Residential Rental Applications: What You Should Know as a Landlord or as a Tenant

For both landlords and prospective tenants, rental applications may seem like a self-explanatory step of the rental process. However, there are several things that both parties should know about the application process. As a tenant, you should know your rights and what information you are required to share with your prospective landlord. On the other hand, as a landlord, you should know what you are allowed to charge and what you are allowed to consider when processing a rental application.

Federal anti-discrimination laws, specifically the Fair Housing Act, prevent landlords from rejecting rental applications on the basis of race, religion, national origin, sex, familial status, and disability. However, this law does not apply to buildings with 4 or fewer units or single-family homes (so long as the landlord owns fewer than 3 rental homes). Additionally, new Supreme Court decisions and Colorado state laws protect tenants from housing discrimination on the basis of sexual orientation and gender identity. As such, rental applications which ask identifying information on any of these bases can lead a landlord to serious questioning about discriminatory practices.

In addition to the federally protected identification categories, Colorado law provides protections to people who have criminal records over 5 years old and people who have poor rental or credit history over 7 years old. Landlords may not consider any criminal offense over 5 years old unless the crime was murder, a sex offense, stalking offense, or the crime involved methamphetamines. Similarly, landlords may not consider poor rental or credit history, such as an eviction or bankruptcy, if it occurred more than 7 years before the date of the application.

Application fees are another issue that involves the obligations and rights of landlords and prospective tenants. While landlords are permitted to charge fees for processing rental applications, Colorado law requires (1) that the expected costs or actual costs spent to process the fee be disclosed to the applicant; and (2) that the entire fee be used for processing and any excess must be returned to the prospective tenant.

Fee disclosures may be made based on expected expenses and may be electronically processed. However, determining “excessive fees” is a bit nuanced. For instance, say a landlord charged $50 for an application fee to cover the cost of a $25 background check and a $25 credit check for an applicant. If the landlord only performed the background check then rejected the applicant on that basis before doing the credit check, the landlord must return the remaining $25 for the unperformed credit check. In such circumstances, landlords are required to make a good faith effort to return the excess $25 within 20 days.

For that reason, it’s important that landlords provide full disclosure of every step they take in the application process and provide any background or credit check to any rejected applicant. This diligent practice dovetails with landlords’ requirement to make a good-faith effort to inform the applicant of the reason for their denial within 20 days of the decision to deny.

Violations of Colorado law regarding rental application fees, such as the above examples, can result in treble damages and attorneys’ fees associated with a claim, so it is important for tenants to know their rights, and for landlords to make sure to comply with the law. If you have questions or concerns related to rental applications or your rental application process, please fill out an interest form here.

GLO has prepared this blog to provide general information on legal issues that may be of interest. This blog does not provide legal advice for any specific situation, and this does not create an attorney-client relationship between any reader and GLO or its attorneys. GLO engages clients only through specific fee arrangements and signed engagement letters. GLO does not guarantee any results.