a landlord out of business or into mortgage default with the stroke of their pen.

It is not clear what happens if a landlord proffers a new lease that is not "substantially the same", the tenant can refuse to sign and presumably remain in the property, allowing their dog to piss in the same spot on carpet everyday, or allowing their child to practice karate punches into the drywall, but hopefully with the requirement to continue paying their original rent amount.  This is not clear to me in the text of the bill.

No-Fault Eviction Of A Tenant (No Just Cause AND Tenant Must Be Compensated With Cash

1. If the landlord wants to demolish or convert (non residential conversion) the property, make "substantial" repairs/renovations or the landlord or their family member wants to live in the property then the landlord can execute a no-fault of tenant eviction.

2.  The landlord will need to provide notice, written in both English & Spanish, of at least 120 days prior to the date the tenant needs to vacate--this notice period applies to ALL no-fault of tenant eviction conditions.  In the case of substantial repairs/renovations, the landlord must provide tenant first right of return under same rental terms with a rental amount that is the same or "reasonably" increased amount.

3. In any of these n-fault eviction conditions, the landlord must pay to the tenant no less than two (2) months of rent as a relocation fee.  If there are tenants on the property who are at least 60+, under the age of 18 or disabled then the landlord must pay to the tenant no less than three (3) months of rent in order to compensate tenant for re-locating due to no fault of their own.

There will no longer be a "natural end" to a residential lease agreement in Colorado if this bill passes and is signed by the Gov of Colorado.  God forbid a soldier at Ft. Carson who is sent to a warzone and after a year of renting out their home has to pay for the right to occupy their home that they already paid for in the first place.  Does this sound right on any level at all???  Even if the ground shifts under your home and is declared uninhabitable by the city a homeowner will need to pay the tenant because this bill does not allow for Acts of God and we all know that God always checks with us here on Earth before doing anything-NOT!

Repeal Of CRS 13-40-107 Notice To Quit

This bill repeals ALL Notices to Quit thereby preventing a natural end to a lease--in other words no Landlord will be able to take their property back by not renewing a tenant.  And here you thought you could rely on the legislature to overlook something that might actually give Landlords a work around.

To date the only significant amendment to this legislation is the one of the bill's sponsors/authors, Javier Mabrey, agreed to exempt short term rentals, and get this, rooms being rented in the home you occupy because he himself is renting out the basement of his home to a third part, you literally cannot make this **** up--when he realized that he would be bound by this law he agreed to an exemption that shields him from this proposed law.

If you don't agree with this legislation then contact your Colorado State Representative and Senator!  Thanks.

HOUSE BILL 23-1068, Pet Animal Ownership In Housing proposes that insurance companies may not prohibit certain breeds of dogs for purposes of obtaining homeowners insurance, landlords may not charge a pet deposit and or pet rent if they allow tenants to keep pets on the property, the bill calls for establishment of the pet friendly landlord mitigation program by the department of local affairs, landlords may not place a lien upon a pet for purposes of collecting from tenants who are in default and lastly, the bill mandates that in order to obtain the Colorado affordable housing tax credit all affordable housing projects must allow pet ownership.  Here's a summary of what these provisions may impact for landlords and homeowners in Colorado:

Insurance Companies May Not Prohibit Certain Breeds

1. Unless the dog has been identified as a dangerous dog by animal control or law enforcement then all dog breed will need to be allowed.  Certain insurance companies may simply stop writing policies in Colorado and others may significantly raise rates in order to take on the risk of breeds like pit bulls, staffordshire terriers, dobermans and other breeds that are often prohibited in rental dwelling policies.  Not only will this impact landlords but will affect homeowners as well.

2. Another scenario is that insurance companies in Colorado exclude incidents with pets from coverage thereby leaving the homeowner/landlord completely liable for incidents with pets that they allow to occupy their property, sometimes these can reach into the hundreds of thousands.

No Pet Deposits and No Pet Rent

1.  This article is clear and states that IF the landlord chooses to allow pets then the landlord will not be able to charge either an extra deposit or additional rent per pet.  Naming certain items a "fee" or stating that they are refundable may be interpreted by the courts as deposits and pet rent in disguise.  This article takes away a landlords right to determine how their property may be accessed by the public in terms of allowing pets in their rentals.

2.  Are landlords now supposed to relinquish certain rights over private property if they choose to enter the rental business?  Who then becomes the true beneficial owner of the property if not the individual who pays the mortgage/insurance/maintenance?  It's not clear if these questions have been contemplated by the Colorado legislature.

3. For those landlords that do choose to accept pets then large deposits (2X-3X monthly rent) may become the norm and pet ownership may become the realm of the wealthy thereby having the opposite effect of the legislators intent.

Establishment of Landlord Mitigation Fund

1. This article calls for the establishment of a landlord mitigation fund that, subject to funding, will compensate the landlord up to $1,000.00 for damages caused by a tenant's pet, the $1,000.00 cannot be requested/applied for if the deposit of the tenant covered the damages caused by the pet.

2. While the bill calls for the department of local affairs to establish the fund there is no mechanism, defined by the bill, to actually fund the mitigation fund.  For those who are unfamiliar with governmental processes there needs to be a mechanism by which to fund this part of the bill.  What may happen is that the state will require landlords to fund this by way of a licensing fee thereby increasing the cost to be a landlord--but here's the rub, if you as a landlord never accept pets then any licensing fee/surcharge that you end up paying will become a sunk cost with no ability to recapture the cost.

Pets Will Not Be Deemed The Personal Property Of The Tenant

1. In certain cases Landlords have taken a lien over tenant's pets in order to collect past due rent or other charges.  These instances are rare and generally only applied to the most egregious of lease defaults.

2. Will this mean that pets are now defined as legal entities like a person or a company?  If they are not the personal property of the tenant will they automatically be the property of the state?  Interesting indeed.

All Affordable Housing Projects In Colorado Will Need To Accept Pets

1. Without the ability to offer investors the tax credit developers no longer have an affordable housing project but rather a market rate project.

This is just one of a number of bills that if passed will do nothing to increase the rental inventory of Colorado but will in fact reduce the supply of rental inventory of Colorado.  There is currently a super majority in both the House and the Senate in Colorado, enough to override a gubernatorial veto.  If you don't agree with these changes to the rental business please reach out to your Colorado Representative and Senator for your respective district.

HB23-1171 Just Cause Rent Control will destabilize the rental market in Colorado and eventually cause smaller landlords to sell out to larger well funded landlords.  The bill specifies certain conditions for eviction, one of which states that if the tenant refuses to execute a lease extension with “substantially” similar terms the landlord may evict the tenant.  This clause alone is back door rent control because rent is a term of the lease so it could be interpreted by the courts that rent and length of time should be the same.  This bill also creates a permanent leasehold on the property so rather than execute a purchase the tenant will only need to comply with the lease and they can continue renting as long as they like.  If the landlord wants to renovate, move back in or have a family member move in then the landlord will need to pay up to three months of rent to the tenant.  The bill does not allow for a natural end to lease agreements and further states that “substantial lease violation” will be defined as a criminal act that is the burden of the landlord to prove.  If the tenant decides to punch holes in the wall and piss on the floor this bill will preclude those as substantial lease violations.  For landlords who choose to remain the market they will ask for massive amounts of rent and security deposits.  This will have the effect of reducing rental stock and driving up housing costs.

We are looking to make an investment into the Cherry Creek North area and would like to hear from both property managers and investors alike with how their experience in Cherry Creek North has been.