Renters would have the right to know why a property rejected their application, receive an itemized receipt detailing any and all fees, and get any unused fees returned if a bill introduced in the Colorado House becomes law.
Right now, “there’s no requirement that a unit even be for rent,” said Jack Regenbogen, an attorney with the Colorado Center on Policy and Law. “While this might violate your sense of fairness, there is nothing that would prevent a landlord, legally speaking, from collecting application fees on an ongoing basis even if every unit is filled.”
House Bill 1106 would change that by creating a set of rules landlords and rental companies would have to follow when it comes to charging and refunding application fees. The bill, as it’s currently written, would limit the fees property managers could charge to the costs of a credit check, criminal background check and administrative costs of a reference check. It would require landlords to refund any unused portion of those fees, and to explain to potential renters why they were rejected.
“We’ve heard that it is not uncommon for a prospective renter to exhaust their entire savings on rental application fees, leaving nothing left for first month’s rent,” Regenbogen said.
Several people testified about application fees and other nonrefundable fees that ranged from $50 to $450 per application, including Cesiah Guadarrama from the advocacy group 9to5 Colorado. She read the testimony of a woman who spent more than $5,000 on application fees while living in a homeless shelter.
The bill is being pushed by three Democratic lawmakers, but Republicans and industry groups say they aren’t opposed to regulating rental application fees.
Nancy Burke, a vice president for the Colorado Apartment Association, said she’s working with the bill’s sponsors
“so we can get to a support position.”
One of Burke’s main concerns is that the bill requires leasing companies to charge everyone the same price. She told the House Business Affairs and Labor Committee on Tuesday that the costs for verifying the references and criminal histories of in-state and out-of-state applicants are different.
The bill is also silent on what happens if an applicant can’t be located.
“Sometimes they just vanish, and they never inquire about their applications and they don’t return phone calls,” said Debi Stobie, who owns a 24-unit apartment building with her husband. “It would be an administrative nightmare for us to track them down.”
Stobie said she tries to refund unused application fees, but she and other landlords who testified would like clarity about what documentation a court would rely on as proof of a reasonable effort to return that money.
The bill passed out of committee Tuesday on a party-line vote.
Rep. Hugh McKean, R-Loveland, voted against the bill because it relies on a “reasonable” time frame for landlords to refund unused application fees. But he said he’s willing to work with the bill’s sponsors on changes that could move him to a yes when the bill gets to the floor for a vote.