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New Denver Law: Licensing for Rental Properties

Posted: July 14, 2021

The Denver city council has passed a law that requires all landlords to obtain licenses for their rental properties. Licensing requirements will take effect in 2023 for properties with multiple units and in 2024 for single-unit properties. Certain actions are required to obtain a license.

Rental properties must be examined by certified inspectors before a landlord can receive their license, and again every four years. The city of Denver estimates this will average $150, but the American Society of Home Inspectors says this can cost between $300 and $1000. For properties with two or more units, 10% or more of the total units must be randomly inspected. Additionally, landlords must pay a licensing fee. These fees will vary, from $50 for a single unit to $500 for properties with more than 250 units.

The city of Denver is also extending certain protections to tenants. One such protection is expanding the period landlords must give late-paying tenants to catch up on their rent before beginning eviction processes. This three-day period has now been extended to ten days.

The new laws will impact landlords in a variety of ways. Primarily, landlords will face increased costs due to the licensing requirements. Ensuring compliance with city laws will also take time and effort. Additionally, the expanded notice periods for tenants are estimated to extend the average eviction process from 45 days to 60 days.

Landlords may take a variety of actions to minimize these impacts. One option is early licensing, which will be offered in 2022. This will allow landlords to acquire the licenses necessary to rent properties before the law goes into effect. Taking advantage of this is an excellent way to prevent future headaches. Necessary expenses can be planned for in advance, and any delays with licensing will not result in violations if done early.

Additionally, landlords can ensure that potential tenants are screened before leasing, reducing the risk that eviction will become necessary. Background checks, credit checks, and reports on potential tenants’ prior eviction records are valid ways to screen applicants and avoid any potential loss of rental income, damages to the property, or legal expenses. Keep in mind that screening requires an applicant’s signed authorization.

While Denver’s decision to require licenses for rental properties makes renting properties more complicated, savvy landlords can stay on top of these requirements, minimizing the impact on themselves and their income.