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Property Management and Leases

I . In t roduc t ion

Over the yea rs, res iden t ia l and commercia l p rope r ty management has deve loped into

complex and p ro f i tab le real es tate specia l t i es. Proper ty managers are responsib le for many

t r i l l ions of do l l a rs in rea l p rope r ty market va lue on a long- te rm bas is. Many f i rms a re devo ted

exclus i ve ly to proper ty managemen t , and o the rs have se t up au tonomous proper ty

managemen t d ivis ions to pro f i t f rom the economic s tab i l i t y of managemen t i ncome dur ing

pe r iods of s low sa les ac t i v i t y . Some o ther f i rms s imp ly do occas iona l p rope r ty managemen t as

an accommoda t ion to the i r sa les l i s t i ng c l ients .

Proper ty managers o f fe r a va r ie ty of extens ive serv i ces and shou lde r va ry ing degrees of

responsib i l i t y in the per formance of the i r du t ies to the owners and tenants. Proper ty

managers are cons idered “genera l agents , ” per forming mul t ip le funct ions as compared to

sa les l i censees who , as “sp e c ia l a g en ts , ” are emp loyed fo r a l imi ted dura t ion to marke t a

spec i f i c property.

Whateve r the scope of the managemen t , i f a broke r or brokerage company is so l i c i t ing

tenan ts, execut ing leases , co l lec t ing rents and secu r i t y depos i t s , superv i s ing repairs and

improvemen ts, and co l l ect i ng a fee for such serv i ces , that pe rson or company is per fo rming

proper ty manage men t and shou ld become ve ry fami l ia r no t on ly w i th th is chap te r , bu t a l so

wi th Chapter 20, “Escrow Records, ” Chapter 25 , “Co lo rado Fa i r Housing Ac t , ” and Chapte r 4 ,

“Subd iv i s ion Laws.”

Occas iona l l y , employed broke rs are temp ted to pe r fo rm res ident ia l p rop er ty managemen t

w i thout their employ ing broker ’s knowledge or consen t . An employed broker is proh ib i ted

f rom per forming res iden t ia l p rope r ty management outs ide of the knowledge and superv i s ion

o f h i s o r her employing broke r . Sec t ion 12 -61-103 (10) , C.R .S . , requ i res a l l business to be

conducted only in the l icensed name of the employing broker . Employing b roke rs must be

aware of their employed b roke rs ’ act iv i t ies , supe rv i se a l l emp loyed b roke rs ’ ac t i v i t ies , and

main ta in p rope r accoun t ing of any moneys ob ta ined by the employed broke r in accordance

wi th Ru le E -1 and § 12-61 -113 (1 )( f ) , C.R .S . Fur the r , the emp loy ing b roker shou ld have a

c lea r l y wr i t ten po l i cy as to the f i rm ’s o f fe r ing o f management se rv i ces, and out l ine spec i f i ca l l y

how the f i rm and i t s employees wi l l conduct such services.

The increasing use of computers and va r ious so f tware prog rams has improved the

pro f i tab i l i t y and e f f i c iency of proper ty managemen t as wel l as homeowner assoc ia t ion

managemen t . However , so f twa re prog rams vary cons iderab ly , and property managers shou ld

tho rough ly s tudy any app l i ca t ion p r io r to imp lementa t ion . Some commercia l so f twa re p rograms

may lack the abi l i t y to customize fo rmats for res iden t ia l c l ients. Some managers have

deve loped reco rd -keep ing sys tems us ing word processo rs or account ing sys tems. The

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suggested forms in Chapte r 20, “Escrow Reco rds , ” may be helpfu l whethe r using

compu te r i zed, manua l , o r a combinat ion o f bo th t ypes o f record-keeping.

Proper ty managers face cha l lenges of age of cons t ruct ion , cash f low requ i remen ts,

vacancy rates, heat ing and cool ing conce rns , and e lect r i ca l and p lumbing needs, as we l l as

E PA gu ide l ines for radon, asbes tos, and lead-based pa in t , p lus both fede ra l and sta te fa i r

hous ing and c i v i l r igh ts regu la t i o ns and the sta te -manda ted war ranty of hab i tab i l i t y , and

carbon monox ide detec tor requ i rements. Add i t i ona l l y , sound management and account ing

pract i ces must be fo l l owed to avoid comming l ing of funds among the p rope r t i es managed.

Pro fessiona l p rope r ty manag ers per fo rm a va r ie ty of func t ions and must be able to

advise on heat ing , coo l ing , pa in t ing, decora t ing , roofs, pests, insurance, the sales market,

and househo ld app l iances, and must know when to refer to other p ro fess iona ls such as

f inanc ia l or tax advisors or a t to rneys . Proper ty managers shou ld be adept at problem

reso lu t ion, negot ia t ions, account ing , budget ing , and sales.

A work ing know ledge of land lord / tenant law, access to a competent a t to rney , e f fect i ve

communica t ion sk i l l s , and the ab i l i t y to organ ize and de legate e f fect i ve l y , as we l l as good

t ime -managemen t sk i l l s and st ress - reduct ion techn iques, a re a l so necessary fo r e f f i c ien t

p roper ty managemen t . Wh i le an ave rage sa les l i censee may hand le two or th ree t ransac t ions a

mon th , a p rofess iona l p rope r ty manager w i th an inventory of 200 un i t s may be execut ing f i ve

to s i x leases, as we l l as co l lec t ing and d i sburs ing income f rom a l l 200 un i t s , every mon th .

The do l l a r va lue of each t ransac t ion may be smal le r , bu t the manager is most o f ten

respons ib le fo r the ent i re va lue of the proper ty and ove r an extens ive per iod of t ime. The

sk i l l s invo lved are equa l ly impor tan t . A homeowner assoc ia t ion manager may hand le 1 ,000

un i t s compr i sed o f many smal l o r seve ra l la rge communit ies .

At the ou tse t , a p rope r ty manager must c lear l y unde rs tand the owner ’ s needs and desi res

fo r the p rope r ty . Management p lans must suppor t the owner ’ s ob ject i ves of shor t- or long -

term ownersh ip , long - term inves tmen t , or other income needs. As the management cont rac t

con t inues ove r t ime , t he manager must exce l a t c lea r and prompt commu nica t ions wi th

the owner .

A prope r ty manager may decide to spec ia l i ze in a par t i cu la r t ype of p rope r ty or to se rv i ce

many types. P rope r ty management spec ia l t ies may inc lude:

• S ing le fami l y homes, a t tached o r de tached (condos, townhomes);

• Mu l t i -un i t bu i l d ings ( res iden t ia l o r of f ice);

• Gove rnment -ass is ted hous ing;

• Reta i l proper t ies ;

• Shopp ing centers ;

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• O f f i ce or indus t r ia l complexes;

• Reso r t o r sho r t - te rm ren ta l p rope r t i es; † and

• Homeowners associat ions.

(† A Colorado rea l esta te l i cense is not requ i red for the above spec ia l t y or for those

exempt under the provis ions o f § 12-61-101, C .R.S . , who lease or manage apa r tment

bu i l d ings or condomin iums, such as regu la r l y sa la r ied ons i te managers employed by

bui ld ing owners or homeowners associa t ions . However, many such spec ia l is ts are

Colorado real estate l icensees, somet imes because they pe r fo rm o the r ac t i v i t i es tha t do

requ i re a l i cense. Accord ing ly , b roke rs who per form serv i ces tha t may not requ i re l i censu re

must s t i l l fo l low the Commiss ion E -Rules app l i cab le unde r the i r employmen t ag reemen ts.

See Commiss ion pos i t i o n sta temen t CP-19 , Sho r t Te rm Occupancy Agreements. )

Seve ra l na t iona l o rgan iza t ions ex is t to assis t p rope r ty managers in the var ious

managemen t spec ia l t ies . Each o f fe rs a wealth o f in fo rmat ion , ne twork ing oppor tun i t i es , and

re fer ra l serv i ces , as we l l as p ro fess iona l educat ion courses and designations.

NARPM® Nat ional: The Nat ional Associa t ion of Resident i a l Property Managers .

638 Independence Parkway, Su i te 100, Chesapeake, VA 23320, Phone: (800) 782-3452 ,

Fax : (866) 466-2776, E-mail : i n fo@narpm.o rg , Websi te : www.narpm.o r g . Appea l ing to

managers of smal ler res ident ia l p rope r t i es: s ing le - fami l y homes, ind iv idua l condos or

townhomes, and 2-12 unit apa r tmen t houses , NARPM is i ndependent of the Na t iona l

Associa t i on of REALTORS® and does not requ i re members to be REALTO RS®.NARPM does

requ i re i ts members to hold a real es tate l i cense except in those s ta tes in wh ich no l i cense

is requ i red for proper ty managers . The re are chapters o f NARPM in Denver , Colorado

Spr ings, Grand Junct ion, and Nor thern Colorado, wi th members throughout the state.

Several p rofess iona l designat ions a re avai lable.

IREM: The Ins t i tu te o f Real Estate Management .

430 North Mich igan Avenue, Ch icago , IL 60611, Phone: (800) 837 -0706, Fax: (800) 338-

4736, E-mai l : cus tserv@irem.o rg , Websi te : www. i rem.or g . Th is organ i za t ion is an a f f i l ia te o f

the Na t iona l Associa t i on o f RE A LTORS® and requ i res i t s members to be RE A

LTORS®. IREM awards the Cer t i f ied Proper ty Manager (C P M) des igna t ion to those

members who successfu l ly comple te a r i go rous ser ies o f cou rses . IREM tends to draw

managers o f commercia l ventu res or la rge apar tmen t houses.

CAI : The Community Associa t ions Inst i tu te .

6402 Ar l ington Blvd., Sui te 500, Fal ls Church, VA 22042, Phone: (888) 224 -4321, Fax:

(703) 684-1581, Websi te: www.ca ion l ine .or g . This group is independent of the Na t iona l

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Associa t i on of RE A LTORS® and spec ia l i zes in the conce rns of p ro fess iona l homeowners

assoc ia t ion managers. The re are act i ve chap te rs in bo th nor thern and southern Co lor ado. CAI

awards severa l p ro fess iona l des ignat ions.

BOMA: The Bui ld ing Owners and Managers Associat ion.

NAA: The Nat ional Apar tment Associa t ion .

4300 Wi l son B lvd . , Su i te 400 , A r l ing ton , VA, 22203 , Phone: (703) 518 -6141 , Fax : (703 ) 248 -

9440, Websi te : www.naahq.o rg. There are chap ters o f NAA in the Denver me tro area , We ld

County , No r the rn Co lo rado, and Sou thern Colorado.

The e ight o rgan iza t ions l is ted in Par t V I I of th is chapter of fer l i t e ra ture , sem inars , and

other in forma t ion to improve their members ’ profess ional ism.

I I . Ma na ge m en t F u nc t i on s

A prope r ty manager ’ s p r imary conce rn shou ld be to obta in the h ighes t poss ib le i ncome

s t ream cons isten t w i th p ro tec t ing the owner ’ s cap i ta l i nves tment and pre serv ing a good

owner -manager - tenant re lat ionship.

The fo l l owing l i s t , a l though not a l l - i nc lus i ve , ou t l ines wha t is usua l l y expec ted o f a

proper ty manager :

1 . Estab l i sh the ren ta l schedule.

2 . Merchand ise the space and co l lec t the rents .

3 . Supe rv i se ma in tenance schedu les and repairs.

4. Deve lop a tenan t re la t i ons po l i cy w i th tenant un ions and tenants desi r ing a

representa t i ve vo ice in the managemen t of the project .

5 . Deve lop employee po l i c ies and superv i se employee per fo rmance. Have an emp loyee

manua l o f po l i c ies and instruct ions.

6 . Ma in ta in p rope r accoun t ing reco rds and make regu lar l y schedu led repo r ts to

the owner .

7 . Qua l i f y and invest iga te tenant credi t .

8 . Prepare and execute leases.

9 . Prepare deco ra t ing , renova t ion , o r repa i r spec i f i ca t ions and obta in es t imates.

10 . H i re , ins t ruc t , and main ta in qua l i f i ed and wi l l ing personne l to s ta f f the bu i l d ing(s ) .

Expec t resul ts.

11 . Aud i t and pay b i l l s , accoun t for the re tu rn or fo r fe i tu re of tenan t secur i t y depos i t s ,

b i l l tenants for u t i l i t ies ,and co l lec t and d isbu rse la te fees.

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12 . Adve r t i se and pub l i c i ze vacancies th rough appropr ia te media.

13 . P lan and superv i se a l te ra t ions and modern iz ing programs.

14 . Inspect vacant space f requen t l y and per iodical ly.

15 . Ke ep ab reas t o f the t imes and s tay posted on compet i t i ve marke t condi t ions.

16 . Pay insu rance p remiums and taxes . Recommend adequate insu rance coverage.

17 . Keep ab reas t of hea l th bu i ld ing code standa rds and the Amer i cans wi th D isab i l i t i es

Act , wh ich requ i re pub l i c bu i ld ings to mee t a l l sa fe ty and access s tandards.

18. Provide for max imum-secur i t y p rov is ions, unders tand ing that the land lo rd is

responsib le for reasonab le measures to sa feguard tenan ts aga ins t intruders .

19 . Deve lop an annua l budget fo r the f i nancia l opera t ions p lan wi th the owner.

20 . Manage a f fa i r s fo r homeowner associa t i ons . See Chapter 4 , “Subd iv i s ion Laws.”

The proper ty manager ’ s respons ib i l i t i es do not end with the co l lec t i on of rents and

repo r t i ng income and expenses . The pro fessiona l manager must be equ ipped to counse l the

owner on a myr iad o f p rob lems, i nc lud ing the fo l lowing:

1 . Ana lyses and recommendat ions rega rd ing vacan t land and p roposed and

ex i s t ing bui ld ings.

2 . Economic ana lyses and superv i s ion o f p lanned remode l ing and renovat ion.

3 . Economic surveys and ana lyses o f t rade areas.

4 . Ana lyses o f ren ta l ra tes and trends.

5 . Budget ing fo r ope ra t ing cash f l ows and unexpected cos ts or seasona l f luc tua t ions in

ren ta l income.

6 . Work ing wi th munic ipa l i t ies an d a id organizat ions.

7 . EPA and Sta te regu la t i ons fo r renovat ions and construct ion.

Each p rope r ty and ca tegory has i ts own character and i ts own se t of p rob lems. When

tak ing on an un fami l i a r ass ignment , an unwary broke r may be ove rburdened wi th proper t y

managemen t prob lems and may have to choose be tween neg lect ing the b rokerage bus iness

and fac ing the wra th o f an i ra te owner . A broke r pe r fo rming proper ty managemen t must

recogn ize h i s o r her sta f f ’ s t ime and exper ience l im itat ions.

Proper ty management is a t ime -consuming p rocess, and schedu l ing of labor p reva lent

p rob lem. A shor tage of qual i f ied personne l is no de fense for fa i lu re to fu l f i l l f iduc ia ry or

con t ract du t ies to an owner . A competen t manager shou ld not assume add i t iona l accoun ts

w i thout adequa te t ime o r the techno logy to se rv i ce them.

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The business re la t i onsh ip between the p rope r ty manager and owner is based on a cu r rent

wr i t ten managemen t ag reemen t . A manager shou ld a lso have a cur rent wr i t ten ag reemen t

executed by the tenant (s ) and land lo rd . I f a lease is not requ i red , a l l agreemen ts conce rn ing

both pa r t i es ’ p r i v i l eges and responsib i l i t ies shou ld be in wr i t i ng and s igned by the par t ies

concerned. I t is w ise to secu re the owner ’ s wr i t ten consent fo r s ign i f i cant changes in such

dut ies o r o ther specia l serv i ces to be per fo rmed by the b roke r on beha l f o f the owner.

The managemen t o f sho r t - te rm occupancies (30 days o r l ess) unde r a broke r ’ s l i cense

requ i res d i l igence in comply ing wi th §§12-61 -113 ( l ) (g ) , (g .5) , and (q) , C.R .S. Compla in ts

aga ins t l i censees can gene ra l l y be ca tego r i zed in to th ree a reas: (1 ) a fa i lu re to p lan fo r the

seasona l cash f lows inherent in vaca t ion ren ta l managemen t , (2 ) a fa i lu re to superv i se and

proper l y main ta in required records and accounts , and (3) a fa i l u re to d i sc lose ho w

managemen t fees and commissions a re earned in bo th the management ag reement and

reservat ion /cance l la t i on po l i c ies. P lease re fer to “ sho r t - te rm occupancies” in the Index fo r

fu r ther information.

F ina l l y , the p rope r ty manager must conside r the r i gh ts and in te rests of the tenant in

ongo ing or tempora ry management dur ing the l i s t ing pe r iod . The b roker shou ld consu l t the

owner and tenant when schedu l ing show ings of l i s ted proper ty . See Chapte r 25, “Fa i r

Housing , ” fo r fede ra l and Co lo rado fa i r housing cons iderat ions.

Genera l in fo rma t ion regard ing tenan t / l and lord d i spu tes is ava i lab le f rom the Communi ty

Housing Se rv i ce a t (303 ) 831 -1750 or the Re s iden t Re la t io n s He lp L ine a t (303 ) 320-1611.

I I I . Merchand is ing Ren ta l Spa ce

Renta l space reacts to changes in supp ly and demand in the marketp lace . A manager

needs to es t imate the s t reng th of consumer pressure . Consumers normal l y shop the marke t

and ren t the space tha t bes t mee ts the i r f i nancia l and aesthe t i c needs.

As a ru le of thumb, i t takes f i ve qua l i f i ed p rospe c ts pe r un i t to lease out a p rope r ty under

idea l marke t cond i t ions. I f more are requ i red , then someth ing may be wrong wi th the p r i ce ,

the manager ’ s e f fo r t , or the a t t rac t i veness of the proper ty . I f the property ren ts on the basis

o f a ren ta l fo r eve ry qua l i f ied prospec t , then the ren ta l p r i ce asked may be too low. These

ra t ios , o f course, vary wi th the character of the pa r t i cu la r bu i ld ing . Fu rn ished apar tmen ts, for

example , may rent with one rente r to three prospects , whereas de luxe un i t s may requ i re s i x

to n ine p rospec ts per renta l.

I t is impera t i ve tha t a p rope r ty manager counse l owners ca re fu l l y p r io r to tak ing ove r an

accoun t and iden t i f y wh ich p rob lems may be cu rab le and wh ich may not . For example , a

bu i l d ing tha t is not soundproof is not economica l l y feas ib le to cure , and as a resu l t , i t l imi t s

the c l i en te le to qu ie t people.

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I f a p rope r ty su f fe rs f rom cumu la t i ve main tenance prob lems, a d i spropo r t i onate amoun t of

t ime may be requ i red of a property manager , thus caus ing managemen t expenses to exceed

poten t ia l fee income. Bu i ld ings tha t have been cheap ly cons t ructed and suf fe r f rom

acce le ra ted obso lescence are ext remely vu lnerab le to ren ta l compet i t ion f rom newer

bu i l d ings , aga in cont r ibu t ing to h ighe r tu rnove r . One sho r t - te rm owner savings is to fo rego a

prevent i ve ma in tenance prog ram. However , p revent i ve maintenance no rmal l y costs much less

than pay ing to co rrec t ser ious defer red main tenance prob lems la ter.

Many apar tment bu i ld ings a re over -encumbered as a resu l t of improper in i t i a l p ro ject ions

or ren t schedu les ba re ly su f f i c ien t to mee t ope ra t ing expenses and deb t se rv i ce even at 100

pe rcent occupancy . Th is shou ld be asce r ta ined in advance in o rder to avoid negat i ve cash

f low. These cash sho r tages of ten lead to inadequate main tenance. The ef fect is cumu la t i ve

and may se r iously a f fec t the manager ’ s ab i l i t y to main ta in h igh occupancy . A manager must

judge each p rope r ty on i ts own mer i t s before decid ing whe ther o r no t to manage i t . B rokers

need to know and be ab le to advise the i r c l i en ts on chang ing ren ta l markets.

Brokers who wish to engage in proper ty management shou ld ca re fu l l y s tudy Chap te r 20,

“Escrow Records. ” No a rea of real esta te needs more d i l igen t records main tenance than

proper ty management.

Renta l loca t ion agents a re ment ioned i n § 12-61 -113 (1 .5 ) , C .R.S . Broke rs who rece ive

advance fees f rom p rospec t i ve tenants fo r fu rn i sh ing in forma t ion on ava i lab le ren ta l s must

keep records o f such funds acco rd ing to § 12 -61-113(g) , C.R .S . , and Ru le E- l .

I V . Genera l Ac coun t ing Concep ts

A l i censed p rope r ty manager is a t rus tee pr imar i ly responsib le fo r the supe rv i s ion ,

accoun t ing , and use o f “money be long ing to others . ” Any reca l lab le t rus t accoun t cash ba lance

must a lways equa l the cor respond ing t rus t account cont rac tua l l ia b i l i t y at the same po in t in

t ime . Trus t accoun ts are genera l l y main ta ined on a “ cash bas is . ” Funds be long ing to one

owner may never be “ l oaned” as unautho r i zed supp lementa l ope ra t ing cap i ta l to f inance

expend i tu res of o ther owners (o r the b roke r) . (See §§ 12-61-113 ( l ) (g ) , (g .5 ) , and (n) , C.R .S. ;

Ru les E- l ( f ) , (g ) , (p ) , and (q) , E -29, and E-30.)

The fo l l owing re la t ionsh ips govern opera t ion o f a l l doub le -ent ry managemen t

accoun t ing systems:

BALANCE SHEET

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Assets : Cash ba lances fo r unpa id owner i ncom e, tenant secur i t y deposi t s , advance renta l

deposi t s , owner cash reserves , owner inventory and equ ipment on the proper ty.

L iab i l i t ies : Mor tgage pr inc ipa l , taxes , tenant o r gues t depos i ts .

Cap i ta l : Owner rese rves , equ ipmen t rep lacemen t reserves, owner draws f rom net income

ea rned, net i ncome and reta ined earnings.

INCOME STATEMENT

Revenue : Rent rece ip ts , late fees, fo r fe i ted tenant depos i t s , ut i l i t y charges co l l ected

f rom tenants , other ope ra t ing income payab le a f te r expenses to the owner . Owner

payments to prov ide work ing cap i ta l ( rese rves) a re not p rope r ty income.

Expense : Payments or jou rna l en t r i es to record the cos t of opera t ing the p rope r ty under

the te rms au thor i zed in the management ag reement o r l ease or addendum thereto.

In the con tex t of ren ta l managemen t , cash rece ip ts gene ra l l y inc rease assets , net income,

and cap i ta l . They are deb i ted to cash and cred i ted to the app rop r ia te l iab i l i t y , revenue , or a

cap i ta l accoun t . Cash d isbu rsements decrease (c red i t ) a cash account and a re deb i ted to the

app rop r ia te l iab i l i t y , expense, o r cap i ta l account.

The account ing system in a management ope ra t ion should have the capab i l i t y to

in teg ra te owner / tenant /p roper ty /serv ice ac t i v i t y and non - f i nancia l marke t ing data wi th the

accoun t ing t ransac t ions. The sys tem shou ld p rov ide the capab i l i t y to rep roduce repor ts , da ta ,

and bank reconci l ia t ions upon demand for any pr io r per iod . The account ing /management

da tabase shou ld a l low access to immedia te in format ion for :

• Tenant /guest amoun ts owed ve rsus col lec ted.

• Tenant by name/un i t charges and receipts.

• Common a rea cha rges /specia l package pr ices.

• Tenant un i t ren ta l h i s to ry /persona l data.

• Deposi t s co l lec ted or he ld by cur rent broker.

• Leases /agreements /amendmen ts/coming exp i ra t i on dates.

• Correspondence/evict ions/addenda.

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• Schedu led occupancy/vacancy dates.

• Account ing fo r secur i t y deposi t refunds.

• La te fees and o ther tenant charges.

• Proper t i es/un i t s unde r management.

• Proper ty /un i t ident i f i ca t ion /market ing data.

• Owner / i nsurance/ lende r informat ion.

• Managemen t agreements/amendments /correspondence.

• Vendors and schedu led payments fo r mor tgages, etc.

• Ma in tenance/ remodel ing /wr i t ten author izat ions.

• Account ing repor ts /mul t i p le bank account capac ity.

The fo rego ing in fo rmat ion is cr i t i ca l , but the account ing sys tem to p roduce such data

need not be expensive . Good word- p rocessing p rograms can mainta in much of the

managemen t da ta required in t ransact ion f i l es . Several smal l -bus iness account ing so f twa re

prog rams comply wi th the requ i rements of Ru le E- l . A b roke r must t ra in ass is tan ts ,

estab l i sh ing appropr iate of f ice pol ic ies , and unders tand and oversee ope ra t ion of the

accoun t ing sys tem and any so f tware , or else p rob lems or comp la in ts w i l l soon develop.

Managers must d i sc lose brokerage re la t i onsh ips to proper ty owners and p rospec t i ve

tenan ts us ing Commiss ion-approved fo rms. For proper ty owners , the b roke r , i f pe r fo rming

leas ing ac t i v i t i es, is requ i red to en te r i n to the app ropr ia te Exc lus i ve Right- to -Lease L i s t ing

Ag reemen t spec i f i c to the t ype o f b roke rage re la t ionsh ip o f fe red (e i ther Land lord Agency or

Transact ion-Broker , the cur rent fo rm is LC57-8-10 ) . As an a l te rna t i ve to the l i s t i ng agreement ,

the b roke r may use the Brokerage Dut ies Addendum to Prope r ty Management Ag re ement ,

cur rent form B D A55 -5 -09, ( i f the managemen t ag reement inc ludes leas ing by the property

manager /b roke r) , executed by bo th the broker and p rope r ty owner.

For p rospec t i ve tenan ts , the broke r must e i the r en ter in to the approp r ia te Exc lus i ve

Tenant Con t ract speci f i c to the type of brokerage re la t ionsh ip o f fe red (Tenant Agency or

Transact ion -Broker , cur rent form is E TC59 -8 -10) , or the cu rren t Brokerage Disc losure to

Buye r or Tenant (cur ren t fo rms are B D T24-5 -09 and B D T20 -5 -09) . A lso , the b roke r sho u ld

d i sc lose in wr i t i ng the speci f i c du t ies pe r ta in ing to the brokerage re la t i onsh ip o f fe red to

prospect i ve tenants pursuant to Ru le E-35 . I f a p rope r ty owner or p rospec t i ve tenan t reques ts

in fo rmat ion about t ypes of b rokerage re la t ionsh ips o ther than those o f fe red by the broker , the

broker could g ive the owner or tenant the current Def in i t ions of W ork ing Re la t ionsh ips

(or use the L is t ing Agreemen t or D isc losu re fo rm g iven to owner o r tenan t no ted in

th i s paragraph).

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Brokers must have wr i t ten consent f r om the pa r ty ass is ted or rep resented to assess and

rece ive any “mark -ups ” a nd /o r other compensat ion fo r se rv i ces per fo rmed by any th i rd pa r ty o r

a f f i l ia ted business en t i t y . (See Ru le E - l (p ) (8 ) . ) The pu rpose o f th i s rule is to fac i l i ta te fu l l

d isc losu re of a l l f o rms of compensa t ion unde r §§ 12 -61-113( l ) ( c .5 ) and (q ) and 6 -1 -105 ,

C.R .S. Th is app l ies to managemen t companies tha t mark -up the cha rges b i l l ed by independen t

main tenance companies , add a percentage to the cost b i l led by o the rs for admin is t ra t i ve

ove rhead, or rece ive any t ransac t ion -speci f i c i ncome f rom an a f f i l ia ted business en t i t y . The

broke r must main ta in o f f ice reco rds tha t ve r i f y p r io r wr i t ten consen t fo r these amoun ts and

accoun t fo r the add i t iona l amoun ts or percen tages cha rged to others.

V. Secur i t y Depos i t s

A . In t roduc t ion

Proper ty managers may incur se r ious prob lems i f they fa i l to p rope r l y hand le secu r i t y

deposi t s . To avoid these p rob lems, p rope r ty managers shou ld become tho rough ly fami l i a r

w i th the requ i rements i n the fo l l owing prov is io ns o f Co lorado law:

T i t l e 3 8 , A r t i c l e 1 2 , C .R .S . 1 97 3 Se cur i t y D epos i t s -Wrong fu l Wi thho ld ing

§ 3 8 - 1 2 - 1 0 1 , C . R . S . L e g is l a t i v e dec la ra t ion .

The provis ions of th is part 1 sha l l be l i be ra l l y cons t rued to imp lement the in ten t of the

genera l assembly to insure the proper admin is t ra t ion o f secur i t y depos i t s and p ro tec t the

in terests o f tenan ts and landlords.

§ 3 8 - 1 2 - 1 0 2 , C . R . S . De f in i t i ons .

As used in th i s pa r t 1 , un less the context o therw ise requires:

(1) “No rmal wear and tear” means that de te r io ra t ion wh ich occu rs, based upon the use

for wh ich the ren ta l uni t is in tended, w i thout neg l igence, ca re lessness, acc ident , o r

abuse o f the p remises o r equ ipment or chat te l s by the tenan t o r members o f his

househo ld , o r the i r inv i tees o r guests.

(2 ) “Secur i t y depos i t ” means any advance or deposi t o f money, regard less o f i t s

denominat ion , the p r imary funct ion o f wh ich is to secure the per fo rmance o f a ren ta l

ag reement fo r res iden t ia l p remises or any pa r t thereof .

§ 3 8 - 1 2 - 1 0 3 , C . R . S . R e t u r n o f s ec u r i t y depos i t .

(1 ) A land lord sha l l , w i th in one month a f te r the te rminat ion of a lease or sur render and

acceptance of the premises, whichever occurs l ast , re turn to the tenant the fu l l

secu r i t y depos i t depos i ted w i th the land lord by the tenant , un less the lease agreement

spec i f i es a longer pe r iod o f t ime, bu t no t to exceed s i x ty days . No secu r i t y deposi t

sha l l be re ta ined to cover no rmal wear and tea r . In the even t tha t actua l cause ex is ts

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fo r re ta in ing any po r t ion of the secu r i t y deposi t , the land lo rd sha l l p rov ide the tenant

wi th a wr i t ten sta tement l i s t ing the exact reasons fo r the re tent ion o f any por t ion o f the

secu r i t y depos i t . When the s ta tement is de l i vered, i t sha l l be accompanied by paymen t

of the d i f fe rence between a ny sum depos i ted and the amount re ta ined. The land lord

is deemed to have compl ied wi th th i s sec t ion by mai l i ng sa id s ta tement and any

payment requ i red to the las t known address of the tenant . Noth ing in th is sec t ion sha l l

p rec lude the land lord f rom re ta in i ng the secur i t y deposi t fo r nonpaymen t of ren t ,

abandonment o f the p remises , o r nonpayment o f u t i l i t y cha rges , repa i r work , o r

c lean ing cont rac ted fo r by the tenant.

(2 ) The fa i l u re o f a land lord to prov ide a wr i t ten s ta temen t w i th in the requ i red t ime

spec i f i ed in subsec t ion

(1 ) o f th i s sect ion shal l work a fo r fe i tu re o f a l l h is r igh ts to wi thho ld any po r t i on o f the

secu r i t y depos i t unde r th i s sect ion.

(3 ) (a ) The wi l l fu l re ten t ion o f a secur i t y deposi t in v io la t ion o f th i s sec t ion sha l l render a

land lo rd l i ab le fo r t reb le the amount o f that po r t i on of the secur i t y deposi t

w rongfu l l y w i thhe ld f rom the t enant , togethe r w i th reasonab le a t to rneys ’ fees and

cou r t costs; except tha t the tenant has the ob l iga t ion to g i ve no t i ce to the

land lo rd of h is in ten t ion to f i le lega l p roceed ings a min imum of seven days pr io r to

f i l ing sa id act ion.

(b ) In any cou r t act ion b rought by a tenan t unde r th is sec t ion , the land lo rd sha l l bea r

the burden of p rov ing tha t h i s w i thho ld ing o f the secur i t y depos i t o r any po r t i on o f

i t was not wrongful .

(4) Upon cessat ion of h is in teres t in the dwel l i ng unit , whethe r by sale, ass ignmen t ,

death, appo in tment of a rece iver , or o the rwise , the pe rson in possession o f the

secu r i t y depos i t , inc lud ing bu t no t l im i ted to the land lord , h i s age nt , o r h i s executor,

sha l l , w i th in a reasonab le t ime:

(a) Trans fe r the funds, or any remainder af ter lawful deduc t ions under

subsec t ion (1) of th is sect ion , to the land lo rd ’s successo r i n i n te rest and no t i f y

the tenant by mai l o f such t rans fe r and o f the t rans fe ree ’s name and address; or

(b ) Retu rn the funds , o r any rema inde r a f te r law fu l deduc t ions under subsect ion (1) o f

th i s sec t ion , to the tenant .

(5) Upon compl iance wi th subsect ion (4) of th is sec t ion , the person in possess ion of

the secur i t y de pos i t sha l l be re l i eved of fu r ther l iab i l i t y.

(6) Upon rece ip t of t rans fe r red funds unde r subsect ion (4) (a) of th is sect ion , the

t rans fe ree, in re la t i on to such funds, sha l l be deemed to have a l l o f the r i gh ts and

ob l i ga t ions o f a land lo rd ho ld ing the f unds as a secu r i t y depos it .

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(7) Any p rov is ion , whethe r ora l or wr i t ten , in or pe r ta in ing to a renta l ag reement

whereby any provis ion of th is sect ion for the bene f i t o f a tenant o r members o f h i s

househo ld is wa ived sha l l be deemed to be aga inst pub l i c po l i cy and sha l l be void.

§ 3 8 - 1 2 - 1 0 4 , C . R . S . R e t u r n o f s ec u r i t y d e p o s i t – h az a r dou s c on d i t i o n – ga s app l i ance .

(1) Anyt ime service personne l f rom any organ iza t ion p rov id ing gas service to a

res ident ia l bu i ld ing become aware of any haza rdous cond i t i on o f a gas

app l iance, p ip ing , o r o ther gas equ ipment , such pe rsonne l sha l l in fo rm the

customer o f record at the a f fected add ress in wr i t ing of the hazardous cond i t i on

and take any fu r the r ac t ion p rov ided for by the po l i c ies of such personne l ’ s

emp loyer . Such wr i t ten not i f i ca t ion sha l l s ta te the po tent ia l na tu re o f the hazard as

a f i re hazard or a hazard to l i fe , hea l th , p rope r ty , o r pub l i c we l fa re and sha l l

exp la in the possib le cause o f the hazard.

(2) I f the res ident of the res ident ia l bu i ld ing is a tenan t , such tenant sha l l

immedia te l y in fo rm the land lo rd of the p rope r ty or the land lord ’ s agent i n wr i t i ng

of the ex is tence o f the hazard.

(3 ) The land lo rd sha l l t hen have seventy - two hours exc lud ing a Sa tu rday, Sunday, or a

lega l ho l iday a f t e r the ac tua l rece ip t of the wr i t ten no t i ce of the hazardous

cond i t i on to have the haza rdous cond i t i on repa i red by a p ro fessiona l .

“P ro fess iona l ” for the purposes o f th i s sec t ion means a person autho r i zed by the

s ta te of Co lo rado or by a county or munic ipa l gove rnment through l i cense or

cer t i f i ca te where such gove rnment au thor i za t ion is requ i red . Where no pe rson wi th

such gove rnment autho r izat ion is ava i lab le , and where the re a re no loca l

requ i rements fo r gove rnmen t au thor i za t ion , a pe rson who is o therw ise qua l i f ied

and who possesses insurance wi th a min imum of one hundred thousand do l l a rs

pub l i c l iab i l i t y and p roper ty damage coverage sha l l be deemed a pro fessiona l for

pu rposes of th is sect ion . Proo f of such repa i rs sha l l be fo rwarded to the land lord

or the land lord ’ s agent . Such p roo f may also be used as an a f f i rmat i ve de fense in

any ac t ion to recove r the secur i t y depos i t , as p rov ided fo r i n th i s sect ion.

(4 ) I f the land lord does not have the repa i rs made w i th in seventy - two hou rs exc lud ing

a Satu rday , Sunda y, or a lega l ho l iday, and the cond i t ion of the bu i ld ing remains

hazardous, the tenan t may opt to vacate the premises. Af ter the tenan t vaca tes

the premises , the lease or o the r ren ta l ag reement be tween the land lo rd and

tenan t becomes nu l l and vo id , a l l r igh ts and future ob l iga t ions between the

land lo rd and tenant pu rsuant to the lease or o the r ren ta l agreement te rm inate ,

and the tenan t may demand the immedia te re turn of a l l or any po r t i on of the

secu r i t y depos i t he ld by the land lord to wh ich the tenant is ent i t led. The land lo rd

sha l l have seventy - two hou rs fo l low ing the tenant ’ s vacat ion of the p remises to

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de l i ve r to the tenan t a l l of , or the approp r ia te po r t i on o f , the secu r i t y deposi t p lus

any ren t rebate owed to the tenant fo r ren t pa id by the tenan t fo r the pe r iod of t ime

a f te r the tenant has vacated. I f the seventy -second hou r fa l l s on a Satu rday,

Sunday, o r l ega l ho l iday , the secur i t y depos i t must be de l i vered by noon on the

next day that is not a Sa tu rday, Sunday, or legal ho l i day . The tenan t shal l

p rov ide the land lo rd w i th a cor rec t fo rward ing add ress . No secu r i t y deposi t sha l l

be re ta ined to cover normal wear and tear . In the event that actua l cause ex is ts

for re ta in ing any po r t ion of the secur i t y depos i t , the land lo rd sha l l p rov ide the

tenan t w i th a wr i t ten s ta tement l i s t ing the exac t reasons fo r the re tent ion of any

po r t i on of the secur i t y depos i t . When the s ta tement is de l i ve red, i t sha l l be

accompan ied by payment of the d i f fe rence between any sum depos i ted and the

amoun t re ta ined. The land lord is deemed to have compl ied with th is sect ion by

mai l i ng said sta tement and any payments requ i red by th is sec t ion to the

forward ing add ress of the tenan t . Noth ing in th is sec t ion sha l l p rec lude the

land lo rd f rom wi thho ld ing the secur i t y depos i t for nonpaymen t o f ren t o r fo r

nonpayment o f u t i l i t y charges , repa i r work , o r c lean ing con t racted fo r by the tenan t .

I f the tenant does not rece ive the ent i re secu r i t y deposi t or a po r t i on of the

secu r i t y depos i t togethe r w i th a wr i t ten sta tement l i s t i ng the exact reasons fo r the

re ten t ion of any por t ion of the secur i t y depos i t w i th in the t ime per iod p rov ided fo r

in th i s sec t ion , the retent ion o f the secu r i t y deposi t sha l l be deemed w i l l fu l and

wrongfu l and, no twi ths tand ing the prov is ions o f sect ion 38 -12 -103 (3) , shal l

en t i t l e the tenant to tw ice the amount o f the secur i t y depos i t and to reasonab le

a t to rney fees.

B . C i t y Or d in an ces Conc e rn ing Secur i t y Depos i t s

The Ci ty of Bou lder requ i res payment of a sta ted rate of i n te rest to a tenant for any

secu r i t y depos i t he ld unde r a res ident ia l lease . Th is exc ludes leas ing o f mob i le home pa rk

space. The person in possess ion o f the deposi t must re turn and account fo r the amount and

in terest due w i th in 30 days a f te r the la t te r o f te rmina t ion or su r rende r and accep tance o f the

lease. (Ord inances 4969 and 7158, T i t le 12–Chapter 2, Land lo rd /Tenan t Re la t ions. ) Brokers

shou ld check for s im i la r requ i rements in o ther c i t ies where leas ing ac t i v i t y is conducted.

C . Gu ide l ines fo r the Pro per t y Ma na ge r Reg ar d ing Secur i t y Depos i t s

A manager shou ld inspec t a proper ty pr io r to occupancy and document the cond i t ion o f

the p remises. When the tenan t vacates and has caused no damage o the r than no rmal wear

and tea r , the depos i t must be re tu rned to the tenant.

Account ing for secur i t y deposi t s is ex t remely impor tan t and must be per formed pu rsuan t to

Commission Ru les E- l and E-16 and Commiss ion pos i t i on sta tement C P-5, Advance Ren ta ls

and Secur i t y Deposi t s (see Chap te r 3) . These deposi t s must genera l l y be p laced in to a

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secu r i t y depos i t escrow accoun t and re turned as soon as possib le to the tenant , when

re fundab le . The prac t i ce o f making re fund checks jo in t l y payab le to a tenant and a new

proper ty manager o r owner on ly de lays the re fund process and may resu l t in pub l i c

compla in ts . Some owners and managemen t compan ies app ly secu r i t y deposi t s toward the last

month’s rent. This prac t i ce may resu l t in owner l i ab i l i t y because advance renta l deposi t s may

be sub ject to ea rn ing in teres t , whereas secur i t y deposi t s genera l l y a re no t . The b roker shou ld

rev iew loca l o r coun ty o rd inances fo r fu r ther informat ion.

Bo th the management agreemen t and the lease or ren ta l ag reemen t shou ld conta in

au tho r i t y fo r the manager to cont ro l secur i ty deposi t s . I f there is no wr i t ten procedure

pe r ta in ing to these deposi t s , each par ty to the agreemen t i n ject ing h i s or her own ideas may

resu l t in confus ion and resentment . Thus , i t is best tha t bo th the lease and the managemen t

ag reement spe l l ou t in wr i t i ng the in ten t of a l l par t ies to the cont rac t conce rn ing the

d isposi t ion of secu r i t y depos i t funds . A b roke r may t rans fer tenant secur ity deposi t s to a

proper ty owner on ly pu rsuant to Commission posi t ion s ta tement C P -5 , Advance Renta ls and

Secu r i t y Depos i ts. This pos i t i on sta temen t is summar ized in Rule E-16; see a lso “O f fse t t ing

Broker Exp enses Aga ins t Re fundab le Deposi t s ” in Chapter 20 , “Escrow Records.”

A wr i t ten ag reemen t is a lso usefu l in the even t of a change in ownersh ip or management

of a bu i l d ing . The new owner or manager may s imp ly re fe r to the tenancy ag reemen t to

determine the a mount o f the deposi t , and the tenant has a copy as proof .

The amoun t of a secu r i t y deposi t va r ies accord ing to the ren t pa id , the s i ze of the un i t ,

whethe r the un i t is fu rn i shed or no t , and the t ype o f equ ipment inc luded ( e.g . , washer , d rye r ,

d ishwasher , a i r cond i t ioner) . Po l i c ies vary, and compet i t ion p lays a pa r t in the amoun t of

secu r i t y depos i t tha t may be ob ta ined, bu t a good ru le of thumb wou ld be 50 percen t to 100

pe rcent of one month’s rent .

Uncla imed secur i t y deposi t s and o ther fo rms of “money be l ong ing to o thers ” must be

repo r ted and remi t ted by the property manager to the Colorado Sta te Treasure r under the

provis ions of the “Uncla imed Proper ty Ac t , ” §§ 38- 13- 10 1 ,et seq. , C.R.S. Unc la imed proper ty

repo r ts a re f i l ed by November 1 each yea r . Unc la i med p rope r ty is gene ra l l y tha t wh ich has

been he ld fo r f ive years or more . Forms and ins t ruc t ions may be ob ta ined f rom The Grea t

Co lo rado Payback Of f i ces, 1580 Logan St . , Su i te 500, Denver , CO 80203, Phone: (800) 825 -

2111, Websi te : www.colorado.gov/ treasury/gcp / .

V I . Lea se s

A . In t roduc t ion

A lease is both a cont rac t and a conveyance. I t se ts fo r th the te rms o f the ag reemen t

be tween the pa r t i es ( land lo rd and tenant ; l essor and less ee ) whereby the r igh t to possess and

use the proper ty for a cer ta in pe r iod of t ime is t ransfer red f rom one to the o ther . The

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in te rest in the proper ty t ransfer red may be nomina l , such as a lease fo r one month ; or i t may

be a very subs tant ia l 99- year lease. A lease for one year or less may be ora l . A lease for

longer than one year is requ i red to be in wr it ing to be en fo rceab le unde r the s ta tu te of

f rauds . A wr i t ten lease is a lways p re fe rab le because i t fu rn i shes ob jec t i ve proof of the terms

ag reed to by the par t ies.

A lease is an ag reement be tween a lesso r and a lessee whereby the lessee takes

possess ion and rece ives the use and pro f i t s of an es ta te in rea l p rope r ty for a cer ta in pe r iod

of t ime in re tu rn for wh ich the lesso r rece ives the l essee ’s per formance and payment

acco rd ing to the cond i t i ons o f the agreement.

B . Leaseho ld Tenanc i e s

Leaseho ld esta tes can be c lass i f ied into four t ypes : (1) tenancy for years , (2) pe r iod ic

tenancy , (3) tenancy at wi l l , and (4 ) tenancy a t suf fe rance.

Te na nc y fo r y e ar s

A tenancy fo r years is fo r a f i xed per iod of t ime (e.g. , one day or 99 years ) . The

te rminat ion date is set at the t ime the lease is executed . A tenancy fo r years ends on the last

day o f the lease te rm, w i th no need to g i ve not ice.

Pe r iod i c t en anc y

A pe r iod ic tenancy ex is ts when the ren ta l pe r iod is inde f in i te l y renewab le fo r a ser ies o f

same dura t ions (e.g. , week- to -week or month - to -month) . The most common example is a

res ident ia l lease requ i r i ng a tenant to pay mon th ly ren t , but w i th no def in ite te rmina t ion da te .

Pe r iod ic tenanc ies a re gene ra l l y c rea ted by imp l ica t ion and not by an express prov is ion .

Accord ing to Colorado law, and that of most s ta tes, such tenancies requ i re the giv ing of

proper not ice for their te rm inat ion . Notice to te rmina te is d i scussed be low under

“Terminat ion o f leases.”

T en anc y a t w i l l

A tenancy a t w i l l p rov ides tha t e i the r pa r ty may te rminate the lease whenever he o r she

chooses to do so. A tenancy a t w i l l a lso ex is ts when the ag reemen t a l l ows a tenant to occupy

the premises unt i l so ld , or un t i l the land lo rd is ready to cons t ruct a new bu i ld ing , or some

o ther inde f in i te happen ing. S imi la r to a per iod ic tenancy , a tenancy at w i l l requ i res the g iv ing

of p rope r not ice fo r i t s terminat ion.

T en anc y a t su f f e ranc e

A tenancy at su f fe rance ar i ses when a tenan t remains in wrong fu l possess ion a f te r a lease

has ended . In th is s i tua t ion , the tenant is ca l l ed a “holdover tenant . ” The land lo rd may treat

the tenant as a t respasser and in i t ia te ev i c t ion , or may e lec t to accept the tenant fo r a s im i la r

te rm and cond i t ions as in the p rev ious lease. The cho ice is t he land lord ’ s ; the tenant has

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none. I f a tenant ho lds ove r due to reasons beyond his or he r con t ro l , such as i l l ness , the

tenan t may be he ld l iab le on ly fo r the reasonable renta l o f the h o ldover per iod.

C. Types o f Lea se s

Gr o u n d le a se

A ground lease is a tenancy for years whereby a pa rce l of un improved land is let for a

typ ica l l y ex tended per iod of t ime. This usua l l y a l lows a bu i ld ing to be erected on the land by

the tenant and prov ide s fo r the d ispos i t i on of the bu i ld ing at the end of the lease. The

landowner may become ent i t l ed to the bu i ld ing upon the paymen t of a l l , par t , or none of the

value of the bu i ld ing, depend ing upon the agreement . In the absence of an ag reement , the

bu i ld ing lega l l y becomes rea l p rope r ty and be longs to the landowner , who is not requ i red to

re imburse the tenant.

A long - te rm g round lease can o f fe r cons iderab le advantage to a tenant . When land va lues

run as h igh as $10 ,000 and more per f ron t foo t , conside rab le cap i ta l is requ i red to invest in

the land a lone. Add the cost of a bu i l d ing to th i s , and the investment may exceed an

inves to r ’ s resou rces . Bu t under a long - term ground lease , the land par t o f the f i nancing

prob lem is so lved. Such a lease may be conside red as bo rrowing o f the cap i ta l va lue o f the

land fo r the te rm o f the lease. The ground ren t pa id to the owner i s , i n th i s sense , i n te rest on

the va lue o f the land. The land i t se l f p lus the improvements e rec ted by the tenant become

secu r i t y for t he “ l oan. ” A t ransac t ion wi th such amp le secur i t y is i ndeed a good inves tmen t fo r

the fee holder .

Big businesses and investors do not hes i ta te to dea l w i th such long - te rm leases , p rov ided

the locat ion invo lved is su i tab le to the i r pu rposes. In add i t ion , long - term leases invo lve a tax

advan tage. I f pu rchased , the p r i ce o f l and is a cap i ta l inves tment and is not deduct ib le ; in

fact, the g round is not even depreciab le . But rent paid by a tenan t is a deduct ib le bus iness

expense. The landowner benef i t s f rom a reduced income tax l i ab i l i t y on the rent rece ived ove r

the years compared to an immed ia te and large cap i ta l ga ins tax i f t he proper ty had been so ld

to the tenant .

A long - te rm g round lease ho lds anothe r advantage for an owner of va luab le l and lack ing

su f f i c ien t f i nances to deve lop i t . An owner may induce a tenan t to make su i tab le

improvemen ts by means of ren t concess ions. Wi th approp r ia te improvements , the fee ho lde r ’ s

land wi l l i ncrease in va lue , w i th the increase benef i t i ng the owner at the end of the lease.

Such lease s o f ten provide for the increases in va lue to be matched by increased g round rent

at su i tab le i n te rva ls . This is what is known as a “step-up lease ” or “graduated lease . ” Two

common ways to p rov ide fo r these increases in ren t a re to : (1 ) p rov ide fo r a f i xed inc rease at

s ta ted in te rva ls , o r (2 ) p rov ide fo r the inc rease to be based upon the appra ised va lue o f the

proper ty , de te rmined by an a rb i t ra t ion commi t tee . A l though the f irst method has the

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advan tage of be ing c lea r and de f in i te , i t may be too in f lex ib le to mee t changing economic

cond i t i ons ove r a long per iod o f yea rs. The second me thod invo lves an a rb i t ra t i on commi t tee ,

usua l l y composed o f one member se lected by the tenan t , one by the land lo rd , and the th ird

se lec ted by ag reemen t of these two. This commi t t ee then app l ies a f i xed cap i ta l i za t ion ra te

to the app ra ised va lue of the p roper ty at regu lar in te rva ls . Th is me thod es tab l i shes a

current ly reasonab le ren ta l , but may be d i f f i cu l t to imp lement i f the commi t tee members

canno t agree . Some autho r i t i es on long- term leases c la im that f ixed renta l s for the ent i re

per iod g ive the grea tes t sa t i s fac t ion to both pa r t i es, enab l ing s tab le , long- term business

p lann ing . O ther au tho r i t i es fee l tha t such a f i xed ren ta l p rog ram works a ha rdsh ip on the

tenan t i n a recess iona ry per iod and a hardsh ip upon the owner in an in f la t i onary per iod.

P e r c e n t a g e le a se

Pe rcen tage leases are used for commerc ia l es tab l i shmen ts, genera l l y re ta i l s to res , and

usua l l y p rov ide for a f i xed m in imum ren t p lus a pe rcentage of the t enan t ’ s g ross sa les. Gross

sa les or gross income must be c lear l y de f ined and shou ld prov ide for such th ings as re turned

merchand ise , d i scounts for p rompt payment made to cus tomers, sa les to employees, mai l -

o rde r sa les, serv i ces rende red a t cos t ( such as c lo th ing a l te ra t ions) , and income f rom vend ing

mach ines. De ta i led p rov is ions shou ld be made concern ing the t enan t ’ s records and the

land lo rd ’ s r igh t to examine or aud i t the tenant ’ s books . Sat i s factory use of percentage leases

requ i res tho rough know ledge and exper t judgment.

S k y l ea s e

A sky lease o r l ease o f a i r space usua l l y crea tes a tenancy fo r years , gene ra l l y fo r a long

pe r iod o f t ime. In 1910, the C leve land Ath le t i c C lub execu ted one o f the f i r s t such leases,

leas ing the a i r space above a f i ve -story bu i l d ing and e rect ing e igh t add i t iona l s to r ies. The

club paid rent for i ts space a long wi th the improvemen t taxes, but not land taxes . The upper

e igh t s to r ies were to rever t to the lessor a t the end o f the te rm upon the payment o f i t s

app ra ised va lue . Th is t ype o f lease is based upon the common- law r igh t o f a fee ho lder to

use h i s o r he r l and f rom the cen te r o f the ea r th to the dome o f the sk ies . Today, the

governmen ta l r ight to regu la te a i r t ra f f i c has l im i ted th i s p roper ty r ight .

One o f the most in te res t ing u t i l i za t i ons o f a i r space invo lves the Merchand ise Mar t in

Ch icago . The bu i ld ing is const ruc ted over the tracks of the Chicago and Nor thweste rn

Ra i l road, erected on p iers 23 feet above the ear th’s sur face, leaving space necessa ry fo r

the ope ra t ion o f the ra i lway.

Wi th in the s ta te of Co lo rado there ex i s t a few such leases or sa les of a ir space. In 1953 ,

the Colorado leg is la tu re enacted a s ta tu te enab l ing the c reat ion of esta tes, r i gh ts, and

in terests in a reas above the su r face of the g round and the t rans fe r of such in te res ts in the

same manner as in te rests in land . (See §§ 38 -32-101 , et seq. , C.R.S.)

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Ne t l e a s e

A net lease requ i res the tenant to pay ren t p lus a l l or a subs tant ia l pa r t of the cost of

ope ra t ions and main tenance. Var ious exp ress ions a re used in rea l e s ta te to descr ibe the

many var ia t ions in ne t l ease t ransact ions . For i nstance, i f a lease p rov ides for the tenant to

pay u t i l i t ies , rea l esta te taxes and assessmen ts, e tc . , i t m ight be re fer red to as “ne t ” lease . I f

the lease add i t iona l ly p rov ides fo r the tenan t to insu re the p remises , i t m ight be re fe r red to

as “ne t -net . ” Both par t i es must be abso lu te l y ce r ta in of their respons ib i l i t ies i n a ne t lease.

Gr o ss l ea s e

A gross lease is the opposi te of a net lease. The rent t yp ica l l y i nc ludes a l l owner -pa id

ope ra t ing cos ts associa ted w i th the premises.

Fa r m l ea s e

Fa rm leases a re based on the same pr inc ip les as o the r l eases. The fa rm tenan t may pay

ren t based on a c rop -shar ing bas is. The owner ag rees to g ive possess ion to the land and

improvemen ts thereon, and perhaps to fu rn i sh the equ ipmen t , and the tenan t ag rees to

fu rn i sh the labor and cap i ta l to fa rm the land in a sound , reasonab le manner and to pay a

spec i f i ed share o f the c rops. A l te rnat i ve l y , the ren ta l may be a f i xed sum. Fa rm leases vary i n

te rms an d cond i t ions by reg ion and community.

Fa rm management has become one of the lead ing and most specia l i zed branches of rea l

esta te . A fa rm manager must know so i l s , c rops most su i tab le to the va r ious t ypes o f so i l s ,

land conse rva t ion techn iques , and the nume rous o the r th ings necessa ry for success fu l modern

farming.

D . E le m en ts o f a Lea se

As s ta ted ea r l i e r , a lease is bo th a cont rac t and a conveyance . As a cont rac t , i t embodies

the ag reemen t of the par t ies . As a conveyance , i t t rans fers an in terest in l and, the r igh t to

possess and use i t fo r a ce r ta in t ime . The fo l l ow ing a re the more common lease e lements.

1 . Date : Al though not essent ia l , a date can preven t cont rove rsy as to ques t ions of

t ime and re la ted prob lems, such as the por t ion o f the ren t due fo r a pa r t i a l month

or year.

2 . Par t ies : Must have lega l capaci t y to ente r a con t rac t , and be c lear l y named and

designated . I f there are mul t ip le owners or tenants, a l l shou ld be pa r t i es to

the lease.

3 . Con sid erat io n : A lease is not enforceab le wi thout c ons idera t ion . The l essee ’s

payment (or p romise to pay) and the l esso r ’ s de l i very o f (o r p romise to de l i ver )

possess ion a re t yp ica l conside ra t ions suppor t ing the lease.

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4 . Descr ip t io n o f th e Proper ty : A lease must descr ibe the p remises wi th reasonab le

cer ta in ty . Tenancy of on ly par t of an improvement , use of basement s torage

space, assignment o f park ing spaces, or other fac i l i t ies should be c lear ly

descr ibed.

5 . Words of Conveyance : The lease shou ld c lear l y s ta te the ex tent and na ture

of the in terest be in g conveyed , i nc lud ing the dura t ion o f the lease and the

lessee ’s r ights.

6 . Condit ions and Except ions : Al l cond i t ions imposed on a lessee ’s tenancy and

except ions to the r igh ts that normal ly accrue to a tenant shou ld be se t for th.

7 . Lessor ’s and Le ssee’s Covenants : Any and a l l covenan ts to be fu l f i l l ed by e i ther

pa r ty shou ld be inc luded in the lease.

8 . Signatures : A lease fo r l onge r than one yea r must be in wr i t ing and s igned by the

pa r t i es. The best ev idence o f the part ies’ mutua l assen t is a s igned ins t rumen t . I f a

lessee takes possession w i thou t s ign ing , on ly thelesso r need s ign to c reate a va l id

lease. The lessee ’s tak ing possess ion is ev idence o f h i s o r he r assent to

the lease.

9 . Seal : A sea l is not gene ra l l y requ i red , excep t i n the cas e o f co rpo ra t ions and

governmen ta l agenc ies.

1 0 . Del ivery : L ik e a deed, a lease must be de l i vered to be ef fect ive.

1 1 . Recording : A lease need not be reco rded to be va l id . However , a long- term lease

may be ext reme ly va luab le and should be recorded . A s a ru le , a land lord does not

fu rn i sh a tenant w i th t i t l e ev idence, bu t in the case o f a long- te rm lease , a tenant

m ight requ i re the owner to p rove c lear t i t le.

1 2 . Acknowl ed g ment : A lease need not be acknowledged . Aga in , in the case of a

va luab le lease that wi l l be recorded , acknow ledgment o f the s ignatu res shou ld

be made.

1 3 . Lead-B ased Paint Disclosure .

14. Any City or County Regulat ions on Occupancy .

Some o ther lease c lauses tha t may app ly i nc lude: cos t -o f - l i v ing ad jus tment ; hand l ing o f the

secu r i t y depos i t s ; use o f premises; accep tance of the premises by lessee; su r rende r of

premises at end of te rm; main tenance , repa i r , and a l te ra t ions of premises du r ing term;

responsib i l i t y for payment of u t i l i t ies ; pe rsona l and real proper ty taxes ; en t ry and inspect ion

by l essor ’ s agents ; ass ignmen t and sub le t t ing ; agent ho ld -harmless c lause ; repossess ion due

to unpa id rent; abandonmen t of p remises by the tenant ; ho ld ing ove r ; fu tu re sa le o f p remises;

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cessat ion o f lease by condemnat ion o r des t ruct ion o f p remi ses ; r i gh t o f the lesso r to mor tgage

or subo rd ina te ; s ign regu la t ion ; renewal op t ions ; te rm inat ion not i ce ; and d i spos i t i on of

deposi t s / reco rds upon change o f p roper ty managers .

E. Te rm ina t ion o f Lea se s

Leases may be termina ted in four major ways: (1) exp i ra t ion of the term, (2) sur rende r

and accep tance, (3) b reach of cond i t ions o f the lease, and (4) ev i c t i on o f the tenant .

E x p i r a t i o n o f t h e t e r m o f t h e le a se

A tenancy for years ends on the las t day of the te rm, w i th no no t i ce - to -qu i t requ i red .

Sec t ion 13 -40 -107 (4 ) , C .R .S . , s tates: “No not i ce to qu i t sha l l be necessary f rom or to a

tenan t whose te rm i s , by ag reemen t , to end a t a t ime cer ta in . ” I f a lease is ora l, the lessor

shou ld g ive the per iod ic s ta tu to ry no t i ce - to -qu i t in wr i t i ng in o rder to avo id potent ia l conf l i c t

ove r the te rm of the ora l agreement .

To te rmina te a per iodic tenancy or a tenancy -a t -wi l l , the par ty ( l esso r or lessee) desi r ing

to end the lease must serve a wr i t ten no t i ce to qu i t . The no t i ce must descr ibe the premises ,

s ta te the t ime the tenancy wi l l t e rm inate , be s igned by the par ty (or agent ) g i v ing such not i ce ,

and be se rved not l ess than a s ta tu tor i l y speci f i ed t ime be fo re the end o f the tenancy per iod .

Required no t i ce pe r iods under § 13-40 -107 , C.R.S . , are:

• Year - to -year tenancy o r longe r : th ree months pr io r o r ear l ier .

• S ix months o r more bu t l ess than a year : one month p r io r o r ear l ier .

• Mon th - to -month o r up to bu t l ess than s i x mon ths : a t l eas t 10 days’ p r io r not ice.

• Tenancy a t w i l l : m in imum three -day not ice.

Not i ce must be de l i ve red to the tenan t or o the r pe rson occupy ing the p remises , or by

leav ing a copy wi th some pe rson, a member o f the tenant ’ s fami l y above the age o f 15 ,

res id ing on o r i n charge o f the p remises; o r i f no one is on the p remises a t the t ime se rv i ce is

a t tempted, by post ing a copy in some consp icuous p lace on the premises.

Sect ion 13 -40 -107.5(1 ) , C.R .S . , p rov ides for a th ree -day exped i ted ev ic t ion of ce r ta in

undesi rab le and dangerous persons who demonst ra te that they (or the i r guests ) are “un f i t to

coex is t w i th the i r ne ighbors and co- tenants ” by commi t t ing inf ract ions known in the law as

“ substan t ia l v io la t i ons . ” These inc lude va r ious v io len t or d rug- re la ted fe lon ies as we l l as

endangermen t of persons a nd prope r ty . These ac ts are cons idered seve re enough to g i ve the

land lo rd a remedy of exped i ted ev ic t i on . However, the s ta tu te speci f i ca l l y s ta tes tha t v i c t ims

of domest i c abuse , and pe rsons who cou ld not have reasonab ly known of or prevented the

subs tant i a l v io la t i ons bu t d id immed ia te l y no t i f y law enfo rcement , a re exempt f rom any

exped i ted ev ic t ion act ion.

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A ho ldove r tenant is not en t i t l ed to no t i ce to qu i t . I f a lease is fo r a de f in i te te rm and the

tenan t does no t sur render possess ion of the prope r ty at the end of the te rm, the land lord may

e lec t to ho ld the tenant fo r an add i t i ona l l i ke te rm. Such e lect ion must be accompanied by

some act on the par t of the land lo rd tha t s ign i f i es an in ten t ion to accept the tenant , such as

rece iv ing the next ren t paymen t . Un less the land lo rd in some way ind ica tes in ten t to re ta in the

tenan t , the tenant remains a tenant a t suf ferance.

The tenan t does no t have any r i gh t o f e lec t ion in such a case; on ly the land lo rd . I t is a

common p ract i ce —and potent ia l p i t fal l— to inc lude in the lease an au tomat i c renewal c lause,

wh ich p rov ides that un less an ag reed -upon not i ce of a cer ta in number of days (e.g . , 30 or 60 )

is g i ven by e i ther par ty , the lease w i l l be cont inued automat i ca l l y f rom the end o f the te rm fo r

a l i ke per iod.

S u r r en d e r and acc ep t anc e

A mu tua l ag reemen t to te rm inate a lease w i thou t ob l i ga t ion on the part of e i ther the

land lo rd or tenan t is a te rminat ion by su r render o f the lease and an acceptance thereof .

Br ea ch o f cond i t ions

Fa i l u re by e i ther the lessor o r l essee to pe r form ag reed -upon cond i t ions or covenants

cons t i tu te a breach o f the lease and may permi t the in ju red pa r ty to cance l the lease.

Ev ic t i on o f the t en an t

An ev ic t i on may be e i ther ac tua l or const ruc t i ve . Actua l ev i c t i on occu rs when a tenan t is

ous ted f rom the p remises , complete ly or pa r t i a l l y , ei ther by an act of the land lo rd or by

someone with supe r io r t i t le. Const ruct i ve ev i c t i on occurs when the leased p remises

deter io ra te to such phys ica l cond i t ion , owing to some act o r omiss ion o f the land lo rd th a t the

tenan t is unab le to use the premises fo r the pu rpose in tended. Fa i lu re to fu rn i sh heat o r o ther

fac i l i t i es con templa ted by the lease o r any o the r dep r i va t ion of use by the lesso r is a l so a

cons t ruct i ve evic t ion.

Te rm ina t i on unde r o the r cond i t ions

I f leased proper ty is taken fo r pub l i c use by condemna t ion , any lease is te rm inated. The

tenan t is en t i t led to compensat ion for the va lue o f the unexp i red po r t i on o f the lease , and the

tenan t ’ s c la im is supe r io r to tha t o f the landlord.

The fo rec losure o f a mor tgage or o ther l ien may te rmina te the lease . I f the mor tgage o r

o ther l i en was p r io r in t ime to the lease, and the tenan t had e i ther ac tua l no t i ce o r

cons t ruct i ve not i ce o f the l i en , then fo rec losure wi l l t e rm inate

the lease.

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F. Du t ie s an d L i ab i l i t i e s o f the Par t i e s

A ca re fu l l y d ra f ted lease wi l l c lea r l y se t fo r th a l l the dut ies and respons ib i l i t ies of the

pa r t i es, and avo id ambigu i t ies tha t might lead to con t roversy . Absent a comple te wr i t ten lease

se t t ing fo r th a l l te rms, the law p resumes ce r ta in agreements on the pa r t of the par t ies . Fo r

instance, un less there is an agreement to pay ren t in advance, the law presumes tha t ren t is

not due unt i l t he end of a ren ta l per iod.

A tenant may use the premises in any lawful , app ropr ia te way not expressly rest r i c ted

in the lease. I f the premises are unsu i tab le fo r the spec i f i ed purpose of the lease, the

land lo rd , un less having ag reed to do so, need not remodel the p rope r ty but the tenan t may do

so. A commercia l land lo rd may compete or lease to a compet ing business wi th in the same

bu i ld ing un less the lease so prohibi ts.

A lease of bus iness p rope r ty au tomat i ca l l y g i ves a tenant the r igh t to main ta in s igns on

the leased proper ty adver t i s ing the business , in compl iance wi th s ta te , county , and c i t y

regu la t i ons . Un less exp ressly g ranted, no such r igh t to adve r t i se ex i s ts for l eased res ident ia l

p roper ty , such as when a doc to r , real esta te broke r , or other p ro fess iona l ma in ta ins an of f ice

in a leased res idence.

In mul t i p le -un i t commercia l or res ident ia l p rope r ty , the land lord has a duty to keep the

premises warm and hab i tab le , unless each un i t has i ts own fac i l i t ies . Provis ions as to the

furn i sh ing of gas , e lec t r ic i t y , hea t , hot wa te r , and o ther se rv i ces shou ld be inco rpora ted in

the lease.

Un less a lease p rov ides o the rwise , a land lo rd is gene ra l l y not requ i red to keep the

premises in repa i r . Ne i the r is the tenant requ i red to make repa i rs . Provis ion fo r repa i r and fo r

the scope o f the dut ies o f the pa r ty ob l iga ted to keep the premises in repair should be c lea r l y

de l i neated in the lease. An ag reemen t to repair does not impose the duty to rebui ld i f the

premises are acc identa l ly dest royed. A land lo rd is not requ i red to repa i r and make hab i tab le

proper ty that is un inhab i tab le at the t ime of making the lease . The tenant is p resumed to

have fu l l knowledge of the cond i t ion of the p roper ty and shou ld speci f y any des ired repairs.

A lesso r has no r igh t to en te r the leased premises. A l and lo rd ’ s r igh t to en te r upon the

premises to inspec t the proper ty or to show i t to prospec t i ve purchase rs o r l essees is l im i ted

to what is spe l led out in the agreement.

As a genera l ru le , a person occupy ing the p roper ty is l iab le to o the rs for i n ju ry caused by

the cond i t ion of the prope r ty . An occupant is a l so l i ab le to o the rs fo r any nu isance resu l t i ng

f rom the occupant ’ s use tha t in te r fe res wi th o thers ’ use and enjoyment o f the i r property.

A land lord is not genera l l y l iable for i n ju ry to a tenant or a t enant ’ s fami l y caused by the

proper ty ’ s cond i t ion , un less such cond i t ion is la ten t ( i .e . , h idden ) and the land lord had

knowledge o f such la ten t , dangerous cond i t ion . A land lord may be he ld l iab le to persons us ing

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the s idewalks o r h ighway abut t ing the proper ty fo r in ju ry caused by dangerous cond i t ions on

the p rope r ty . In such a case, a land lord ’ s l i ab i l i t y con t inues on ly un t i l a reasonab le t ime a f te r

the tenant takes possession and has the oppor tun i t y to correct the dangerous cond i t i on ,

whereupon the tenant becomes respons ib le . I t is adv isab le that the part ies agree as to

responsib i l i t y fo r i n ju r y to o the r pe rsons, and fo r the responsib le par ty to secure pro tect ion by

means o f l i ab i l i t y insurance.

A land lord usua l l y re ta ins con t ro l ove r en t rances , ha l lways , e levators , s ta i rways , and o the r

po r t i ons o f mul t i -un i t p rope r ty . In such cases, the land lo rd is l i ab le for in ju ry to the tenan ts,

the i r gues ts, or business v i s i to rs caused by dangerous cond i t ions in these areas resu l t i ng

f rom land lord neg l igence. As a genera l ru le , pa r t i a l or to ta l dest ruc t ion of the p remises by f i re

or o the r acc ident does not re l i eve a tenan t f rom the ob l iga t ion to pay ren t . Some s ta tes fee l

th i s common - law ru le is too ha rsh and have enacted s ta tu tes sta t i ng tha t des t ruct ion or

damage mak ing the prope r ty un f i t for occupancy te rminates the lease and re l i eves a tenant

f rom paying ren t . I t is s t rong ly recommended tha t lease p rov is ions cove r such emergenc ies.

Un less the provis ions of the lease proh ib i t , a tenan t may ass ign or sub le t the p remises .

The lessee wou ld remain l i ab le to the lessor for the per fo rmance of a l l the o r ig ina l l ease

cond i t i ons . Most l eases proh ib i t sub le t t i ng or assignment w i thout the lessor ’s pr io r consent .

A land lord who re-en te rs leased premises e f fect ive l y ev i c ts the tenan t and re l i eves the

tenan t f rom a l l l iab i l i t y for fu tu re rent , un less the lease spec i f i e s o the rw ise . I f the lease

autho r i zes a land lord to re -ente r and re - le t the premises w i thout te rminat ing the lease in the

event a tenant vacates the p remises, a cou r t may hold the tenant l iab le for ren t the tenant

ag reed to pay , less any amount the land lo rd rece ived f rom the new tenant . Many lease

ag reements p rov ide tha t upon tenant de fau l t a land lo rd may: (1) declare the te rm of the lease

ended , re -enter the p remises , expe l the tenan t , and take possession of the p remises, or (2)

re- let the premises and app l y the ren t f rom the new tenant ’ s l ease to the lease o f the o ld

tenan t , w i th the o ld tenant be ing responsib le for any ba lance due.

The above d i scuss ion shou ld ind ica te the ex t reme des i rab i l i t y o f having a ca re fu l l y d ra f ted

lease, wh ich c lear l y se ts fo r th a l l the cond i t i ons and covenan ts o f the tenancy and a l l t he

dut ies and respons ib i l i t i es o f each party.

G. 20 08 Wa r ran ty o f Ha b i ta b i l i t y Ac t (Re s iden t ia l P roper t i e s)

§ 3 8 - 1 2 - 5 0 1 , C . R . S . L e g is l a t i v e d e c l a r a t i o n – m at te r o f s ta tew i d e co nce rn – pu rp o ses and po l i c ie s .

(1 ) The gene ra l assembly hereby f i nds and decla res tha t the prov is ions o f th i s pa r t 5 a re a

mat te r o f s ta tew ide concern . Any local government o rd inance, reso lu t i on , o r o ther

regu la t i on tha t is i n con f l i c t w i th th i s par t 5 sha l l be unenforceable.

(2 ) The unde r l y ing pu rposes and po l i c ies o f th i s pa r t 5 a re to:

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(a) S impl i f y , c la r i f y , modern ize , and rev ise the law govern ing the ren ta l of dwel l ing

uni ts and the r ights and ob l iga t ions of l and lords and tenants;

(b ) Encourage land lo rds and tenan ts to main ta in and improve the qua l i t y o f hous ing; and

( c) Make un i fo rm the law w i th respec t to the sub ject o f th i s pa r t 5 th roughou t Colorado.

§ 3 8 - 1 2 - 5 0 2 , C . R . S . De f in i t i ons .

As used in th i s pa r t 5 , un less the context o therw ise requires:

(1) “Common areas” means the f ac i l i t i es and appur tenances to a res iden t ia l p remises ,

inc lud ing the g rounds, areas, and fac i l i t i es he ld ou t fo r the use o f tenan ts genera l l y o r

whose use is promised to a tenant .

(2 ) “Dwel l ing un i t ” mea ns a s t ructure or the pa r t o f a s t ructure tha t is used as a home,

res idence, o r s leep ing p lace by a tenant.

(3 ) “Land lo rd ” means the owner , manager , lesso r , o r sub lesso r o f a

res ident ia l premises.

(4) “Renta l ag reemen t” means the agreement , w r i t ten or oral , embodying the terms and

cond i t i ons concern ing the use and occupancy o f a res iden t ia l premises.

(5 ) “Res ident ia l p remises” means a dwel l i ng un i t , t he s t ruc tu re o f wh ich the

un i t is a pa r t , and the common areas. (6 ) “Tenant ” means a pe rson

ent i t l ed unde r a renta l agreemen t to occupy a dwel l i ng un i t to the

exclus ion o f o thers .

§ 3 8 - 1 2 - 5 0 3 , C . R . S . W a r r a n t y o f h ab i t ab i l i t y .

(1 ) In eve ry ren ta l agreement , the land lord is deemed to war rant tha t the

res ident ia l p remises is f i t f o r human hab i ta t ion.

(2 ) A land lord breaches the war ranty o f hab i tab i l i t y se t fo r th i n subsec t ion (1) o f

th i s sec t ion i f :

(a ) A res iden t ia l p remises is un inhab i tab le as descr ibed in sect ion 38 -12 -505 o r

o therw ise unf i t f o r human hab i ta t ion ; and

(b) The res iden t ia l p remises is in a cond i t ion tha t is mater ia l l y dangerous or hazardous

to the t enan t ’ s l i f e , hea l th , or safety; and

(c) The land lo rd has rece ived wr i t ten no t i ce of the cond i t i on descr ibed in parag raphs

(a) and (b) of th is subsect ion (2) and fa i led to cure the p rob lem w i th in a

reasonab le t ime.

(3) When any cond i t ion descr ibed in subsect ion (2) of th is sec t ion is caused by the

misconduct of the tenan t , a member of the tenant ’ s househo ld , a guest or i nv i tee of

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the tenant , or a pe rson unde r the tenant ’ s d i rec t ion or con t ro l , the cond i t ion sha l l not

cons t i tu te a breach of the war ranty of hab i tab i l i t y . I t sha l l not be misconduct by a

v i c t im of domest i c v io lence or domest ic abuse unde r th is subsec t ion (3) i f the

cond i t i on is the resu l t o f domest i c v io lence or domest i c abuse and the land lo rd has

been g i ven wr i t ten no t i ce and ev idence o f domest i c v io lence o r domest i c abuse as

descr ibed in sect ion 38 -12 -402 (2 ) (a) .

(4) In response to the no t i ce sent pursuant to pa ragraph (c) of subsec t ion (2) of th is

sect ion , a land lord may, in the land lord ’s d i sc re t ion , move a tenant to a comparab le

un i t a f te r paying the reasonab le cos ts, ac tua l l y i ncu rred , i nc ident to the move.

(5) Except as se t fo r th in th is par t 5, any ag reemen t wa iv ing or modi f y ing the war ranty of

hab i tab i l i t y sha l l be vo id as con t rary to pub l i c pol icy.

(6 ) Noth ing in th i s par t 5 shal l :

(a ) Preven t a land lo rd f rom terminat ing a renta l ag reemen t as a resu l t of a casua l t y or

ca tast rophe to the dwel l ing un i t wi thout fu r the r l iab i l i t y to the land lord or tenant ; or

(b ) Preclude a land lord f rom in i t i a t i ng an ac t ion fo r nonpaymen t o f ren t , b reach o f the

ren ta l ag reement , v io la t i on o f sec t ion 38-12-504 , o r as prov ided fo r under ar t i c le 40

o f t i t l e 13 , C.R.S.

§ 3 8 - 1 2 - 5 0 4 , C . R . S . T e n a n t ’s m a i n t e n a nc e o f p r e m i se s .

(1) In add i t i on to any dut ies imposed upon a tenan t by a renta l ag reement , eve ry tenant of

a res ident ia l p remises has a du ty to use tha t por t ion of the p remises wi th in the

tenan t ’ s cont ro l in a reasonab ly c lean and sa fe manner . A tenan t fa i l s to mainta in the

p remises in a reasonab ly c lean and sa fe manner when the tenan t

subs tant ia l l y fa i l s to:

(a) Comply w i th ob l i ga t ions imposed upon tenants by app l i cab le p rov is ions of bu i ld ing ,

hea l th , and housing codes mater ia l ly a f fect ing hea l th and safety;

(b ) Keep the dwel l i ng un i t reasonab ly c lean, sa fe , and san i ta ry as permi t ted by the

cond i t i ons o f the uni t ;

( c) D ispose o f ashes , ga rbage, rubb ish , and o the r waste f rom the dwel l ing un i t in a

c lean, sa fe , san i ta ry, and lega l l y compl ian t manner ;

(d) Use in a reasonab le manner a l l e lect r i ca l , p lumb ing, san i ta ry , heat ing , ven t i l a t i ng ,

a i r - cond i t i on ing , e levato rs, and other fac i l i t i es and app l iances in the dwel l i ng unit ;

(e) Conduct h imse l f or he rse l f and requ i re o the r persons in the res iden t ia l p remises

wi th in the tenant ’ s con t ro l to conduct themselves in a manner tha t does not d i s tu rb

the i r ne ighbors ’ peace fu l en joyment o f the ne ighbo rs ’ dwe l l ing un i t ; or

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( f ) Prompt l y no t i f y the land lord i f the res ident ia l p remises is un inhab i tab l e as def ined

in sect ion 38 -12 -505 or i f there is a cond i t ion tha t cou ld resu l t i n the premises

becoming un inhab i tab le i f no t remedied.

(2) In add i t ion to the du t ies set fo r th in subsect ion (1) of th is sec t ion , a tenan t sha l l not

knowing ly, in ten t iona l l y , de l ibera te l y , or neg l igent l y dest roy , de face, damage, impa i r ,

or remove any par t of the res ident ia l p remises or know ing ly pe rmi t any person wi th in

h i s o r her cont ro l to do so.

(3) Noth ing in th is sec t ion shal l be const rued to author i ze a modi f i ca t ion of a l and lo rd ’ s

ob l iga t ions under the war ranty of habi tabi l i t y.

§ 3 8 - 1 2 - 5 0 5 , C . R . S . U n i n h a b i t a b l e r e s i d e n t i a l p re m i s es .

(1 ) A res iden t ia l p remises is deemed un inhab i tab le i f i t subs tant ia l l y lacks any o f the

fo l l owing character ist ics:

(a) Wate rp roof ing and wea the r p ro tec t ion of roof and ex te r io r wal ls main ta ined in

good work ing orde r , inc lud ing unbroken windows and doors;

(b) P lumbing or gas fac i l i t i es tha t con fo rmed to app l i cab le law in e f fec t a t the t ime of

insta l l a t i on and tha t are ma in ta ined in good work ing order;

(c) Runn ing wa te r and reasonab le amounts of hot wa te r at a l l t imes furn i shed to

app rop r ia te f i x tu res and connected to a sewage d isposa l sys tem app roved unde r

app l i cab le law;

(d) Func t ion ing heat ing fac i l i t i es tha t con fo rmed to app l i cab le l aw at the t ime of

insta l l a t i on and tha t are main ta ined in good work ing order;

(e) E lect r i ca l l igh t ing , with wir ing and e lec t r i ca l equ ipment that conformed to

app l i cab le l aw at the t ime of ins ta l la t ion, main ta ined in good work ing order ;

( f ) Common areas and areas under the cont ro l of the land lord that are kept

reasonab ly c lean , san i ta ry, and f ree f rom al l accumula t ions o f deb r i s , f i l th ,

rubb ish , and garbage and tha t have approp r ia te exterminat ion in response to the

in fes ta t ion o f rodents o r vermin;

(g ) Approp r ia te ex te rminat ion in response to the in festa t ion o f rodents o r

vermin th roughou t a res ident ia l p remises; (h ) An adequate number o f

app rop r ia te ex te r io r receptac les fo r ga rbage and rubb ish , in good repair ;

( i ) F loors , s ta i rways , and ra i l i ngs main ta ined in good repair ;

( j ) Locks on a l l ex te r io r doors and locks or secur i t y devices on windows designed to

be opened tha t a re main ta ined in good work ing orde r ; or

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(k ) Compl iance wi th a l l app l i cab le bu i ld ing , housing , and hea l th codes, wh ich , i f

v io la ted , wou ld cons t i tu te a cond i t i on tha t is dangerous o r hazardous to a

tenan t ’ s l i f e , hea l th , o r safety.

(2) No de f i c iency in the common area sha l l rende r a res iden t ia l p remises

un inhab i tab le as set fo r th in subsec t ion (1) of th is sect ion , un less i t mate r ia l l y and

subs tant ia l l y l im i t s the tenant ’ s use o f h i s o r her dwe l l ing unit .

(3) Un less o the rwise s ta ted in sec t ion 38 -12-506, p r io r to be ing leased to a tenan t , a

res ident ia l p remises must comply w i th the requ i remen ts se t fo r th in sec t ion

38 -12-503 (1 ) , (2 ) (a ) , and (2 ) (b) .

§ 3 8 - 1 2 - 5 0 6 , C . R . S . Op t -ou t .

(1) I f a dwel l i ng un i t is conta ined wi th in a mobi le home pa rk, as def ined in sect ion

38 -12-201.5 (3) , or i f there are fou r or fewer dwel l i ng un i t s shar i ng common wal l s

or l ocated on the same pa rce l , as de f ined in sec t ion 30 -28-302 (5 ) , C .R .S . , a l l of

which have the same owner , o r i f t he dwe l l i ng un i t is a s ing le - fami l y res ident ia l

premises:

(a) A good fa ith ren ta l ag reemen t may requ i re a tenant to assume the ob l iga t ion

for one or more of the character is t ics con ta ined in sect ion 38 -12 -505 (1) ( f ) ,

(1) (g) , and (1) (h), as long as the requ i rement is not inconsis ten t wi th any

ob l iga t ions imposed upon a land lo rd by a governmenta l en t i t y f o r the rece ip t o f

a subs idy fo r the res ident ia l p remises ; and

(b ) Fo r any dwel l i ng un i t fo r wh ich a land lord does not rece ive a subs idy f rom any

governmen ta l source, a land lo rd and tenant may agree in wr i t ing tha t the tenan t

is to pe r fo rm speci f i c repa i rs , main tenance tasks , a l te ra t ions , and remodel ing ,

bu t only i f :

( I ) The ag reement o f the pa r t i es is ente red in to i n good fa i th and is se t

fo r th in a separa te wr i t i ng s igned by the par t i es and suppor ted by

adequate considerat ion;

( I I ) The work is no t necessa ry to cu re a fa i lu re to comply wi th sec t ion

38 -12-505 (3 ) ; and

( I I I )Such agreement does not a f fec t the ob l i ga t ion o f the land lo rd to o the r

tenan ts ’ res iden t ia l premises.

(2) For a s ing le - fami l y res iden t ia l p remises for wh ich a land lord does not rece ive a

subs idy f rom any gove rnmen ta l sou rce , a land lord and tenant may ag ree in wr i t ing

that the tenant is to pe r fo rm speci f i c repa i rs , main tenance tasks , a l te ra t ions, and

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remodel ing necessa ry to cure a fa i lu re to comp ly wi th

sect ion 38 -12 -505 (3) , bu t on ly i f :

(a ) The ag reement o f the land lord and tenan t is en tered in to in good fa i th and is se t

fo r th in a wr i t i ng tha t is separa te f rom the ren ta l ag reemen t , s igned by the

pa r t i es, and suppor ted by adequate conside ra t ion ; and

(b ) The tenan t has the requ is i te sk i l l s to per fo rm the work requ i red to cure a fa i lu re

to comply wi th sec t ion 38 -12 -505 (3) .

(3) To the exten t that per fo rmance by a tenant re la tes to a cha rac te r i s t ic set

for th in sect ion 38 -12 -505 (1) , the tenant shal l assume the ob l i ga t ion fo r

such character is t ic .

(4 ) I f consis ten t w i th th i s sec t ion a tenant assumes an ob l iga t ion fo r a character i s t i c

se t fo r th i n sect ion 38 -12-505 (1 ) , the lack of such cha rac te r i s t i c sha l l no t make a

res ident ia l p remises uninhabitable.

§ 3 8 - 1 2 - 5 0 7 , C . R . S . B r e ac h o f w a r r a n t y o f h a b i t a b i l i t y – t e n a n t ’ s r e m ed ie s .

(1 ) I f there is a b reach o f the war ranty o f hab i tab i l i t y as se t fo r th i n sec t ion 38 -12-503

(2 ) , the fo l l owing prov is ions sha l l apply:

(a ) Upon no less than ten and no more than th i r t y days wr i t ten no t i ce to the

land lo rd speci f y ing the cond i t i on a l l eged to breach the warran ty of hab i tab i l i t y

and g iv ing the land lord f ive bus iness days f rom the rece ip t of the wr i t ten no t i ce

to remedy the breach, a tenant may te rminate the ren ta l agreement by

sur render ing possession of the dwe l l ing unit . I f the breach is remediab le by

repa i rs , the payment o f damages, o r o the rwise and the land lo rd adequate ly

remed ies the b reach wi th in f ive business days o f rece ip t o f the not i ce , the ren ta l

ag reement sha l l no t te rm inate by reason o f the breach.

(b ) A tenant may obta in i n junct i ve re l ie f for b reach of the war ranty of hab i tab i l i t y in

any cour t of competen t j u r i sd i c t ion . In any proceed ing fo r in junct i ve re l i e f , the

cou r t sha l l de te rmine ac tua l dama ges fo r a breach of the warran ty at the t ime

the cour t orde rs the in junc t i ve re l i e f . A land lord sha l l no t be sub jec t to any

cou r t o rder for i n junc t i ve re l i e f i f the land lo rd tende rs the actual damages to

the court wi th in two business days of the order. Upon app l i ca t ion by the

tenant, the cour t shal l immedia te l y re lease to the tenant the damages paid

by the land lord . I f the tenant vaca tes the leased p remises, the land lo rd shal l

not be pe rmi t ted to rent the premises aga in unt i l such t ime as the uni t

wou ld be in compl iance wi th the war ranty o f hab i tab i l i t y se t fo r th in sec t ion

38 -12-503 (1).

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(c) In an act ion for possession based upon nonpayment of ren t in wh ich the tenant

asse r ts a defense to possess ion based upon the land lo rd ’ s a l leged breach o f

the warran t y o f hab i tab i l i t y , upon the f i l ing o f the tenan t ’ s answer the cour t sha l l

order the tenan t to pay in to the reg is t ry of the cour t a l l or pa r t of the rent

accrued a f te r due conside ra t ion of expenses a l ready incu rred by the tenan t

based upon the land lo rd ’s b reach o f the war ranty o f habitabi l i t y.

(d ) Whethe r asser ted as a c la im o r counterc la im, a tenant may recover damages

d i rect l y a r i s ing f rom a b reach o f the warranty o f hab i tab i l i t y , wh ich may inc lude,

bu t a re not l imi ted to , any reduc t ion in the fa i r re n ta l va lue o f the dwel l i ng un i t ,

in any cour t o f compe tent jur isd ic t ion.

(2) I f a ren ta l ag reement conta ins a prov is ion for e i the r pa r ty in an ac t ion re la ted to

the renta l ag reemen t to ob ta in a t to rney fees and costs , then the preva i l ing par ty i n

any ac t ion brough t unde r th i s par t 5 sha l l be en t i t led to recove r reasonab le a t to rney

fees and costs .

§ 3 8 - 1 2 - 5 0 8 , C . R . S . L a n d l o r d ’s d e f e ns e s t o a c l a im o f b r e ac h o f w a r r a n t y

– l i m i t a t i o n s o n c l a i m i n g a b re ach .

(1 ) I t sha l l be a de fense to a t enant ’ s c la im o f b reach o f the war ranty o f hab i tab i l i t y

tha t the tenan t ’ s act ions or inac t ions prevented the land lord f rom cu r ing the

cond i t i on under l y ing the breach o f the warran ty o f habi tabi l i t y.

(2 ) On ly par t ies to the ren ta l ag reement o r o the r a du l t res idents l i s ted on the ren ta l

ag reement who are a l so lawfu l l y res id ing in the dwel l ing un i t may asser t a c la im fo r

a breach o f the war ranty o f habitabi l i t y.

(3) A tenant may not asse r t a c la im for in junc t i ve re l ief based upon the l and lo rd ’ s

breach of the war ranty of hab i tab i l i t y of a res ident ia l p remises un less the tenan t

has g iven not i ce to a loca l gove rnmen t w i th in the boundar ies of wh ich the

res ident ia l p remises is loca ted o f the cond i t i on unde r l y ing the breach tha t is

mater ia l l y dangerous o r haza rdous to t he tenant ’ s l i f e , heal th, o r safety.

(4 ) A tenant may not asse r t a b reach o f the warran ty o f hab i tab i l i t y as a defense to a

land lo rd ’ s act ion fo r possession based upon a nonmonetary v io la t i on o f the ren ta l

ag reement o r fo r an act ion fo r possess ion based upon a not i ce to qu i t o r vacate.

(5 ) I f the cond i t ion a l leged to b reach the warran ty o f hab i tab i l i t y is the resu l t o f the

act ion o r i nac t ion o f a tenant in ano ther dwel l ing un i t o r anothe r th i rd pa r ty no t

unde r the d i rec t ion and con t ro l o f the land lo rd and the land lo rd has taken

reasonab le , necessary, and t ime ly s teps to abate the cond i t i on , but is unab le to

abate the cond i t i on due to c i rcumstances beyond the land lo rd ’s reasonab le

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con t ro l , the tenant ’ s on ly remedy sha l l be te rm inat ion o f the ren ta l agreement

cons is ten t w i th sec t ion 38 -12-507 (1) (a) .

(6) For pub l i c hous ing au thor i t ies and other housing p rov iders rece iv ing fede ra l

f inancia l ass i s tance d i rec t l y f rom the federal gove rnment , no p rov is ion of th is par t

5 in d i rec t conf l i c t w i th any fe de ra l l aw or regu la t i on sha l l be en fo rceab le aga ins t

such hous ing provider.

§ 3 8 - 1 2 - 5 0 9 , C . R . S . P r o h i b i t i o n o n re t a l i a t ion .

(1 ) A land lord sha l l no t re ta l ia te aga ins t a tenant fo r a l leg ing a b reach of the war ranty

of hab i tab i l i t y by d i sc r im inato r i l y increas ing rent or decreas ing serv i ces or by

br ing ing or th rea ten ing to br ing an act ion for possess ion in response to the tenan t

having made a good fa i th compla in t to the land lord o r to a governmen ta l agency

a l leg ing a b reach o f the war rant y o f habi tabi l i t y.

(2 ) A land lord sha l l no t be l iab le fo r re ta l i a t i on under th i s sect ion , un less a tenant

p roves tha t a land lo rd b reached the war ranty of habi tabi l i t y.

(3) Regard less of when an act ion for possess ion of the p remises where the land lord is

seek ing to te rminate the tenancy for v io la t i on o f the te rms o f the ren ta l agreement

is brough t , there sha l l be a rebut tab le p resumpt ion in favo r o f the land lo rd tha t h is

or he r dec is ion to te rminate is not re ta l ia to ry . The presumpt ion c rea ted by th i s

subsec t ion (3 ) canno t be rebu t ted by evidence of the t iming a lone o f the land lo rd ’ s

in i t i a t i on o f the ac t ion.

(4) I f the land lo rd has a r i gh t to inc rease rent , to decrease serv i ce , or to te rmina te

the tenant ’ s tenancy at the end of any te rm of the ren ta l ag re emen t and the

land lo rd exe rc i ses any o f these r igh ts , there sha l l be a rebu t tab le presumpt ion tha t

the landlord ’s exe rc i se of any of these r i gh ts was not re ta l i a to ry . The p resumpt ion

of th i s subsec t ion (4) cannot be rebut ted by ev idence of the t iming a lone o f the

land lo rd ’ s exe rc i se o f any o f these r ights.

§ 3 8 - 1 2 - 5 1 0 , C . R . S . U n l a w f u l r e m o v a l o r exc l us ion .

I t sha l l be un lawfu l fo r a land lord to remove or exc lude a tenant f rom a dwel l ing un i t

w i thout resor t ing to cou r t p rocess, un less the remova l or exc lus ion is consis ten t w i th the

provis ions of a r t i c le 18.5 of t i t le 25, C.R .S., and the ru les p romu lga ted by the state boa rd of

hea l th for the c leanup of an i l lega l d rug labo ra tory or is wi th the mutua l consent of the

land lo rd and tenant or un less the dwe l l ing uni t has been abandoned by the tenan t as

evidenced by the re tu rn of keys, the subs tant ia l remova l of the tenant’s persona l p roper ty ,

no t i ce by the tenan t , or the ex tended absence of the tenan t wh i le rent rema ins unpa id , any of

wh ich would cause a reasonab le person to be l i eve the tenan t had permanen t l y su r rende red

possess ion of the dwel l i ng unit . Such unlawful remova l or exc lus ion inc ludes the wi l l fu l

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te rm inat ion of u t i l i t ies or the wi l l fu l remova l of doo rs , w indows, or l ocks to the premises

o ther than as requ i red for repa i r or main tenance. I f the land lo rd wi l l fu l l y and un lawfu l l y

removes the tenant f rom the premises or wi l l fu l l y and un lawfu l l y causes the te rmina t ion o f

hea t , runn ing water , ho t water , e lec t r i c , gas, o r o ther essent ia l se rv i ces, the tenant may seek

any remedy ava i lab le unde r the law, i nc lud ing th is par t 5.

§ 3 8 - 1 2 - 5 1 1 , C . R . S . App l i c a t i on .

(1 ) Un less c reated to avo id i t s app l i ca t ion , th i s par t 5 sha l l no t app ly to

any o f the fo l low ing ar rangements :

(a ) Residence a t a pub l i c o r p r i va te ins t i tu t i on , i f such res idence is inc identa l to

deten t ion or the prov is ion o f med ica l , ger iatr ic , educa t ion , counse l ing , re l i g ious, o r

s im i la r service;

(b ) Occupancy unde r a cont rac t of sa le of a dwe l l ing un i t or the p rope r ty of wh ich i t is

a pa r t , i f the occupan t is the purchaser, se l le r , o r a pe rson who succeeds to h i s o r

he r in terest;

(c) Occupancy by a member of a f ra te rna l or soc ia l o rgan iza t ion in the po r t ion of a

s t ructure opera ted for the benef i t of the organizat ion;

(d ) Trans ien t occupancy in a ho te l o r mote l tha t las ts l ess than th i r t y days;

(e) Occupancy by an employee or independen t con t rac to r whose r ight to occupancy is

cond i t i ona l upon per fo rmance of serv i ces fo r an employer o r contractor;

( f ) Occupancy by an owner o f a condomin ium un i t o r a ho lde r o f a p ropr ie ta ry l ease in

a cooperat ive;

(g ) Occupancy in a st ruc tu re tha t is l ocated w i th in an un incorp o ra ted area o f a county ,

does not rece ive wa te r , hea t , and sewer serv i ces f rom a pub l i c en t i t y , and is

ren ted for recreat iona l pu rposes , such as a hunt ing cab in , yur t , hu t , or o the r

s imilar structure;

(h) Occupancy under renta l ag reemen t cover ing a res iden t ia l p remises used by the

occupant p r imar i l y for agr icu l tu ra l pu rposes ; or

( i ) Any re la t i onsh ip between the owner o f a mobi le home pa rk and the owner o f a mobi le

home s i tua ted in the park .

(2 ) Noth ing in th i s sec t ion sha l l be cons t rued to l im i t r emedies ava i l ab le e l sewhere in l aw

for a tenan t to seek to main ta in sa fe and san i ta ry hous ing.

H . E lec t r i c Veh ic le Cha rg in g Sys t e ms

* § 3 8 - 1 2 - 6 0 1 , C .R . S . U nr e a so n a b l e r es t r i c t i o ns o n e l ec t r i c v eh i c l e c h a rg i ng s y s te m s – de f i n i t ion s .

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* (1 ) Notwi ths tand ing any prov is ion in the lease to the cont ra ry , and sub ject to

subsec t ion (2 )o f th i s sect ion:

* (a ) A tenant may insta l l , a t the tenan t ’ s expense fo r the tenan t ’ s own use , a leve l 1 or

leve l 2 e lec t r i c veh ic le cha rg ing system on or in the leased p remises; and

* (b ) A land lord sha l l no t assess or charge a tenan t any fee for the p lacement or use of

an e lect r i c veh ic le cha rg ing system; excep t that :

* ( I ) The land lo rd may requ i re re imbursemen t fo r the actua l cost o f e lec t r i c i t y

p rov ided by the land lo rd tha t was used by the cha rg ing sys tem o r , a l te rnat i ve l y ,

may charge a reasonab le fee fo r access . I f the cha rg ing sys tem is pa r t of a

network fo r wh ich a ne twork fee is cha rged, the land lord ’ s re imbursement may

inc lude the amount o f the network fee . Noth ing in th i s sect ion requ i res a

land lo rd to impose upon a tenant any fee or cha rge o ther than the ren ta l

payments speci f ied in the lease.

* ( I I ) The land lo rd may requ i re re imbursemen t fo r the cos t o f the insta l l a t i on o f the

cha rg ing sys tem, inc lud ing any addit ions or upg rades to ex is t ing w i r i ng d i rect l y

a t t r ibu tab le to the requ i remen ts of the cha rg ing system, i f the land lo rd p laces

or causes the e lect r i c veh ic le charg ing sys tem to be p laced a t the request o f the

tenan t ; and

* ( I I I ) I f the tenant des i res to p lace an e lect r i c veh ic le charg ing sys tem in an a rea

access ib le to o the r tenants, the landlord may assess or cha rge the tenant a

reasonab le fee to reserve a spec i f i c pa rk ing spot in wh ich to ins ta l l the

charging system.

* (2 ) A land lord may requ i re a tenant to comply wi th:

* (a) Bona f ide safe ty requ i rements , cons is ten t wi th an app l i cab le bu i l d ing code or

recogn ized sa fe ty s tan dard , for the pro tect ion o f persons and property;

* (b ) A requ i rement tha t the cha rg ing sys tem be reg is tered wi th the land lo rd wi th in

th i r t y days a f te r i nsta l l a t ion ; or

* (c) Reasonab le aes thet i c p rov is ions that gove rn the d imensions , p lacement , or

externa l appearance of an e lec t r i c vehic le cha rg ing system.

* (3 ) A tenant may p lace an e lect r i c veh ic le cha rg ing sys tem in an a rea accessib le to

o ther tenants i f :

* (a ) The cha rg ing sys tem is in compl iance wi th a l l app l i cab le requ i remen ts

adopted p ursuant to subsect ion (2) of th i s sect ion; and

* (b ) The tenan t ag rees in wr i t ing to :

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* ( I ) Comply w i th the land lord ’ s des ign spec i f i ca t ions fo r the insta l l a t i on o f the

cha rg ing system;

* ( I I ) Engage the serv i ces of a du ly l i censed and reg is te red e lec t r i ca l

con t ractor fami l ia r w i th the insta l la t i on and code requ i rements o f an

e lec t r i c veh ic le cha rg ing system; and

* ( I I I ) (A ) Provide , w i th in four teen days a f te r rece iv ing the land lo rd ’ s consent

fo r the ins ta l la t ion , a ce r t i f i ca te of insu rance naming the land lord as

an add i t i ona l i nsu red on the tenant ’ s ren te rs ’ i nsu rance po l i cy for

any c la im re la ted to the insta l l a t i on , main tenance , or use of the

sys tem or , at t he land lo rd ’ s op t ion , re imbursement to the land lo rd fo r

the ac tual cost of any increased insu rance p remium amoun t

a t t r ibu tab le to the sys tem, no twi thstand ing any provis ion to the

con t rary in the lease.

* (B ) A ce r t i f i ca te o f insurance unde r sub -subparagraph (A ) o f th i s

subparagraph ( I I I ) must be prov ided wi th in four teen day s af ter the

tenan t rece ives the land lord ’ s consent fo r the ins ta l l a t i on .

Reimbursement fo r an inc reased insurance premium amount under

sub -subparagraph (A ) of th i s subparagraph ( I I I ) must be p rov ided

wi th in four teen days a f te r the tenant rece ives the land lord ’s i nvo ice

fo r the amount a t t r ibu tab le to the system.

* (4) I f the land lord consen ts to a tenant ’ s i nsta l l a t i on of an e lec t r i c veh ic le

cha rg ing sys tem on p rope r ty access ib le to other tenants , i nc lud ing a park ing

space, ca rpor t , or garage sta l l , t hen, u n less o therwise speci f ied in a wr i t ten

ag reement wi th the landlord:

* (a) The tenan t , and each success ive tenan t wi th exc lus i ve r ights to the area

where the charg ing sys tem is insta l l ed , is responsib le fo r any cos ts fo r

damages to the cha rg ing sys tem and to any o ther p rope r ty o f the land lo rd or

o f anothe r tenant tha t a r i se o r resu l t f rom the ins ta l l a t i on , main tenance,

repa i r , remova l , o r rep lacemen t o f the cha rg ing system;

* (b ) Each success ive tenan t w i th exc lus i ve r i gh ts to the a rea where the charg ing

sys tem is ins ta l led sha l l assume respons ib i l i ty fo r the repa i r , ma in tenance,

remova l , and rep lacement o f the cha rg ing sys tem unt i l t he sys tem has been

removed;

* ( c) The tenan t and each success ive tenant w i th exc lus i ve r igh ts to the area

where th e sys tem is insta l led sha l l a t a l l t imes have and ma in ta in an

insu rance po l i cy cover ing the ob l iga t ions of the tenant under th is

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subsec t ion (4) and shal l name the land lo rd as an add i t iona l insu red unde r

the po l i cy ; and

* (d) The tenan t and each success ive tenant w i th exc lus i ve r igh ts to the a rea

where the sys tem is ins ta l l ed is responsib le for remov ing the sys tem i f

reasonab ly necessa ry or conven ient fo r the repa i r , ma in tenance, o r

rep lacemen t o f any p roper ty of the land lord , whether o r no t l eased to

ano ther tenant .

* (5 ) A charg ing sys tem ins ta l led at the t enant ’ s cos t is p rope r ty of the tenant . Upon

te rminat ion of the lease , i f the charging sys tem is removab le , the tenant may

e i the r remove i t o r se l l i t to the land lo rd o r anothe r tenan t fo r an ag reed pr i ce .

Noth ing in th i s subsect ion (5 ) requ i res the land lord o r anothe r tenan t to

pu rchase the charg ing system.

* (6 ) As used in th i s sect ion:

* (a) “E lec t r i c veh ic le cha rg ing sys tem” or “ charg ing sys tem” means a dev ice that

is used to p rov ide e lec t r i c i t y to a plug- in e lec t r ic veh ic le or p lug - in hyb r id

veh ic le , is des igned to ensure tha t a sa fe connect ion has been made

between the e lec tr ic gr id and the veh ic le , and is ab le to communica te wi th

the veh ic le ’ s cont ro l sys tem so tha t e lec t r i c i t y f l ows a t an appropr iate

vo l tage and cu rren t l eve l . An e lect r i c veh ic le cha rg ing sys tem may be wal l -

mounted or pedesta l s tyle and may provide mul t ip le cords to connect wi th

e lec t r i c veh ic les . An e lec t r i c veh ic le charg ing sys tem must be cer t i f ied by

underwr i te rs l abora tor ies or an equ iva len t ce r t i f i ca t i on and must comply w i th

the cu rren t vers ion of a r t i c le 625 of the na t iona l e lectr ica l code.

* (b) “Leve l 1” means a cha rg ing sys tem that p rov ides cha rg ing th rough a one-

hundred - twenty volt A C p lug wi th a cord connector tha t meets the SAE

in ternat iona l J1772 s tanda rd or a successor standard.

* (c) “Leve l 2” means a cha rg ing sys tem that p rov ides charg ing th rough a two-

hundred -e igh t to two -hundred- fo r t y vo l t A C p lug wi th a co rd connecto r tha t

mee ts the SAE in terna t iona l J1772 standa rd o r a successor standard.

* (7 ) Th is sect ion app l ies on ly to res iden t ia l ren ta l proper t ies .

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I . C a rbon Monox ide A la rms

§ 3 8 - 4 5 - 1 0 1 , C . R . S . De f in i t i ons .

As used in th i s a r t i c le , un less the context o therw ise requires:

(1 ) “Ca rbon monoxide a la rm” means a device tha t de tects carbon monoxide and that :

(a ) p roduces a d i s t i nc t , aud ib le a larm;

(b) Is l is ted by a na t iona l l y recogn ized, i ndependen t p roduc t -sa fe ty tes t ing and

cer t i f i ca t ion labora tory to con fo rm to the standa rds fo r ca rbon monox ide a la rms

issued by such labo ra tory o r any successo r s tandards;

(c) Is bat te ry powered, p lugs into a dwel l i ng ’ s e lec t r i ca l ou t le t and has a bat te ry

backup , is w i red in to a dwel l ing ’ s elec tr ica l sys tem and has a ba t te ry backup, o r is

connected to an e lec t r i ca l sys tem v ia an e lec t r i ca l pane l ; and

(d) May be combined wi th a smoke detect ing device i f the combined device compl ies

wi th app l i cab le law rega rd ing both smoke detect ing devices and ca rbon monoxide

a la rms and tha t the combined un i t p roduces an a la rm, or an a la rm and vo ice

s igna l , in a manner tha t c lea r l y d i f fe ren t ia tes between the two hazards.

(2) “Dwel l i ng unit” means a s ingle unit prov id ing comple te independen t l iv ing fac i l i t i es

for one or more pe rsons , inc lud ing pe rmanen t p rov is ions fo r l i v ing , s leep ing , ea t ing ,

cook ing , and sani tat ion.

(3) “Fue l ” means coa l , kerosene , oil , fue l gases , or o the r pe t ro leum p roducts or

hyd roca rbon produc ts such as wood tha t emit carbon monoxide as a

by-product o f combust ion.

(4 ) “ Ins ta l led” means tha t a ca rbon monoxide a la rm is ins ta l led in a dwe l l ing un i t in one o f

the fo l low ing ways:

(a ) Wired d i rec t l y in to the dwel l ing ’ s e lect r i ca l system;

(b ) D i rec t l y p lugged in to an e lec t r i ca l ou t le t w i thout a sw i tch o the r than a c i rcu i t

b reaker ; or

(c) I f the a la rm is bat te ry -powered, a t tached to the wall or ce i l i ng of the dwel l i ng unit

in acco rdance with the nat iona l f i re pro tect ion assoc ia t ion ’s s tanda rd 720, or any

successor s tanda rd , for the opera t ion and ins ta l la t i on of ca rbon monox ide

detect ion and warn ing equ ipment i n dwel l i ng uni ts.

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(5 ) “Mul t i - f ami l y dwel l ing” means any improved rea l p roper ty used or in tended to be used

as a res idence and tha t conta ins more than one dwel l i ng un i t . Mu l t i - fami l y dwe l l ing

inc ludes a condomin ium or cooperat ive.

(6 ) “Opera t iona l ” means work ing and in serv i ce in accordance wi th manu fac turer

instruct ions.

(7 ) “S ing le - f ami l y dwel l ing” means any improved rea l p rope r ty used or in tended to be used

as a res idence and tha t conta ins one dwel l ing uni t .

§ 3 8 - 4 5 - 1 0 2 , C . R . S . C a r b o n m o n ox i d e a l a r m s i n s i n g l e - f a m i l y dw e l l i n g s – r u l e s .

(1 ) (a) Notw i ths tand ing any o the r p rov is ion of law , the se l l e r of each ex is t i ng s ing le - fami l y

dwel l ing o f fe red fo r sa le or t ransfer on or af ter July 1, 2009, that has a fue l - f i red

hea te r or app l iance, a f i rep lace, or an a t tached ga rage shal l assu re that an

ope ra t iona l carbon monoxide a la rm is insta l l ed wi th in f i f t een feet of the en t rance to

each room lawfu l l y used for s leeping purposes or in a locat ion as spec i f i ed in any

bu i l d ing code adop ted by the s ta te o r any loca l governmen t ent i t y.

(b ) By Ju ly 1 , 2009 , the rea l esta te commiss ion c rea ted in sec t ion 12 -61 -105 , C.R .S . ,

sha l l by ru le requ i re each l i s t ing contract for res ident ia l real proper ty that is

sub ject to the commission ’s ju r i sd i c t ion pu rsuan t to ar t i c le 61 of t i t le 12, C.R.S. , to

d i sc lose the requ i remen ts spec i f i ed in parag raph (a) o f th i s subsect ion (1).

(2 ) Notwi ths tand ing any o ther p rov is ion o f law, eve ry s ing le - fami l y dwel l i ng tha t i nc ludes

e i the r fue l - f i red app l iances or an at tached ga rage where , on or af ter Ju ly 1, 2009,

in te r io r a l te ra t ions, repa i rs , fue l - f i red app l iance re p lacemen ts, or add i t i ons, any of

wh ich requ i re a bu i ld ing pe rmi t , occu rs or where one or more rooms lawfu l l y used fo r

s leep ing pu rposes are added sha l l have an ope ra t iona l ca rbon monoxide a la rm

insta l l ed w i th in f i f teen feet of the en t rance to each room law fu l l y used for s leeping

pu rposes o r i n a locat ion as spec i f i ed in any bu i ld ing code adop ted by the s ta te o r any

loca l government ent i t y.

(3) No person shal l remove ba t te r ies f rom, or in any way rende r inope rab le , a ca rbon

monoxide a la rm, except as part of a process to inspect , ma in ta in , repa i r , o r rep lace

the a la rm or rep lace the ba t te r ies in

the a larm.

§ 3 8 - 4 5 - 1 0 3 , C . R . S . C a r b o n m o n ox i d e a l a r m s i n m u l t i - f a m i l y d w e l l i n gs – ru le s .

(1) (a) No twi thstand ing any o the r p rov is ion of law, the se l l e r of every dwel l i ng un i t of an

ex is t ing mul t i - fami l y dwel l i ng o f fe red for sale or t rans fer on or a f te r Ju ly 1, 2009 ,

tha t has a fue l - f i red heate r or app l iance, a f i rep lace, or an a t tached garage shal l

assu re tha t an opera t iona l carbon monoxide a la r m is insta l l ed wi th in f i f t een fee t of

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the en t rance to each room lawfu l l y used fo r s leep ing purposes or in a loca t ion as

spec i f i ed in any bu i l d ing code adop ted by the s ta te o r any loca l gove rnmen t ent i t y.

(b ) By Ju ly 1 , 2009, the rea l esta te commission c reated in sec t ion 12 -61 -105, C.R .S . ,

sha l l by ru le requ i re each l i s t ing contract for res ident ia l real proper ty that is

sub ject to the commission ’s ju r i sd i c t ion pu rsuan t to ar t i c le 61 of t i t le 12, C.R.S. ,

to d i sc lose the requ i rements spec i f i ed in pa rag raph (a) o f

th i s subsect ion (1).

(2) Notw i ths tand ing any o the r p rov is ion of law , eve ry dwe l l ing un i t of a mul t i - fami l y

dwel l ing tha t i nc ludes fue l - f i red app l iances or an at tached garage where, on or af ter

July 1, 2009, inter ior a l te ra t ions, repairs, fue l - f i red app l iance rep lacemen ts, or

add i t i ons , any o f wh ich requ i re a bu i ld ing permi t , occu rs or where one or more rooms

lawfu l l y used fo r s leep ing purposes are added sha l l have an opera t iona l ca rbon

monoxide a la rm insta l l ed wi th in f i f t een fee t o f the en t rance to each room lawfu l l y used

for s leep ing pu rposes or in a locat ion as spec i f i ed in any bu i l d ing code adopted by the

s ta te or any loca l gove rnment ent i t y.

(3) No pe rson shal l remove bat te r ies f rom, or in any way render inoperab le , a ca rbon

monoxide a la rm, except as part of a process to inspect , ma in ta in , repa i r , o r rep lace

the a la rm or rep lace the ba t te r ies in the a larm.

§ 3 8 - 4 5 - 1 0 4 , C . R . S . C a r b o n m o n ox i d e a l a r m s i n r e n t a l p rop er t i e s .

(1) Except as p rovided in subsect ion (5) of th i s sec t ion , any s ing le - fami l y dwel l i ng or

dwel l ing un i t i n a mul t i - fami l y dwel l i ng used for ren ta l pu rposes and that inc ludes fue l -

f i red app l iances or an a t tached ga rage where , on or af ter July 1, 2009, in ter ior

a l te ra t ions , repa i rs , fue l - f i red app l iance rep lacemen ts, or add i t i ons , any of wh ich

requ i res a bu i l d ing pe rmi t , occurs or where one or more rooms lawfu l l y used fo r

s leep ing pu rposes are added sha l l be sub jec t to the requ i rements speci f ied in

sect ions 38-45 -102 and 38-45-103.

(2) Except as p rovided in subsect ion (5) of th is sec t ion , each ex is t i ng s ing le - fami l y

dwel l ing or ex i s t ing dwe l l ing un i t in a mul t i - fami l y dwe l l ing tha t is used fo r r en ta l

pu rposes tha t has a change in tenan t occupancy on o r a f te r Ju ly 1 , 2009 , sha l l be

subject to the requ i rements spec i f i ed in sec t ions 38 -45 -102 and 38-45-103.

(3) (a) Notwi ths tand ing any o ther p rov is ion of law , the owner of any ren ta l p rope r ty

spec i f i ed in subsec t ions (1) and (2) of th is sec t ion shal l :

( I ) Pr io r to the commencement of a new tenan t occupancy , rep lace any carbon

monoxide a la rm tha t was sto len , r emoved, found miss ing , o r found not

ope ra t iona l a f te r the p rev ious occupancy;

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( I I ) Ensure tha t any bat te r ies necessa ry to make the ca rbon monoxide a la rm

ope ra t iona l are provided to the tenan t at the t ime the tenan t takes res idence in

the dwel l i ng unit ;

( I I I ) Rep lace any ca rbon monoxide a la rm i f no t i f i ed by a tenant as speci f ied in

pa ragraph (c) of subsec t ion (4) of th is sec t ion that any carbon monox ide alarm

was sto len , removed, found miss ing , or found not opera t iona l dur ing the

tenan t ’ s occupancy ; and

( IV) F i x any def i c iency in a carbon monoxide a la rm i f no t i f ied by a tenant as

spec i f i ed in parag raph (d) o f subsect ion (4) of th i s sect ion.

(b ) Excep t as provided in parag raph (a) of th i s subsect ion (3) , the owner of a s ing le -

fami l y dwel l ing or dwel l i ng un i t i n a mult i - fami l y dwel l i ng tha t is used fo r ren ta l

pu rposes is no t respons ib le fo r the main tenance , repa i r , or rep lacement of a

carbon monox ide a la rm or the care and rep lacemen t o f ba t te r ies fo r such an a larm.

(4 ) Notwi ths tand ing any o ther p rov is ion o f law, the tenant o f any ren ta l p roper ty spec i f i ed

in subsec t ions (1 ) and (2) o f th i s sect ion shal l :

(a ) Keep , tes t , and main ta in a l l ca rbon monoxide a la rms in good repair ;

(b ) Not i f y , in wr i t ing , the owner o f the s ing le - fami l y dwel l ing o r dwe l l ing un i t o f a mul t i -

fami l y dwel l ing , o r the owner ’ s author ized agent , i f t he ba t te r ies o f any carbon

monoxide a la rm need to be replaced;

( c) Not i f y , in wr i t ing , the owner o f the s ing le - fami l y dwel l ing o r dwe l l ing un i t o f a mul t i -

fami l y dwel l ing , o r the owner ’ s author ized agent , i f any ca rbon monox ide alarm is

s to len , removed , found miss ing , or found not ope ra t iona l dur ing the tenant’s

occupancy o f the s ing le - fami l y dwel l ing or dwel l i ng un i t i n the mul t i - fami l y

dwel l ing ; and

(d ) Not i f y , in wr i t ing , the owner o f the s ing le - fami l y dwel l ing o r dwe l l ing un i t o f a mul t i -

fami l y dwel l ing , or the owner ’ s author ized agent , o f any def i c iency in any ca rbon

monoxide a la rm tha t the tenant cannot correct .

(5) Notwi ths tand ing the requ i remen ts of sec t ion 38 -45 -103 (1) and (2 ) , so long as the re

is a cent ra l i zed a la rm sys tem or other mechan ism for a responsib le pe rson to hea r

the a larm at a l l t imes in a mul t i - fami l y dwel l i ng used for ren ta l purposes, such mul t i -

fami l y dwel l ing may have an opera t iona l ca rbon monoxide a la rm insta l l ed wi th in twen ty -

f i ve fee t o f any fue l - f i red hea te r or app l iance, f i rep lace, o r ga rage o r i n a locat ion as

spec i f i ed in any bu i l d ing code adop ted by the s ta te o r any loca l government ent i t y.

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(6) No pe rson shal l remove bat te r ies f rom, or in any way render inoperab le , a ca rbon

monoxide a la rm, except as part of a process to inspect , ma in ta in , repa i r , o r rep lace

the a la rm or rep lace the ba t te r ies in the a larm.

§ 3 8 - 4 5 - 1 0 5 , C . R . S . M u n ic i p a l o r c o u n t y o r d i n a n c es r e g a r d i n g c a r b o n m o n ox i d e a l a r m s .

Noth ing in th is ar t ic le shal l be const rued to l im it a munic ipa l i t y , c i t y, home rule c i ty,

c i ty and county , county , or other local gove rnment en t i t y f rom adop t ing or en fo rc ing any

requ i rements for the ins ta l l a t i on and ma in tenance of ca rbon monoxide a larms tha t a re more

s t r i ngen t than the requ i rements se t fo r th i n th i s ar t ic le.

§ 3 8 - 4 5 - 1 0 6 , C . R . S . L i m i t a t i o n o f l i ab i l i t y .

(1) No person shal l have a c la im for rel ief aga ins t a p rope r ty owner , an author i zed

agent of a p rope r ty owner , a pe rson in possess ion of rea l p roper ty , or an insta l le r for

any damages resu l t ing f rom the opera t ion , main tenance, or e f fect i veness of a ca rbon

monoxide a la rm i f the p rope r ty owner , au thor i zed agent , person in possess ion of rea l

p roper ty , or ins ta l le r i ns ta l l s a carbon monoxide a la rm in acco rdance wi th the

manufacturer ’ s pub l i shed inst ruc t ions and the prov is ions o f th i s art ic le.

(2) A purchase r shal l have no c la im for re l ief aga ins t any pe rson l i censed pu rsuan t to

art ic le 61 of t i t le 12, C .R.S. , for any damages resu l t ing f rom the opera t ion ,

main tenance, or e f fec t i veness of a carbon monoxide a la rm i f such l i censed person

compl ies wi th ru les p romulgated pursuant to sec t ions 38 -45-102 (1 ) (b ) and 38 -45 -103

(1 ) (b ) . Noth ing in th i s s ubsect ion (2) sha l l a f fec t any remedy tha t a purchaser may

o therw ise have aga ins t a sel ler .

V I I . Sou rces o f I n fo r ma t i o n an d T ra in ing

• The Nat ional Center for Hous ing Management unde r the sponsorsh ip o f the

Depar tment o f Hous ing and Urban Deve lopmen t o f the U.S. government.

• The Nat iona l Associa t i on o f Homebui lders .

• The Nat iona l Apa r tmen t Associat ion.

• The Inst i tu te o f Rea l Es ta te Management assoc ia ted wi th the Nat iona l

Associa t i on o f Realtors .

• Bu i ld ing Owners and Managers Assoc iat ion.

• Educat iona l Ins t i tu te fo r the Amer i can Hote l & Mote l Associat ion.

• Nat iona l Associa t i on o f Realtors.

• Nat iona l Associa t i on o f Residen t ia l Prope r ty Managers.

CR-12 Required Reading Part Two

Page 40 of 40

These nat iona l associa t i ons usua l l y have local chapters a f f i l i a ted wi th them. The nat iona l

o rgan iza t ions co l lec t i ncome and opera t ing expense data f rom the i r members. The expense

ra t ios are usefu l gu ides tha t managers use to check the i r i nd iv idua l p rope r t i es ’ opera t ing

expense aga ins t the average expense shown for tha t c i t y . Seve ra l ass ocia t i ons o f fe r

educa t iona l courses and in fo rmat ion usefu l in a l l f o rms o f p rope r ty management.

V I I I . Mob i l e Home Pa rk Tenanc i e s

Co lo rado law spec i f i ca l l y p rov ides for the me thod of te rm inat ion of a lease in a mobi le

home pa rk. Managemen t must g ive wr i t ten not i ce to remove an owner ’ s un i t f rom the

premises w i th in no t less 60 days f rom the date not i ce is served . The manager must p rov ide

the homeowner wi th a s ta temen t of reasons for te rm inat ion . Managemen t may increase rent

on ly a f te r 60 days ’ wri t ten no t i ce to the homeowners.

The law a lso cove rs regu la t ions of tenancy , amoun t of secu r i t y deposi t s , fees or f ines,

co l l ect i on of u t i l i t y charges , e tc . ( see §§38-12-201 , et seq. , C .R .S . ) The Mob i le Home Park Ac t

is pr in ted in Chap te r 26 , “Re la ted Rea l Es ta te Law.”

(DORA, 21-1 – 21-31)

Ci ted Mater ia l: DORA. "Chapter 21 : Proper ty Management and Leases ." Colorado Real Estate Manual . Char lottesvi l le , VA: LexisNexis, 2014. . Pr int .