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A Peek Behind The Curtain
Another year, another housing bill that stands to disrupt the landlord-tenant relationship in Colorado. The bill, now titled “Cause Required for Eviction of Residential Tenants” (HB24-1098) has been the pet project of house representative Javier Mabrey – primary sponsor of the nearly identical “Just Cause for Eviction” bill and “Rent Control” bill that were both defeated in last year’s legislative session.
Rep. Mabrey is an attorney and co-founder of the Community Economic Defense Project (founded and formerly known as The Covid-19 Eviction Defense Project), a non-profit that has morphed from a small group of volunteers into a powerful housing advocacy firm with nearly 150 employees providing “rapid rental aid payments, eviction legal defense and…rehousing support.”
CEDP is now one of the largest beneficiaries of state grant programs created as a result of federal COVID-19 funding which have been extended with the use of Prop 123 affordable housing funds. Prior to the passage of Prop 123 and just 2 years after being founded, the group reported $84 million in revenue, including $82 million in government grants and contributions for the 2022 fiscal year. I expect this number to grow with the introduction of Prop 123.
Of this, roughly $73 million was given to 8,505 recipients for rental assistance, another $6 million paid out for staff and a curious $93,000 reported under lobbying through “direct contact with legislators, their staffs, government officials or a legislative body”.
Rep. Mabrey does not appear directly on any publicly available documents or financial reports; however, he is listed as a “staff attorney” on both their website and his LinkedIn page. It is unclear whether he is paid for this role, though their governing documents and conflicts of interest can be obtained upon request should you desire to dig deeper. Personally, I prefer to avoid stirring up a group of lawyers with ~$100 million in annual revenue to work with.
Changing the Game
While I think it’s great that this group has found a way to provide rental assistance to tenants in need. It is extremely concerning to see the primary sponsor of this, and similar legislation so closely connected with a group that stands to gain a great deal – in both money and power – as a result of said legislation.
Suffice it to say, should this bill pass, landlords will need to be extra diligent with how we approach our current and future leases as it will re-define what we’ve always understood “eviction” to mean.
I’ll provide further explanation on the next page, but first I want to preface a couple points. As of this writing the bill has been passed in the House and sent for review in the Senate. The bill could simply be passed by the senate, be amended, defeated, or could even get vetoed by Governor Polis down the road. Ultimately, with the amount of support I’ve seen so far, I don’t think this will go away and we will see some version of this bill passed either this year or next.
Get in touch if you’d like updates or would like information on how you can follow the bill’s progress going forward.
What Landlords Need to Know
First. The bill outlines that “for-cause” eviction would remain unchanged under the law, so things like non-payment of rent, illegal subleases...etc. that are covered under current law would still be grounds for eviction.
It then goes on to state “cause required for eviction – no fault evictions” followed by “A landlord shall not serve a notice to terminate tenancy or a demand for possession…unless there is cause for the eviction.”
Note: This extends to lease renewals and is not just limited to evictions as we know them now.
To be clear – they are re-defining eviction to include a landlord’s decision not to renew a lease with a tenant and thus requiring any non-renewal initiated by the landlord to be accompanied by written notice either outlining the cause (must be a violation per current law) or initiating a “no-fault” eviction as defined in the bill.
The categories for a “no-fault eviction” include:
· Demolition or conversion of the residential premises
· Substantial repairs or renovations
· Occupancy assumed by the landlord or family member of the landlord
· Expiration of time-limited housing operated by a mission driven organization
· Withdrawal of the residential premises from the rental market for the purposes of selling
· Tenant refuses to sign a new lease with reasonable terms
It then goes on to describe each of these categories in detail and the different notice requirements that would need to be provided to the tenant to be compliant. This is where it becomes extremely obvious that this bill is designed to create litigation initiated by tenants against landlords. The terms are clearly designed to trip up landlords and the language they use is the type of ambiguous language commonly argued by attorneys in court.
It also disincentivizes any sort of updating to rental properties. Whether planned or not, you would be opening up a massive can of worms if you decide to “substantially” update your rental. If you give the tenant notice as required, you must provide the tenant “first right to return” once the work is completed and it must be “pursuant to a rental agreement of substantially the same terms, including terms establishing rent in the same amount or in a reasonably increased amount.”
If you don’t give the tenant notice and they move out, but then they learn that you updated the unit – they could very well sue you for not providing them notice and not providing them first right to return! Any sort of updating would become a lose-lose with this law as you run the risk of litigation no matter what you do!
Also, who defines “substantial improvements” and who defines what is a “reasonable amount” for a rent increase? I’ll tell you – a court will decide on a case-by-case basis and there just happens to be a government funded “non-profit” positioned perfectly to initiate these lawsuits on behalf of tenants.
The final category “tenant refuses to sign a new lease with reasonable terms” was added just before this passed in the house but is by far the most egregious. This is clearly designed to open the door for litigation in the event a tenant does not agree to a rent increase. At minimum this would automatically extend their lease by 90 days – but would very likely end in a drawn-out eviction lawsuit while attorneys argue what is considered to be “reasonable terms” and whether the rent increase is considered “retaliatory” for any reason.
I’d love to hear your take on all of this.
I’m following this and other bills closely, as well as investigating workarounds so that I can strategically help you accomplish the best outcome with your real estate.
As always, I invite you to get in touch for a free consultation. I’m confident I can find the workarounds to help for your best benefit!