Colorado application fee law: processing cost only, portable reports and a $2,500 penalty
Colorado's rules are in Part 9 of Article 12, Title 38. A landlord may charge an application fee only to cover the real cost of processing the application, must charge every applicant for the same unit the same amount, and must accept a portable tenant screening report without any fee.
What can the fee cover?
Section 38-12-903(1) bars charging a rental application fee unless the landlord uses the entire amount to cover the landlord's costs in processing the application. Those costs may be the actual expense incurred processing the application, or the average expense per prospective tenant across multiple applications. The statute's definition is broad: a rental application fee is any sum, however denominated, charged in connection with submitting an application, or any nonrefundable fee that precedes the start of the tenancy. A refundable security deposit and prepaid rent are not included.
Subsection (2)(a) bars charging one applicant a different amount from another applicant for the same unit, or any other unit offered at the same time.
What must you disclose, give and return?
A paid applicant gets either a disclosure of the anticipated expenses the fee will be used for, or an itemization of actual expenses. If you charge an average-cost fee, you include information on how the average is determined. Every applicant who pays gets a receipt, electronic unless they ask for paper (subsection 3). If you do not use all of the fee, you remit the remainder to the applicant, making a good-faith effort within twenty calendar days after processing the application (subsection 4).
Example a made-up landlord charges a $50 fee based on an average processing cost. After screening one applicant for $32, the landlord returns $18 within twenty days and explains how the average was set.
How does a portable screening report change things?
A portable tenant screening report is a consumer report prepared at the applicant's request that includes name, contact information, employment and income verification, last known address, and for each prior-residence jurisdiction a rental and credit history report and a criminal conviction check. The landlord must accept one (section 38-12-904(1.5)), may require that it was completed within the previous 30 days, available directly from the consumer reporting agency or a compliant website at no cost to the landlord, and accompanied by the applicant's statement that nothing material has changed. The landlord may not charge a fee to access or use it, and may not charge a rental application fee when one is provided (38-12-903(2)(b)).
Before any action for which you would expect to collect a fee, you must advise the applicant, in substantially the statute's language and in a place likely to reach applicants, of the right to provide a portable report and of the no-fee consequence. Bold twelve-point type is required in advertisements, on a website home page, or in the application.
Is there an exemption?
Yes. A landlord is exempt from the portable report requirements if it accepts only one application fee at a time for a unit (or one per applicant group) and refunds the whole fee within twenty calendar days after either side's written communication declining to enter a lease (904(1.5)(f)). Then income rules also apply: a landlord may consider income only to confirm it meets 200 percent of annual rent, or of the tenant's share of rent for housing subsidy applicants.
Denials and penalties
A denial must be in writing with the reasons, within twenty calendar days, with a copy of any consumer report and the right to dispute it. A violation of Part 9 makes the landlord liable for $2,500 plus court costs and reasonable attorney fees, but the applicant must give seven days' notice first, and a landlord who cures within seven days after notice pays a $50 penalty instead (section 38-12-905). I read the 2024 printout of the statutes, so check for later amendments.
How DoorKeeping helps in Colorado
DoorKeeping puts the portable report advisement on your application page, keeps one fee amount for all applicants of a unit and shows the 20 day dates for any refund and denial notice. Tenants never pay a fee to DoorKeeping. Screening is passed through at cost. DoorKeeping never holds your money and sends a payment only when you approve it. This is general information, not legal advice. Check the current statute or ask a local attorney before you rely on it.
Sources
Questions
- What can a Colorado application fee cover?
- Only the landlord's costs of processing the application, based on actual expense or the average expense per applicant, and the same amount for every applicant for the same unit.
- Can a Colorado landlord charge a fee if the applicant has a portable screening report?
- No. The landlord must accept it and cannot charge an application fee or a fee to access or use the report, unless the landlord qualifies for the one-fee-at-a-time and full-refund exemption.
- What happens to unused application fee money in Colorado?
- It must be returned, with a good-faith effort to do so within twenty calendar days after processing the application.