Colorado’s Recent Landlord-Tenant Laws - Potential Challenges for Property Owners

Recent changes to Colorado’s landlord-tenant laws aim to enhance tenant protections and housing affordability. However, these laws also introduce new challenges for property owners and landlords, who face increased costs, reduced flexibility, and potential legal risks. Below is a detailed analysis of key legislation and its potential impact:

1. Cause Required for Eviction of Residential Tenants (HB24-1098)

Enacted: April 19, 2024

This law prohibits landlords from evicting residential tenants without cause, except in specific cases such as:

Demolition or substantial renovation of the property

The landlord or their family moving into the property

The sale of the property to a buyer who will occupy it

Negative Impact:

Limits landlord flexibility in ending tenancy, even for problematic tenants whose actions may not meet the statutory definition of “cause.”

Legal processes to prove cause may result in higher attorney fees and prolonged vacancy periods.

Small landlords may find compliance burdensome, potentially leading them to exit the rental market.

2. Warranty of Habitability for Residential Premises (SB24-094)

Enacted: May 3, 2024

This law clarifies the conditions that breach the warranty of habitability, requiring landlords to maintain their properties in habitable condition. Tenants can now raise breach claims as a defense in eviction cases or disputes over unpaid rent.

Negative Impact:

Increased risk of litigation, as tenants may use minor maintenance issues to delay or avoid eviction.

Repair obligations may be financially burdensome, particularly for landlords of older properties needing continuous upkeep.

Landlords may face delays in recovering possession of their property due to extended legal proceedings.

3. Residential Occupancy Limits (HB24-1007)

Enacted: July 1, 2024

Local governments can no longer enforce occupancy limits based on familial relationships, but they may impose limits based on health and safety standards.

Negative Impact:

Potential overcrowding in rental units, leading to excessive wear and tear and higher maintenance costs.

Increased utility usage and strain on shared amenities, especially in multi-family properties.

Landlords may face challenges in enforcing quiet enjoyment clauses when dealing with unrelated tenants cohabitating in high numbers.

4. Rental Price Gouging During Declared Disasters (HB24-1259)

Enacted: August 7, 2024

This law caps rental price increases during a declared disaster at 10% or the rate of inflation, whichever is higher.

Negative Impact:

Limits landlords’ ability to offset increased costs during disasters, such as repairs or heightened insurance premiums.

Could deter property investments in areas prone to natural disasters, reducing housing availability in those regions.

Creates confusion and risk of penalties if landlords inadvertently violate the caps during a disaster period.

5. Pet Security Deposits and Rent (HB23-1068)

Enacted: January 1, 2024

This law caps pet security deposits at $300 and monthly pet rent at $35 or 1.5% of monthly rent, whichever is greater.

Negative Impact:

Pet-related damages could exceed capped deposits, leaving landlords financially exposed.

Disincentivizes landlords from accepting tenants with pets, potentially reducing available housing for pet owners.

Cumulative Challenges for Property Owners

Higher Compliance Costs: These laws demand more resources for repairs, legal fees, and compliance with additional regulations.

Reduced Flexibility: Strict requirements on evictions and rent adjustments limit landlords’ ability to manage their properties effectively.

Deterrence to Investment: The combination of restrictions may discourage landlords from investing in or maintaining rental properties, exacerbating housing shortages.

While these laws reflect efforts to address tenant protections and housing affordability, their implementation presents significant hurdles for landlords, particularly smaller property owners. Balancing tenant rights with property owners’ interests is critical to sustaining Colorado’s rental housing market and ensuring its long-term viability.  For those investors and operators looking to expand their real estate portfolio in residential real estate, it is important to address these concerns with your state and local representatives.  Real estate investors must get involved in advocacy for fellow landowners and landlords before Colorado becomes untenable for real estate developers and owners.