The Essentials of Colorado Rental Application Law
The rental application serves as a key document in the landlord-tenant relationship. Not only does a rental application assist in the screening process of potential tenants for a landlord, it also may be the first document to establish a legal relationship between a potential tenant and a landlord or property owner. Even when used as an informal source of information, individuals providing information to a landlord should sign an application. Using a rental application may shield a landlord or property owner from liability where a tenant later alleges in a lawsuit that the individuals who completed the application misrepresented their backgrounds. Once signed, a rental application may remove any uncertainty regarding the facts provided.
In Colorado, there are no state laws that expressly require rental applications. However, a few local municipalities have enacted laws regulating rental applications. While these local laws may affect just a particular locality, such as Denver or Boulder, the reasons behind regulating rental applications usually turn on the same principles . For example, cities may seek to regulate rental applications to promote transparency in leasing practices and reduce discriminatory practices that lead to housing inequities. Further, many localities regulate rental applications to limit the amount of fees charged. Other fees are permitted to be charged for specific purposes, such as the cost of obtaining criminal history reports or screening service fees.
While landlords or property owners in Colorado generally do not have to use rental applications, prudent business practices dictate that an application be employed. An application provides guidance to the applicant while requiring certain information in a uniform manner. Entities that are considering renting units or space to individuals should consider developing and implementing an application process to assist with compliance issues. An application often acts as an agreement between the landlord or property owner and the applicant to screen applicants under standard criteria. In many respects, an application is a transparent tool that fosters the goal of providing a legally compliant and efficient leasing process.
Fees and Deposits in Colorado
When it comes to rental applications, Colorado law is specific about what landlords can and cannot charge. For example, Colorado law limits the amount of money that can be charged as a rental application fee. A landlord cannot charge more than the greater of: (1) $50, or (2) the actual out-of-pocket costs for a credit or background check. However, the law only places limits on application fees set by landlords. No fee limits apply to application fees charged by managers of affordable housing projects. An "affordable housing project" is defined as a private or governmentally owned housing project that serves households with incomes at or below 80% of the median income for the area, and where the owner, agent, or manager subsidizes a portion of the rents for at least a year.
Just as there are restrictions on application fees, there are restrictions on security deposits. Landlords of residential properties in Colorado may charge a security deposit that does not exceed the equivalent of two-months’ rent. For unfurnished dwellings, the security deposit can never exceed one-month’s rent. After the tenant vacates, landlords must provide a written accounting of security deposit deductions within one-month of the tenant vacating or one-month of the time the rent was due for the final month of the rental agreement. The tenant must then have the opportunity to return to the premises, within 7 days notice, to retrieve any personal property left behind (described in the accounting notice) prior to the landlord mailing the balance of the security deposit that the tenant is entitled to.
Rental Requirements and Fair Housing Regulations
The screening criteria that landlords in Colorado are legally permitted to use when evaluating prospective tenants primarily encompasses the following factors. Criminal history, consisting of felony and misdemeanor records, docket entries, warrants, and pending arrests are all important information to review when determining whether or not rent will be paid. In reality, this is a risk management step taken by landlords to reduce the number of losses they will incur. However, the prohibited grounds discussed in the previous section must be followed using the screening criteria. Additionally, landlords may not automatically disqualify a prospective tenant simply because he or she has an arrest record without a conviction resulting from the charge. An exception to this rule exists if the tenant is registered on a sex-offender registry. In that instance, the landlord is able to disqualify the tenant.
(The same restriction applies for pending arrests, however, the landlord is allowed to evaluate whether or not the situation will impact the landlord’s ability to fulfill the rental contract in accordance with any state or federal law. For example, if one roommate gets arrested and is charged for possession of marijuana and the other is not, it likely will have an impact on the rental application process and the landlord could legally refuse the application. This discretion should be used very carefully, however.) Furthermore, if the landlord requires a minimum credit score, this requirement must be stated in the advertisement for the rental unit and it must be the same among all of the potential tenants. If the landlord does not require a minimum credit score for every applicant, but instead elects to determine credit worthiness on a case-by-case basis, he or she may then take into consideration the credit worthiness of applicants with children and/or who might be receiving government assistance. The idea with this legal process is to prevent landlords from denying an apartment based solely on credit score while allowing them to still be able to protect themselves and their properties and, ultimately, their livelihoods.
Background Checks and Credit Reports in Colorado
Credit reports, in addition to credit scores, have been considered among the most important and common tenant screens. Don’t confuse a credit score with a credit report, however; a credit report includes all of the information used to calculate a credit score. In many credit reports, however, there is no score. A landlord receives only the report of the applicant’s credit and whatever rating the applicant’s payment history comes out to.
State law does not include many provisions that apply to credit scores, but it does requires a separate disclosure from the landlord to the applicant if a credit report will be obtained and bills itself the "Consumer Protection Against Unfair Rental Practices Act." The act may be found here: The act applies to any "landlord," but it does not define who that is. Due to the absence of a definition, a court may determine that an "agent" is also covered under the act. A credit report, as defined by the act, is "a written, oral or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or has been used or collected along with any file maintained by a consumer reporting agency for the purpose of serving as a factor in establishing the consumer’s eligibility for a credit transaction involving $150,000 or less, or a real estate transaction, or for employment purposes, or other purposes authorized under federal law . " The definition given in the act differs from that typically found in credit reports because this definition seems to apply to anyone (including commercial landlords) and in any state. Most credit scores do not include demographic factors, such as place of residence, race, gender, marital status or religion. Credit reporting agencies derive consumer credit scores from multiple applications, resulting in a complex process that raises legal issues surrounding accuracy, privacy and discrimination. The law further states: The act further requires that a landlord who requires an applicant to provide a social security number must include the following disclosure: The act also expressly states that landlords do not need a consumer’s permission to request a credit report, so long as they are obtaining the report for a permissible purpose listed above, and that the act shall not be construed to replace or limit the provisions of the federal Fair Credit Reporting Act.
Notice and Deadlines: What You Need to Know
If a landlord requires an application fee, Colorado law explicitly mandates that the property owner provide a notice and receipt to the applicant of this fee, stating the proposed use of the funds. If the fee is not returned, the landlord must inform the applicant within 72 hours if their application has been accepted or denied.
When a rental application is denied, the property owner is obligated to return all fees. However, if an application is accepted, the fees cannot be returned unless the applicant has personally delivered the application to the property management office or site. Where the applicant has mailed the application and the application is denied, the landlord does not have to return the application fee. If the landlord chooses to return the application fee, it must be done within 10 when the application was denied. If the landlord does not return the application fee (assuming they accepted the application), they are required to provide written notice to the applicant within 72 hours upon acceptance. This written notice must include the name and address of the landlord, when they can be contacted, and the specific unit or location being rented. Tenants need to be aware that if the landlord charges fees that exceed what is prescribed in the application fee statute, or if the landlord does not provide notice within the 72 hour requirement, they may be liable for a three-fold penalty and attorney’s fees.
In addition to application fees, buildings with four or more rental units are required to display an official housing disclosure built in collaboration between a private landlord trade organization and the Colorado Department of Local Affairs. The Colorado Department of Local Affairs’ Private Lands-Licensed Rental Housing Official Disclosure and Checklist must be posted in all residential buildings that contain four or more units. The disclosure form must be displayed at the place the lease is entered into by tenants, such as the leasing or property management office, as well as in each unit prior to showings and after the unit has been vacated, such as in each laundry room. The disclosure form contains the following statements: This information is not limited to just private landlords, but is also required to be displayed by businesses that manage or operate apartment rentals. It does not apply to public entities, such as housing authorities, as these entities already have housing requirements as set forth by the Colorado Division of Housing.
Tenant and Landlord’s Rights in Application Disputes
Disputes in the rental application process can sometimes be unavoidable. Landlords and tenants are granted specific rights and privileges when a grievance arises. The first step in settling differences is finding out what those rights are, and how you can best resolve the matter.
Tenant Rights and Responsibilities
When a landlord selects a tenant for a residential property, he or she must disclose certain information. These include the following:
Landlords must also provide a copy of the lease, rules, and regulations to the new tenant. Similarly, the tenant has the right to inspect the written lease for any provisions that would break federal and state rental laws. If a clause within the lease is not legal, tenants have the right to refuse to sign or ask for another copy that omits the illegal section.
If any issues arise during the application process, tenants are required to follow up with the landlord. While laws vary by state, tenants can often file a complaint with the city or county housing authority.
Landlord Rights and Responsibilities
Once the tenant is approved, the landlord has the right to detail all responsibilities when it comes to the security deposit and/or first month’s rent. According to the Colorado Department of Regulatory Agencies , landlords must provide new tenants with an accounting of all funds deposited as security for the lease.
It’s important to note that in Colorado, there is no limit on the amount of the security deposit. The law also doesn’t stipulate that the tenant must receive interest on the money. Nevertheless, the landlord must put the funds in a federally insured financial institution in this country in the tenant’s name and place an endorsement on the certificate in the name of the tenant.
After moving into the rental home or space, the landlord has the right to visit the premises for certain reasons. The Colorado Apartment Association states that as long as the landlord notifies the tenant 24 hours in advance, he or she may enter the property to perform the following:
Should an issue occur during the rental application process, landlords are responsible for following the law. If the landlord refuses to listen to the tenant’s grievance, the tenant has the right to file an official complaint with the local housing authority. If the issues are related to the security deposit—such as withholding or improper deductions—tenants may want to take additional legal action to settle the dispute.