HB18-1127, also known as the Rental Application Fairness Act (creating C.R.S. § 38-12-801 et seq), was introduced in the house on January 19, 2018.  If passed, the bill would do three things:

1. Limit the application fee that a landlord may charge an applicant to the actual costs for a personal reference check or for obtaining a consumer credit or tenant screening report;
2. Require a landlord to provide each prospective tenant with written notice of the landlord’s tenant selection criteria and the grounds upon which a rental application may be denied before accepting an application or collecting an application fee; and
3. Require a landlord to provide a prospective tenant with an adverse action notice if the landlord takes adverse action on a prospective tenant after reviewing the rental application

In this blog, we’ll address each section of the bill and discuss in a bit more detail.

SECTION 1

The first portion of the bill would, as stated above, prohibit a landlord from charging an application fee unless the fee is used to cover the landlord’s costs in processing the rental application.  The costs may be based on the actual amount the landlord incurs in processing the rental application OR the average amount that the landlord charges each prospective tenant based on the average costs incurred in processing rental applications.

Not only would the bill provide as stated above, but the landlord would also have to provide any person who has paid the application fee with either 1) a disclosure of the anticipated expenses for which the fee will be used; or 2) a receipt that itemizes the actual expenses incurred.  If the landlord is charging a fee based on the average cost of processing the application, then the landlord must include information in the disclosure about how the average rental application fee is determined.

Additionally, the bill would not allow a landlord to charge one prospective tenant a fee that is different from the fee charged to another prospective tenant who applies to rent either the same unit or any other unit offered by the landlord at the same time.

SECTION 2

In its second portion, the bill would require that prior to accepting a rental application or collecting an application fee, the landlord must give the prospective tenant written notice of the tenant selection criteria and the grounds on which a rental application may be denied.  The bill provides the following list of grounds for denial which must be included in the notice (if the landlord will deny a prospective tenant’s application based on these criteria):

• The prospective tenant’s:
  • criminal history;
  • rental history;
    • If using this as criteria, the landlord cannot consider any history beyond five years immediately preceding the application date.
  • credit history; or
    • If using this as criteria, the landlord cannot consider any history beyond five years immediately preceding the application date.
  • current income
• Failure to provide accurate or complete information in the rental application; or
• Failure to pay the application fee in the amount specified in the notice.

SECTION 3

If the landlord takes adverse action (denies an application or requires additional conditions to be met), written notice must be provided to the prospective tenant which states the reasons for the denial and/or additional conditions.  The bill provides a sample format as follows:

ADVERSE ACTION NOTICE

(NAME OF PROSPECTIVE TENANT)
(ADDRESS OF PROSPECTIVE TENANT)

THIS NOTICE IS TO INFORM YOU THAT YOUR APPLICATION HAS BEEN:

_______  REJECTED

_______  APPROVED WITH CONDITIONS:

_______  RESIDENCY REQUIRES AN INCREASED DEPOSIT;

_______  RESIDENCY REQUIRES A QUALIFIED GUARANTOR;

_______  RESIDENCY REQUIRES LAST MONTH’S RENT;

_______  RESIDENCY REQUIRES AN INCREASED MONTHLY RENT OF $_______

_______  OTHER

ADVERSE ACTION ON YOUR APPLICATION WAS BASED ON THE FOLLOWING:

_______  INFORMATION CONTAINED IN A CONSUMER CREDIT REPORT

_______  THE CONSUMER CREDIT REPORT DID NOT CONTAIN SUFFICIENT INFORMATION

_______  INFORMATION RECEIVED FROM PREVIOUS RENTAL HISTORY OR REFERENCE

_______  INFORMATION RECEIVED IN A CRIMINAL RECORD

_______  INFORMATION RECEIVED IN A CIVIL RECORD

_______  INFORMATION RECEIVED FROM AN EMPLOYMENT VERIFICATION

(DATE)
(SIGNATURE OF LANDLORD

Additionally, the notice must be accompanied by an acknowledgment of receipt, to be signed by the prospective tenant.

What would be the penalty for violation of the Act?  Two times the amount of the rental application fee, plus court costs and reasonable attorney fees. 

While responsible landlords are already taking these steps to ensure that they are screening for responsible tenants, this bill would formalize those steps and require that landlords jump through a few more hoops to ensure compliance.  Is it really necessary?  What are your thoughts? Chime in with your comments – we’d love to hear from you!  We’ll be following the progress of this bill throughout the legislative session, so check back often for updates!