As of August 7, 2023, residential landlords must comply with Colorado House Bill 23-1095 (HB 23-1095). The new law significantly changes the enforceability of various residential lease provisions in the State of Colorado. Residential landlords should consider closely scrutinizing their leases to ensure compliance with the new law. A summary of the changes enacted by HB 23-1095 is set forth below.
OVERVIEW OF HB 23-1095’S RESTRICTIONS ON RESIDENTIAL LEASE AGREEMENTS
HB 23-1095 introduces limitations on specific provisions that can be included in written agreements for residential rentals and amends C.R.S. § 38-12-801. It is important to note that certain provisions apply universally to all residential rental agreements, while other provisions contain exemptions for distinct types of rental agreements. These changes are outlined below.
However, a written rental agreement may provide that the landlord is not responsible for third-party actions beyond the reasonable control of the landlord. The foregoing prohibitions related to the right to a jury trial, the implied covenant of good faith and fair dealing, and the implied covenant of quiet enjoyment are inapplicable to mobile home rental agreements in mobile home parks. None of the provisions listed in C.R.S. 38-12-801(3)(a)(III) are applicable to duplex, triplex, or accessory dwelling unit rental agreements if: (a) the property owner resides in one unit, or (b) the owner’s primary residence shares the same lot as these structures.
- Penalties for Eviction Notice or Actions. Under Colorado law, it is illegal for a rental agreement to include “an unreasonable liquidated damages” clause related to eviction notices or actions resulting from rental agreement violations. HB 23-1095 extends this prohibition to encompass penalties that result from a violation of the rental agreement.
- Fee Shifting Clauses. HB 23-1095 revises C.R.S. § 38-12-801(II) to prohibit unilateral (or one-way) fee-shifting provisions in residential leases. The statute now requires that authorized fee-shifting provisions stipulate that attorney fees for the prevailing party can be awarded or recovered only after the court determines the prevailing party and deems the fee to be reasonable.
- Restricted Waivers. HB 23-1095 also enacted new prohibitions on certain waivers in rental agreements. C.R.S. § 38-12-801(3)(a)(III) specifies that residential rental agreements cannot include waivers of: (i) the right to a jury trial (except the parties may agree to a waiver during a possession hearing); (ii) the right to participate in joint, class, or collective claims or actions related to the tenancy; (iii) the implied covenant of good faith and fair dealing; or (iv) the implied covenant of quiet enjoyment. However, a written rental agreement may provide that the landlord is not responsible for third-party actions beyond the reasonable control of the landlord. The foregoing prohibitions related to the right to a jury trial, the implied covenant of good faith and fair dealing, and the implied covenant of quiet enjoyment are inapplicable to mobile home rental agreements in mobile home parks. None of the provisions listed in C.R.S. 38-12-801(3)(a)(III) are applicable to duplex, triplex, or accessory dwelling unit rental agreements if: (a) the property owner resides in one unit, or (b) the owner’s primary residence shares the same lot as these structures.
- No Fees, Damages, or Penalties for Failure to Provide Notice of Non-Renewal. Residential lease agreements are barred from including provisions that impose fees, damages, or penalties due to a tenant’s failure to provide notice of non-renewal prior to the end of the rental agreement. However, this does not include actual losses incurred by the landlord due to the tenant’s failure to provide such notice required under the lease agreement. This restriction is inapplicable to mobile home rental agreements in mobile home parks. This restriction is also inapplicable to duplex, triplex, or accessory dwelling unit rental agreements if: (a) the property owner resides in one unit, or (b) the owner’s primary residence shares the same lot as these structures.
- Characterization of Rent. HB 23-1095 restricts residential rental agreements from categorizing any amount or fee, apart from the monthly occupancy payment, as “rent.” This includes any fees for utilities or services and any other charge that is not rent. This restriction is inapplicable to mobile home rental agreements in mobile home parks. This restriction is also inapplicable to duplex, triplex, or accessory dwelling unit rental agreements if: (a) the property owner resides in one unit, or (b) the owner’s primary residence shares the same lot as these structures.
- Third-Party Fee Markups. HB 23-1095 limits provisions that require a tenant to pay a fee markup or for a service that the landlord is billed for by a third party. The landlord may impose a fee markup of no more than 2% of the landlord’s charge or a total of $10 per month for services billed by a third party. While the scope of this provision remains subject to refinement as courts construe it, this language could be interpreted to prohibit certain forms of mandatory cleaning fees and other charges that have been commonly included in residential leases in the past. This restriction is inapplicable to mobile home rental agreements in mobile home parks. This restriction is also inapplicable to duplex, triplex, or accessory dwelling unit rental agreements if: (a) the property owner resides in one unit, or (b) the owner’s primary residence shares the same lot as these structures.
- Restricted Possession Actions for Nonpayment of Utilities. Under HB 23-1095, landlords participating in any local, state, or federal voucher or subsidy programs are prohibited from initiating possession actions solely due to a tenant’s nonpayment of utilities. This restriction is inapplicable to mobile home rental agreements in mobile home parks. This restriction is also inapplicable to duplex, triplex, or accessory dwelling unit rental agreements if: (a) the property owner resides in one unit, or (b) the owner’s primary residence shares the same lot as these structures.
This alert is informational only. The presentation or use of this information does not in any manner constitute an attorney-client relationship between BHGR and the website user. While the information on this site concerns legal issues, it is not intended as legal advice or a substitute for particularized advice from your own legal counsel. If you have any questions about the impact of HB 23-1095 on your current or future residential lease agreements, BHGR’s real estate practice group is here to help.
Authors:Lorenzo Thayn, Mark Changaris, and Staff Writer Heidi Potter