Colorado renters won’t have to pay so many application fees starting in August

Hart Van Denburg/CPR News
Apartments for rent in Denver, March 17, 2023.

A new law in Colorado is meant to cut down on some of the costs of searching for rental housing.

HB23-1099, which was signed by Gov. Jared Polis on Thursday, could save tenants from having to pay for background checks over and over again.

“We know that housing is tight in the state. This is a way to make a real difference for people — saving up to hundreds of dollars per search,” said state Rep. Mike Weissman, a Democratic sponsor of the legislation.

What the bill does:

When apartments are in short supply, renters often file applications with multiple landlords. And right now, they may have to pay a fee of about $30 or more for a background check with each one of those applications.

The new legislation changes that model. Instead of paying each landlord to run a separate background check, a prospective tenant could pay for a single report from a consumer reporting agency. 

Reports could be used for up to 30 days and would have to include verification of employment and income; a rental and credit history; and a criminal record check. There are already companies out there offering this kind of service. For example, TransUnion’s SmartMove appears to fit the bill’s requirements.

“It’s very innovative,” said state Sen. Rhonda Fields, a cosponsor. “It’s a slick, clean procedure. I love this bill.”

The tenant could share their report with multiple landlords — meaning they wouldn’t have to pay background check fees for every application. Landlords will have to advise tenants of their rights under the law and would not be able to charge application fees to people who provide their own reports.

“The landlord is still getting the information that the landlord wants. ‘What kind of tenant am I potentially renting to?’” Weissman said. “It's an understandable concern. And we think that we found a way to meet that concern and save renters money at the same time.”

Landlords would have the right to get a copy of the background report directly from the agency.

The bill faced relatively light opposition from real-estate interests, with none registering in opposition, though some requested amendments.

Drew Hamrick of the Apartment Association of Metro Denver said that the bill overall was a good idea. But he said that landlords should still be allowed to charge fees for the administrative cost of processing applications, even if the tenant is providing the background check themselves.

The law goes into effect early in August 2023. It passed with the support of nearly every Democrat and without any Republican votes. It was co-sponsored by state Sen. Tony Exum and state Rep. Stephanie Vigil.

One exemption:

The law includes a partial exemption that Weissman said is aimed at smaller landlords. If a landlord is only accepting applications from one tenant at a time, they can still charge application fees. But in those cases, renters can still catch a break. The application fees would have to be refunded if the tenant doesn’t end up leasing the unit — whether by their own choice or that of the landlord.

The law follows a 2019 state law, which says that rental fees can only be used to pay for actual costs incurred by the landlord.