Leasing a property can be a great way to earn money through real estate. However, it can get a little complicated if you are not familiar with the local tenant laws. Fortunately, when you work with a property management company like Progressive Property Group, we can help you understand the leasing laws in Colorado and ensure that you stay in compliance with all your obligations as a landlord.
Occupancy Limits in CO
Occupancy limits are restrictions placed on the number of people who can occupy a unit. For occupancy limits that are set by law, this is often relative to the number of bedrooms or the square footage of the rental unit. If you are setting occupancy limits as a landlord, you can simply determine the appropriate cap for each unit in your inventory.
There are not currently any state-wide occupancy laws in Colorado limiting the number of people per unit. However, there are often local ordinances that set occupancy limits. Make sure to check the municipal or county website for this information. There are no limits on long-term rentals in Colorado Springs (where Progressive Property Group is located), but short-term rentals are limited to two occupants per bedroom.
Lease Language
It is common for landlords to set occupancy limits in their lease language. It makes sense that you would not want too many people in a unit. For example, you wouldn’t want ten people occupying a studio apartment. Typically, the most effective language is setting the occupancy for a unit for consecutive (e.g., no more than two occupants for more than seven consecutive days). That way, your tenants can have guests without going against the lease terms.
Types of Leases
There are two major types of residential leases defined by the State of Colorado: term and month-to-month. The former is a lease that is in effect from a starting date to an ending date. The latter is a lease that automatically renews each month until one or both parties decide to terminate it.
Neither the landlord nor the tenant needs to give notice to end a term lease in Colorado. Instead, they simply need to not renew the lease. Nonetheless, both landlords and tenants often pay each other the courtesy of providing notice.
A month-to-month lease must be terminated with notice. This is 10-days by default but can be specified in the lease, as a longer notice period such as 30 days. Although most month-to-month leases are written contracts, there is a default, implied month-to-month lease for any tenant that pays monthly. If a term lease expires and the tenant continues to pay, the lease will switch to the default Colorado lease.
Fair Housing Rights in Colorado
Under various fair housing laws, Colorado tenants have various legal protections. Many landlords will follow these without even thinking about it, but it is helpful to know your obligations under the law.
Federal Fair Housing Act
The Federal Fair Housing Act establishes several protected classes. When selecting tenants, you cannot discriminate against people based on the following characteristics:
- Skin Color
- Race
- Disability Status
- Sex
- Familial Status
- National Origin
- Religion
Colorado’s Fair Housing Act
Colorado has a parallel law that establishes several additional protected classes. These are additions to the seven above-listed classes:
- Creed
- Ancestry
- Sexual Orientation
- Marital Status
Thus, you cannot refuse to choose a married tenant over a single-tenant simply because you prefer married couples. Similarly, you cannot deny an applicant due to their sexual identity.
Security Deposit Rules in Colorado
One of the most common leasing requirements for rental properties is a security deposit. The landlord can hold this to cover any potential damage to the property. The security deposit laws in Colorado are fairly simple. The landlord can require a one-time deposit of any amount (although excessive deposits will turn off tenants), and it can be stored in any manner you see fit.
You may take deductions from the deposit for unpaid rent, unpaid utilities, unpaid cleaning or repair bills, or any damage to the unit. Many landlords make some allowance for normal wear and tear that will not be deducted.
Tenant Obligations Under Colorado’s Landlord-Tenant Law
Although the leasing laws in Colorado are largely in place to protect tenants, they also establish some obligations for renters. The basic requirements are that tenants make timely rent payments and follow the rules of the lease. Additionally, tenant laws require that renters keep their units in a clean and sanitary state and respect the quiet enjoyment of their neighbors.
Bear in mind that tenants may be able to challenge lease terms that are unreasonable or predatory. However, within a reasonable scope, you can set almost any rules in your lease, provided that the tenant agrees to them.
How Has COVID-19 Affected the Rental Market and Is Now a Good Time to Invest?
Covid has impacted several markets across the board. Many landlords have become hesitant with pulling the trigger on purchasing a rental due to the recent moratoriums to protect tenants. The management firm and the expertise of the team can make all the difference.
Since covid, the rental market has been spiraling! The pandemic has resulted in a home shortage across the country. This has caused a sellers’ market where sellers are subject to bidding wars as there is little to no inventory available. To add to the frenzy, interest rates are at an all-time low, further incentivizing buyers to make a purchase. Good news for the sellers, but for the buyers who lose the bidding war, they are pushed into finding another home to purchase or find a rental. Which has proven beneficial for investors!
As more and more people are looking to rent, due to the current sellers’ market, investors are in the perfect position to increase rents due to supply being low and demand being at an all time high in Colorado! As of 8/9/21, Colorado Springs hit another all-time high in the rental average, 21% increase from the year prior!
Progressive Property Group has a team of attorneys on retainer who specialize in real estate. They continuously keep our licensed brokers apprised of the ever-changing laws around COVID to ensure we have the most updated information. In addition, the team of attorneys assist the licensed brokers in how to prepare and execute any future challenges we may face. Giving our firm a preventative rather than reactive mentality of doing business.
Progressive Property Group understands first hand how expensive evictions can be for landlords. With some eviction cases ranging from $3,000-$6,000 and taking months to execute by the courts, a thorough pre-qualifying process is key. With our in-depth pre-screening processes, eviction rates are greatly reduced in comparison to other management firms. To date, our eviction rates are less than 3% for the past several years. Having such processes in place has greatly impacted our clients through the pandemic. Progressive Property Group has been trained by our attorneys on all new laws and relief acts available for tenants and landlords. We can assist our well-qualified renters with the Federal Emergency Rental Assistance Program to assist renters in obtaining any unpaid back rent and/or future payments. This has been a huge benefit to our clients as they still receive their normal rental payments each month.
Over eight different management firms in Colorado Springs closed their doors in 2020 due to the negative impact of the pandemic. This information has left clients wondering if investments are the right/safe decision during these times. Whether it’s a pandemic or any other challenges that might arise in the market, having the right team will make all the difference. Because management doesn’t just make sense when times are easy. It’s during the most challenging times that separates Progressive Property Group from the rest.
Contact Progressive Property Group To Learn More About Leasing in Colorado
Understanding the leasing laws in Colorado is one of the most important parts of being a landlord in the area. Renting out properties can be a great way to earn a living. However, you should always be careful to understand your rights and responsibilities. Contact Progressive Property Group to learn more about leasing in Colorado Springs and the rest of the state. You can also reach us by calling (719) 350-5871.
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