Colorado’s Late Fee Laws

IMPORTANT DISCLAIMER: THE INFORMATION CONTAINED IN THIS ARTICLE IS NOT LEGAL ADVICE. LEGISLATION IN THIS AREA IS CHANGING ALL THE TIME. DO NOT RELY ON THIS ARTICLE. FAILURE TO PROPERLY APPLY THE LAW CAN BE DETRIMENTAL TO YOUR CLAIM AND RESULT IN A LAWSUIT AGAINST YOU. CONTACT AN ATTORNEY.

COVID-19 Late Fee Update

COVID-19 both uncovered and highlighted many issues in the Colorado renter’s market. The virus created a situation where people could not interact with each other which led to the shutdowns preventing people from working which led to financial problems. In short, how can you pay the bills if you cannot work?

As such, you saw an uptick in the number of late payments and late fees. Now, a large portion of the older leases used to classify late fees as rent or additional rent. This allowed the landlord to attempt to evict tenants using the same provision under the forcible detainer statute which you would use for non-payment of rent allowing for shorter eviction times.

Both the federal government and state governments scrambled to address the problem. The CDC attempted to enact eviction moratoriums and state governors took drastic actions relying on emergency powers to stem the incoming flood of homeless individuals caused by the pandemic. I encourage readers to look into my other web posts on the topic. Link found here.

While the pandemic rolled on, the Colorado legislator worked to solve portions of the issue. This brings us to the topic of today, Colorado Senate Bill 21-173. This bill addressed numerous areas directly affecting landlord-tenant law and as of the date of this article is in effective. Today we are going to talk about late fees.

What is a Late Fee?

A late fee in relation to Senate Bill 21-173 is defined as follows.

 “Late fee” means a monetary sum that a landlord charges a tenant or home owner as a result of the tenant’s or home owner’s failure to timely pay rent and that is determined pursuant to a rental agreement between the landlord and the tenant or home owner. C.R.S. 38-12-102 (3) (2022).

The legislator used the phrasing “a monetary sum that a landlord charges a tenant or home owner as a result of the tenant’s or home owner’s failure to timely pay rent…” It should be noted that the use of the word late fee is not required for it to qualify as a late fee. Landlords should be aware of this nuance because things such as bounced check fees, administrative fees, or other cleverly wordage phrases could qualify as a late fee under the statute provided they are charged as a result of the tenant’s failure to timely pay rent.

What are a few things that a landlord cannot do with a late fee?

A landlord including its agents (Management Companies) cannot do any of the following. Please refer to C.R.S. 38-12-105 (2022) and contact an attorney for the full list and a more detailed explanation. This list does not reflect the exact wording of the statute.

1.     Required Grace Period: Charge a tenant or home owner a late fee unless a rent payment is late by at least seven calendar days;

2.     Late Fee Cap: Charge a tenant or home owner a late fee in an amount that exceeds the greater of: (I) Fifty dollars; or (II) Five percent of the amount of the past due rent payment;

3.     Required Disclosures: Require a tenant or home owner to pay a late fee unless the late fee is disclosed in the rental agreement;

4.     Limits The Landlord’s Ability To Evict: Remove or exclude a tenant from a dwelling or initiate a court process for the removal or exclusion of a tenant from a dwelling because the tenant fails to pay one or more late fees to the landlord;

5.     Limits The Landlord’s Ability To Terminate: Terminate a tenancy or other estate at will or a lease in a mobile home park because a tenant or home owner fails to pay one or more late fees to the landlord;

6.     Limits Charges For Rental Support: Impose a late fee on a tenant or home owner for the late payment or nonpayment of any portion of the rent that a rent subsidy provider, rather than the tenant or home owner, is responsible for paying;

7.     Prevents Multiple Charges: Impose a late fee more than once for each late payment, except that a landlord may impose a late fee more than once for a late payment if the total amount of such late fees does not exceed the amount described in other parts of the statute;

8.     Prevents Any Interest Charges: Require a tenant or home owner to pay any amount of interest on a late fee;

9.     Prevents Offset Against Current Rental Payments: Recoup any amount of a late fee from a rent payment made to the landlord by a tenant or home owner; or

10.  Required Notice In All Circumstances: Charge a tenant or home owner a late fee unless the landlord provided the tenant or home owner written notice of the late fee within one hundred eighty days after the date upon which the rent payment was due.

The information contained in this article is based on C.R.S. 38-12-105 (2022). It has been modified. The reader should not rely on any of this information as legal advice. This article is intended to help readers identify situations where it may be appropriate to call an attorney to discuss their legal needs. It is highly encouraged that you contact an attorney if you have any questions.

Check When Your Lease Was Written?

For landlords, I highly encourage landlords and management companies to look at your lease and determine when it was written. If it was written prior to 2022, there is a good chance that it may no longer comply with current laws. Talk to an attorney about reviewing and revising the lease to comply with current laws.  

For Tenants, I highly encourage Tenants to reach out to an attorney early in the eviction process. If you receive any type of notice, summons, complaint, or other legal-looking documents then reach out to an attorney to discuss.

Late Fee Classification:

Another important point for landlords is how late fees are classified.  

A late fee is distinct from rent, and a rental agreement may not classify a late fee as rent for the purposes of section 13-40-104 (1)(d). C.R.S. 38-12-105 (7) (2022).

This subtle but important distinction is important because it prevents landlords from using the shorter time frames allowed for non-payment of rent in the forcible detainer statutes (Eviction Statutes). In addition, this classification as well as other portions of C.R.S. 38-12-105 (2022) make it very clear that a landlord needs more than a simple failure to pay a late fee to pursue an eviction.

For Landlords,, I highly encourage landlords and management companies to look at their leases for phrases such as additional rent. If you see any phrasing attempting to classify a late fee as rent, then you may be working with an out-of-date lease that could create problems.

For Tenants, if a landlord is seeking an eviction and the only reason they provide is non-payment of a late fee then reach out to an attorney.

Defense Against Eviction:

In certain situations, a tenant can use a violation of C.R.S. 38-12-105 as an affirmative defense to a forcible detainer action (Eviction). Talk to an attorney. Affirmative defenses have special pleading requirements. You can actually waive your defense by not following the proper procedure.

Legal Risk For Landlords And Protections For Tenants:

The following are a few items that both tenants and landlords need to be aware of.

1.     Void Provisions And Injunctive Relief: A provision of a lease of a landlord or person acting on behalf of a landlord that does not comply with the provisions of C.R.S. 38-12-105(1) is void and unenforceable. A tenant who is aggrieved by an action taken by a landlord or person acting on behalf of the landlord in violation of C.R.S. 38-12-105(1) may bring an action for injunctive relief pursuant to C.R.S. 38-12-105(5).  

2.     Penalties: A landlord who violates subsection C.R.S. 38-12-105(1) shall pay to an aggrieved tenant or home owner a penalty in the amount of fifty dollars for each violation.

3.     Requirement To Cure Violation: Except as described in subsection C.R.S. 38-12-105(3), and notwithstanding any other provision of this section to the contrary, a landlord who violates C.R.S. 38-12-105(1) has seven days to cure the violation, which seven days begins when the landlord receives written or electronic notice of the violation;

4.     Failure To Cure Resulting In Additional Litigation: If a landlord violates C.R.S. 38-12-105(1) and fails to timely cure the violation as described in C.R.S. 38-12-105(4), a tenant or home owner may bring a civil action to seek one or more of the following remedies:

a.     Compensatory damages for injury or loss suffered;

b.     A penalty of at least one hundred fifty dollars but not more than one thousand dollars for each violation, payable to the tenant or home owner;

c.      Costs, including reasonable attorney fees to the prevailing party; and

d.     Other equitable relief the court finds appropriate.

In short, a landlord needs to be aware that if they run afoul of the late fee statute that they could be subject to penalties and legal action which may put them on the hook for compensatory damages, punitive damages, attorney fees and costs, and more.

The tenant needs to be aware that they have rights. C.R.S. 38-12-105 (2022) specifically authorizes attorney fees and costs in certain situations. If you feel your rights are being violated, then call an attorney.

The information contained in this article is based on C.R.S. 38-12-105 (2022). It has been modified. The reader should not rely on any of this information as legal advice. This article is intended to help readers identify situations where it may be appropriate to call an attorney to discuss their legal needs. It is highly encouraged that you contact an attorney if you have any questions.

Contact Larranaga Law Today!!!

Thank you for reading this article. Larranaga Law provides legal services to both landlords and tenants.

For landlords, it may be time to have an attorney review and update your lease. Late fees were not the only things that changes this past year. Old leases should be heavily scrutinized because they can lead to some real problems for landlords.

For tenants, if you feel something does not feel right from a moral or legal standpoint, reach out to an attorney. Colorado is a very renter-friendly state. There is a good chance there may be a law on the books regarding the subject.

The information contained in this article is based on C.R.S. 38-12-105 (2022). It has been modified. The reader should not rely on any of this information as legal advice. This article is intended to help readers identify situations where it may be appropriate to call an attorney to discuss their legal needs. It is highly encouraged that you contact an attorney if you have any questions.