Are you prepared to risk lawsuits and legal challenges while self-managing your rental property?
We understand the urge to DIY whatever can be DIY-ed. And it may seem easy enough to collect rent and respond to maintenance calls. But are you following fair housing laws with your marketing? Are you compliant with security deposit laws and aware of the legal limits on late fees? What if you have to evict? Does your lease agreement allow for you to recoup your legal fees?
The true cost of self-managing a rental property in today’s regulatory environment can be brutal. While there are hundreds of good reasons to partner with a professional property management team in Colorado, one of the best reasons is to ensure you’re compliant with all state and local laws.
Quick Summary:
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Marketing and Screening in Compliance with Fair Housing Laws
Landlords cannot discriminate against tenants or applicants based on race, color, religion, sex, disability, familial status, or national origin under the Federal Fair Housing Act. Colorado state law expands these protections to include sexual orientation, gender identity, and source of income.
Typically, legal mistakes are made by self-managing landlords during the marketing process, when language is used that could be considered discriminatory. Or, through tenants not being screened to the same and consistent standards.
Our expertise in fair housing allows us to market your property effectively while adhering to strict federal and state guidelines. We establish clear, objective rental criteria to ensure a fair screening process for every prospect. Partnering with us minimizes your exposure to liability and ensures your leasing process is both professional and legally sound.
Security Deposit Laws in Colorado
Security Deposits are one of the most common reasons for legal disputes. Tenants are often confused about what it covers and what it doesn’t. It is a common misconception among independent landlords that they have more discretion over security deposit funds than the law actually allows.Here’s what you need to know.
- Colorado law sets a maximum Security Deposit of 2x the rent.
- The security deposit must be returned within 30 days after the tenant moves out, or 60 days if the lease allows, minus any legitimate deductions for damages or unpaid rent.
- If any portion of the security deposit is withheld, the landlord must provide an itemized list of deductions with the return/disposition.
Normal wear and tear cannot be deducted from the deposit. Those small nail holes in the walls are normal. Scuff marks where furniture rested are normal. Colorado recently defined cleaning and carpet cleaning as normal wear and tear, so these expenses can no longer be withheld in most circumstances. Landlords can only deduct for documented damage or for unpaid rent and utility bills.
Mishandling of the Security Deposit can result in treble damages. Working with a property manager ensures that deductions are legal and that the deposit is returned on time.
Collecting Rent and Charging Late Fees
Colorado does not have rent control. However, when you raise the rent at lease renewal time, you must provide at least 60 days of notice.
Are you charging late fees? Make sure it’s in the lease.
Late fees can only be charged if specified in the lease agreement, but they cannot be charged until the rent is at least 7 days late. Fees cannot exceed $50 or 5% of the outstanding rent amount, whichever is greater, and they can be charged only once per late payment, and cannot include interest.
Eviction Laws in Colorado
Eviction has become more complicated in Colorado. There are strict timelines and processes that must be followed to the letter, otherwise your eviction complaint will be thrown out by the courts.
You must provide a 10-day notice (Notice to Quit) for most violations, including non-payment of rent, before beginning the eviction process. A 3-day notice may only be issued for substantial violations – these are generally defined by actions that jeopardize the safety of others. If the violation hasn’t been cured by the time the notice expires, you’ll need to file a formal eviction lawsuit in court, and you cannot remove the tenant until you have a Writ of Repossession, which is carried out by the sheriff.
Because Colorado’s eviction laws are layered and complex, navigating them without professional guidance is risky. Small oversights in how a notice is served or how a property is accessed can derail an entire case. We ensure every step is handled by the book (and with our attorneys) to avoid the common pitfalls of ‘self-help’ evictions, which the courts view as a violation of the legal process.
What is the True Cost of Regulatory and Legal Mistakes?
Self-managing a rental property in Colorado may seem like a way to save money and enjoy having full control over your investment, but the true costs go far beyond just the time and effort required to handle day-to-day management.
In Colorado, we’re working within a complex regulatory environment, and the legal risks associated with self-management can be significant. And costly.
Landlords are responsible for ensuring that their rental property meets all habitability standards and complies with state and local laws, which are continuously evolving. From eviction processes to security deposit rules, a single misstep can result in hefty fines, expensive legal battles, or even lost rental income.
Failing to stay updated on changes in tenant protections can leave you vulnerable to lawsuits or penalties. For example, incorrectly retaining a security deposit or mishandling a tenant dispute could lead to costly litigation, which can be far more expensive than hiring a professional property management company. What if you treat an emotional support animal like a pet? You’ll likely face a lawsuit.
The potential financial and legal consequences make it clear that the risks of self-management often outweigh the benefits, especially in a state like Colorado, where tenant protections are robust and the legal landscape is ever-changing.
We have highlighted only a few of the laws and regulatory concerns that often get self-managing landlords into trouble. You also need to understand habitability standards and right-of-entry notice periods. There are disclosures that need to be included in the lease.
Don’t put yourself or your property at risk. Please contact us at Laurel Property Services. We provide expert property management throughout Jefferson County in Colorado, including communities such as Golden, Arvada, Lakewood, Morrison, Wheat Ridge, and Littleton.
