An ambitious tenant rights bill that was introduced in Colorado’s Legislature this year has been significantly whittled down by landlord industry groups.
Senate Bill 21-173, as introduced, sought to permanently strengthen legal protections for renters by putting substantial limits on how much a landlord can charge in rental late fees, extending the grace period for paying back owed rent, and rebalancing the legal power tenants have when facing an eviction or challenging their landlords in court for uninhabitable living conditions.
“We acknowledge the importance of tenants paying rent and landlords paying mortgages,” said Rep. Serena Gonzales-Gutierrez, a Denver Democrat who is bringing the bill. “We want to equal the playing field for both parties.”
“There is nothing in Senate Bill 173 that impacts a landlord who is acting in good faith,” said Gonzales-Gutierrez, who is the House assistant majority leader. “And there is nothing in Senate Bill 173 that protects a tenant who is acting in bad faith.”
A heavily amended version of the bill, which has already passed through the Senate, stalled in the House Business Affairs and Labor Committee on Thursday after six hours of public testimony that stretched long into the night. The bill sponsors requested that lawmakers not vote on the legislation until they have time to evaluate more amendments brought by opposition.
The bill has faced strong pushback by a handful of powerful business interest groups, including the Colorado Apartment Association, Colorado Association of Realtors, Denver Metro Chamber of Commerce, Colorado Landlord Legislative Coalition, Colorado Mortgage Lenders Association and the Rocky Mountain Home Association.
Grace period trimmed to seven days
The amended bill would prohibit landlords from charging a tenant or mobile-home owner a late fee unless rent is more than seven days late and mandates that the fee not exceed $50 or 5% of the rent that’s past due.
The introduced bill originally proposed a 14-day grace period to give people the opportunity to receive another paycheck.
Currently, there are no regulations around how much a landlord can charge in late fees.
Capping late fees and extending grace periods were two recommendations that were put forth in October by a Special Eviction Prevention Task Force, which was convened by Gov. Jared Polis. An effort to cap late fees failed in 2019.
Under the amended bill, a landlord would also be prohibited from initiating an eviction solely for outstanding late fees.
The law, if passed, would also allow tenants to pay back their rent at any time until a court has ordered a writ of restitution (the document that allows a sheriff to remove someone from the premises). Current law states that landlords are not required to accept past rent owed once an eviction has been filed in court.
Another housing bill weaving its way through the state Legislature, House Bill 21-1121, would give people 10 days after a judge approves an eviction to vacate their home. Currently, people have 48 hours.
The bill, which was also heavily amended, would also prohibit a landlord from increasing the rent on a leased property more than one time a year. It would also extend the notice for rent increases for people on month-to-month leases from 21 days to 60.
Landlord groups want to see grace period decreased even more — and late fees bumped up
Andrew “Drew” Hamrick, general counsel and senior vice president of government affairs for the Colorado Apartment Association, a trade group that represents landlords, said that the late fee provisions go too far.
“Now, there’s nothing inherently wrong with statutorily defining what that reasonable level would be, but it’s got to capture normal reasonable business practices, which are a grace period to the fourth of the month, and a late fee of $75,” said Hamrick, who spoke in opposition of the bill.
Other criticisms include that the wider grace periods will result in property owners being late on their mortgage payments and incurring late fees and the added regulations will disincentivize people from becoming — or staying — property owners.
Late fees for mortgage payments are typically issued on the 16th of the month, according to Sunny Banka, a long-time member of the Colorado Association of Realtors.
Hamrick told lawmakers that higher late fees for tenants who are struggling to make their rental payments are necessary to offset the administrative costs.
“When someone’s delinquent, you have to run over there, post the notice on the door, and that has some cost, particularly for an off site landlord as much for larger complexes,” Hamrick said. “You have to track the delinquency, answer the phone to the owner who’s chewing you out for not collecting rent. There are a lot of administrative costs.”
Majority of mom and pop landlords voiced support for the bill
Chuck Hubbard, a retired pastor who has been a landlord in Colorado and other states, testified in support of the bill, saying that nothing in the legislation would discourage him from renting out his property again and that he’d like to see a more level playing field for renters during the eviction process.
“We’ve heard about catastrophic circumstances with renters, or sometimes someone having to wait 11 months to get someone out of their properties, but fortunately that is very, very rare,” he told lawmakers during his testimony.
“I have seen the anxiety that the threat of eviction causes people, mostly as a pastor, because of a catastrophe like loss of employment or illness,” he added. “I have also seen how difficult it is for people to climb back out of the homelessness once they have fallen into it.”
He also voiced support for allowing a renter to raise a warranty of habitability claim — a serious health or safety concern related to their living conditions — without posting bond regardless of whether someone was behind on their rent. “Particularly if the habitability issue has been voiced by the renter before falling into arrears,” he said.
The bill would eliminate a bond requirement only if a person is considered indigent, meaning a person doesn’t have the financial means to get a lawyer.
“The idea is that you’re securing the landlord in case a claim is frivolous,” Javier Mabrey, an attorney with the COVID-19 Eviction Defense Project, told lawmakers on Thursday. “The problem with that is that it prices tenants, particularly low-income tenants, out of bringing fair counterclaims.”
Amendment exempts landlords who own five or less single-family homes from the late fee cap
An amendment introduced by Sen. Joann Ginal, a Fort Collins Democrat, with support from Republican lawmakers, would exempt landlords who own five or fewer single-family homes from the late fee cap. “I’m asking for the exception of five units or less because these are mom and pop operations that would be affected by this bill,” Ginal said.
State Sen. Dominick Moreno, a Commerce City Democrat who is also sponsoring the bill, unsuccessfully urged lawmakers to vote against the amendment because it would allow for “two different forms of justice depending on where you live.”
“That is a very bad precedent to set for public policy,” he said.
It would be difficult, if somewhat impossible, for a renter to know how many properties a landlord owns and if they would be exempt from the tenant protections in the bill, according to Craig Carmean, an attorney in Colorado Springs with Colorado Legal Services, a statewide nonprofit that provides legal support to low-income people.
“I would love to read the legislative notes on how they came up with this. This makes zero sense to me,” said Carmean, who has worked in legal services since 2005. “The only time I ever really see any provision like that is the Mrs. Murphy exemption.”
The Mrs. Murphy exemption, which refers to a fictitious widow, says that if a “dwelling” has four or fewer rental units and the owner of the property lives in one of those units, then that home is exempt from the Federal Fair Housing Act, Carmean explained.
Law experts and researchers have criticized the exemption, saying that although the intent of the law might not have been to allow for discrimination, the reality has been different.
He said the proposed exemption to the tenant rights bill brings up a lot of questions for him. For example, could a person own 10 homes but only rent out five of them and therefore be exempt from the late fee cap provision? Do they have to be properties in Colorado?
“What if (the homes) are held in a trust?” Carmean said. Or what if you have now become the new John D. Rockefeller of rental housing and just conglomerate houses in separate trusts?”
A push for equity in Colorado’s housing laws
State Sen. Julie Gonzales, a Denver Democrat and prime sponsor of the bill, said sponsors have had to make a lot of concessions in order to appease the landlord lobby despite the majority of testimony from small landlords being in support of the bill.
“It really begs the question, are we doing right by the people of the state, or are we doing right by a couple of narrow special interest groups?” she said.
For Gonzales, it’s not a coincidence that all the lawmakers co-sponsoring tenant rights bills this year are members of the Latino or Black Caucus.
Due to longstanding income inequality along racial lines in the U.S. — a product of ongoing discrimination, unequal job opportunities and systemic racism — Black and Latino households make up a disproportionate amount of the rental market and are the most impacted by lack of affordable housing.
According to the National Low Income Housing Coalition, a research and advocacy organization, 44% of Black households and 42% of Latino households spend more than 30% of their incomes on housing, compared to 26% of white households.
“For me, as a Chicana, as a Chicana lawmaker, it is my obligation to fight and to advance equity in all of the policies that I work on,” she added.