Colorado calls taxes junk fees: 4 huge changes for landlords

2025 was the year for housing in the Colorado legislature; the underlying theme is that more regulation of everything will somehow bring costs down.  Unfortunately the opposite is occurring with many lower priced rentals drastically increasing prices to comply with all the new legislation.  What is the “junk fees” law and why are property taxes considered junk fees under the law? What items are now prohibited for residential landlords?

What was in the Colorado Junk Fees law?

Colorado renters will likely see changes to their monthly bills starting Jan. 1 as a new state law takes effect, prohibiting landlords from charging separate fees for services such as common-area maintenance and pest control.

HB25-1090 aims to eliminate “junk fees,” making rental costs clearer for tenants.  This law, as most do, sounds noble, but the details are radically different.

Details of the new Colorado Junk fees law:

Here is more information from the legislature:

• Prohibits a person from offering, displaying, or advertising pricing information for a good, service, or property unless the person clearly and conspicuously discloses the maximum total (total price) of all amounts that a person may pay for the good, service, or property, not including a government charge or shipping charge unless voluntarily included (total price disclosure requirement);
• Prohibits a person from misrepresenting the nature and purpose of pricing information for a good, service, or property;
• Requires a person to clearly and conspicuously disclose the nature and purpose of pricing information for a good, service, or property that is not part of the total price; and
• Prohibits a landlord from requiring a tenant to pay certain fees, charges, or amounts or including in a written rental agreement a provision that requires the tenant to pay a fee, charge, or amount that is prohibited by the act.

 

Prohibited items for residential landlords:

Below are details from the legislature on what is prohibited:

 

(a) RELATED TO THE PROVISION OF UTILITIES THAT IS ABOVE THE

AMOUNT CHARGED BY THE UTILITY PROVIDER FOR SERVICE TO THE TENANT’S

DWELLING UNIT, EXCEPT IN ACCORDANCE WITH SECTION 38-12-801

(3)(a)(VI);

(b) THAT INCREASES BY MORE THAN TWO PERCENT OVER THE

COURSE OF A RENTAL AGREEMENT OF ONE YEAR OR LESS, EXCEPT FOR THE

COST OF UTILITIES PROVIDED TO THE TENANT’S DWELLING UNIT;

(C) RELATED TO THE PAYMENT OF PROPERTY TAXES;

(d) RELATED TO THE PROCESSING OF RENT OR OTHER PAYMENTS IF

A MEANS OF PAYMENT THAT IS COST-FREE TO THE TENANT IS NOT

REASONABLY ACCESSIBLE BY THE TENANT;

(e) RELATED TO THE OVERDUE PAYMENT OF A FEE, CHARGE, OR

AMOUNT THAT IS NOT RENT;

(f) FOR A GOOD, SERVICE, OR PROPERTY NECESSARY TO COMPLY

WITH THE RESPONSIBILITIES OR OBLIGATIONS OF A LANDLORD OR THE

LANDLORD’S AGENT, INCLUDING THE LANDLORD’S RESPONSIBILITY TO

PROVIDE A HABITABLE LIVING ENVIRONMENT IN ACCORDANCE WITH SECTION

38-12-503;

(g) ABOVE THE TOTAL PRICE OF THE GOOD, SERVICE, OR PROPERTY

FOR WHICH AN AMOUNT IS CHARGED, EXCEPT AS PROVIDED IN SECTION

38-12-801 (3)(a)(VI);

(h) FOR A GOOD, SERVICE, OR PROPERTY NOT ACTUALLY PROVIDED;

(i) FOR THE MAINTENANCE OF COMMON AREAS; OR

(j) THAT VIOLATES THIS SECTION

 

4 key items that will have the biggest impact on landlords:

1. Property taxes: I thought this was fascinating that landlords can not charge tenants for increases in property taxes as they are considered a “junk fee”.
2. No charges for Common Areas: A landlord can not charge tenants for common area maintenance for things like a pool, weight room, etc…
3. Habitable living environment: This one sounds pretty straightforward, but could be the biggest headache for landlords. Let’s say that a tenant clogs a drain, typically you could charge the tenant for the service call, under the new law, a working drain is considered a necessity for habitability and the landlord can not charge for it.  The same could be said for electrical, etc.. even if the damage was done by the tenant.
4. No fees on other costs other than rent: This is also going to be a big headache for landlords. Let’s say that a tenant doesn’t pay the electric bill that you bill back to them.  A landlord is unable to charge a late fee on this portion of the rent.

Colorado landlords will merely increase rents

Unfortunately the new law does nothing to help tenants.  Landlords that own lower priced units will merely increase the base rent to compensate for the increased compliance costs.  The interesting part is that tenant activists are saying landlords are doing a “workaround”.

Tenant rights activists are up in arms: “I would like to see the state Attorney General’s Office issue guidance, further guidance, and also take action on some of the most egregious actions being taken by landlords,”

The reality is that landlords are getting squeezed from every direction including higher property taxes and higher insurance costs along with higher maintenance costs.  All of these items have to be factored into the rent for landlords to stay in business.

Colorado legislature slowly eliminating affordable housing

The Colorado legislatures war on landlords is greatly reducing the current supply of affordable housing as landlords are forced to increase rents due to the new laws from eviction moratoriums, to right of first refusal, ghost taxes, to this new junk fee law.  All of these items add costs that ultimately will be passed on to renters.

Furthermore, it will not be possible to provide and affordable unit for rent due to all the new laws as the liability grossly outweighs any benefits.  Many owners will opt to either sell their units or move the units up the income ladder to avoid the risk with lower paying tenants.

On top of a decline in existing stock of affordable housing, many developers of new housing will look elsewhere as the legislature continues to raise operating and compliance costs.  Although, on the surface nobody wants to pay junk fees, the way the law is written, landlords will need to raise prices to comply with the new laws leaving tenants on the hook for higher base rents.

Additional reading/resources

1. https://s3.us-west-2.amazonaws.com/beta.leg.colorado.gov/d0c683aa475fc2686e90d9d8801c3ebb
2. https://www.denver7.com/news/local-news/colorado-law-to-ban-junk-fees-for-renters-but-some-landlords-find-workarounds
3. https://coloradohardmoney.com/colorado-decarbonization-law-real-estate-impact/
4. https://coloradohardmoney.com/new-ghost-tax-in-denver-how-much-will-it-cost-you/

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Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner.  He is the owner of Fairview Commercial Lending.  Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine,  The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.

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