HB23-1171 Just Cause Requirement Eviction Of Residential Tenant
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.
Colorado State Representative Ruby Dickson did email me back... my response to her (which I'm sure will not be answered) is in her text below:
On Thu, Mar 16, 2023 at 11:21 AM Rep. Ruby Dickson wrote:
Hello Greg,
Thank you for reaching out and sharing your opinion on protections for renters in Colorado. This issue is an extremely important one, and I very much value your perspective.
As one of the 34% of Coloradans who rent their home, I believe it is essential that we ensure a fair and stable rental market for everyone in the state. - I'm not sure what you mean by fair and stable? I've owned my residential property management company for 15 years and the market has been exactly that - fair and stable. Are rent prices high? Of course, it's Colorado. No one is forced to live here. It's a free country, and as we say in real estate, "location, location, location." Colorado is a wonderful place, so it's expensive. The middle of Nebraska is probably much cheaper, and I would encourage people who cannot afford Colorado to move somewhere else, vs. trying to change the laws to make it "cheaper." A Porsche for $500 ceases to impress. Again, I have no idea what you mean by fair and stable.
That includes preventing homelessness by protecting renters from prejudicial evictions and increasing their stability in their homes. -A lot to unpack here. Evictions are, by virtue of the legal procss required, never "prejudicial", and interference from you is not necessary or useful. Evictions can only happen with cause. You seem to confuse the terms "lease non-renewal" and "eviction." Let me help educate you on this distinction.
Eviction: Tenants are in default of their lease terms. Usually non-payment, but sometimes other violations of the lease. They've been provided with a (statutorily mandated) 10 Day Notice to cure the violation, and for an eviction to be filed, the tenant will have not complied by the expiration of the 10 day notice. This is what an eviction is. Does this seem "unfair" to you? Prejudicial? Please explain.
Lease non-renewal on the other hand: Tenant (such as yourself) is renting a property, and the lease has an end date. The lease does not go "until the end of time" or "until the tenant feels like moving out." Tenants, such as yourself, are BORROWING someone else's property. What makes you think this should only end on the tenant's terms? Someone else actually owns the thing you are borrowing--the landlord--and they have no obligation to extend your lease term beyond the expiration date. Nor should they have such an obligation. Nor should they pay for your moving expenses if you did not plan ahead. The landlord can terminate the lease at the end by providing the (again, statutorily mandated) notice period to the tenant. This could be for no reason at all, or because they don't like you or because they are moving in, etc. The reason is not relevant. It's a contract with clear terms including a start and end date. Who are you to meddle with this? It's not an eviction, and wording it as such is so ignorant of the actual process.
When you say one of your aims is "preventing homelessness" and "increasing stability", I think you believe it's sufficient that these sound like "good things to do" and you don't care what the actual effects are on most landlords (who by the way are not particularly wealthy.) Most of my clients have a single rental property. It's one of their few assets, and one they plan on using to help build a future and a retirement. Many simply cannot weather the legislative storm you're proposing. Inability to terminate a lease on it's end date? Paying for moving costs?
It also means allowing localities to enact anti-price-gouging and rent-stabilization measures. -I find this term interesting. Price gouging. Does this mean the rent is too high? Does this make it gouging? Again, move to Nebraska if you want lower rent. Living in one of the most desirable areas in the country will always come with higher costs of living. The rental market is a great example of a free market. There is supply and demand. At times I see rents level off, and in different areas rents sometimes go down. Your interference is not needed. It's not as if 1 or 2 companies have a monopoly over market pricing.
Throughout the consideration of HB23-1115 and HB23-1171, I advocated to include guardrails to ensure that we don’t harm property owners or the development of new housing. --You've failed. I am proud to have passed both bills through the House of Representatives, and look forward to working on further legislation to lower housing costs and improve quality of life for all. --Lowering housing costs is not up to you; you do not control the market. Costs will show up elsewhere and you will never win the game of whack-a-mole. What you will do, is ostracize business owners and lose voters by the thousands, who are disgusted at your ignorance with regards to how markets operate.
Even though we may disagree on this issue, I still appreciate hearing from you and I hope that you will stay engaged with the legislative process. Have a nice day! --I'm sure you're a wonderful person but I do sincerely wish you would make it your business to speak to job creators (I know Democrats hate that term, but my well-paid employees would certainly agree that I'm one) instead of hanging out in your echo chamber.
Best,
Representative Ruby Dickson
-
Real Estate Agent
- Real Estate Solutions
- 303-586-5560
- http://www.RESrents.com
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.
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.
Quote from @Henry T.: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.
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.
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.
@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.
I refuse to take it. One by one, take your houses off the market and go Short Term Rental. I did in Seattle. You may make more or less, to me it doesn't matter. There's satisfaction in having an alternative. Let your rep know it too! Sell if you have to. There are still a few reasonable states left to do business.
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.