Every time I look at the docket of new bills in the Colorado Legislature I am amazed. This new bill will radically alter rental contracts in Colorado and changes the real estate market profoundly. The proposed bill not only impacts property owners but also lenders. Furthermore, if you are resident of any big city in Colorado, be prepared to pay a ton more in taxes and be called for jury duty every single year.
What is in the new bill?
The new bill allows a jury trial for evictions. Assume a tenant doesn’t pay rent. The tenant could then request a trial by a jury to decide if they should be evicted or not. In the meantime, they are able to stay in the unit indefinitely without paying rent until the jury trial is over and if they are unable to afford the court costs then a judge will waive the fees. Below are the details:
The bill affords a plaintiff and defendant the right to trial by jury
in any action brought for unlawful detention of real property.
The bill requires at least one attempt on 3 separate days of personal
service on the defendant in an action for unlawful detention of real
property. The bill requires an affidavit of service to be filed with the
court.
The bill requires a defendant who demands a trial by jury to make
the demand in accordance with the Colorado rules of civil procedure or
file a separate jury demand with the defendant’s answer. The bill requires
the court to set the date for trial no sooner than 10 days after the answer
is filed. The bill authorizes the court to continue the trial if a party
demands a trial by jury.
Trial by Jury exponentially increases the expense and time
Any tenant can now request a trial by jury and no consideration has to be given if they are deemed to not have substantial funds. In essence, someone getting evicted doesn’t have money to pay their bills and therefore will use a trial by jury to indefinitely delay an eviction. The time to evict could now be basically into perpetuity as jury trials for evictions will now compete with criminal trials, other civil trials, etc…
A jury trial leads to huge risks for property owners.
The whole premise of this bill is crazy as there is no dispute of facts regarding an eviction. Either someone paid the rent or didn’t pay the rent per the contract. Introducing a jury trial creates a whole new risk. Regardless of whether someone didn’t pay their rent a jury might be empathetic to the tenant and grant them additional reprieve. For example if the tenant were a single mom with kids and an elderly parent, even though they didn’t pay their rent, the jury might be swayed by their personal struggles and allow them to stay in the property for additional time.
Huge risks to rent long term in Colorado
Long and short, property owners are going to have a hard time with this new law. The costs to hire an attorney and prepare for a jury trial are enormous. The property owners will have to eat these fees. Remember the overwhelming majority of rental property owners are small owners with less than 3 properties. This new law will bankrupt many property owners due to legal expenses and the time to get their property back.
Lenders also impacted by this new bill
Note that real estate lenders will also be impacted by this new bill. If a lender forecloses on a property, an eviction action must be taken in order to get the prior owner out of the property. This eviction will add considerable time and expense onto an already lengthy foreclosure process.
Who is going to pay the costs for jury trials
At the end of the day, the judicial system in Colorado is already close to a breaking point with the criminal and civil matters they already have. Now, with this new law, there will be thousands of new jury trials just in Denver county. Last year there were 16,000 evictions just in Denver County, assume half of these evictions are contested, this would lead to an additional 8k jury trials just in Denver county. Who is going to show up for all the jury trials? Who is going to pay for it as no money has to be put down by person facing eviction so the courts will eat the costs.
Summary
This bill is a terrible idea for Colorado. When there is an eviction, there rarely (if ever) is a dispute about facts. The eviction is clear cut, the tenant didn’t pay and needs to vacate the property. There is no reason to implement jury trials for evictions other than to radically eliminate the number of evictions. Unfortunately the legislature is very short sighted. By even discussing a law like this any landlord is going to be extremely selective before renting their property which will ultimately radically alter the building and renting of affordable housing. The risk of renting to a lower income tenant with less than perfect credit will no longer be palatable because of this proposed law which will ultimately lead to an even larger homelessness issue as market rate lower income properties will not be built. Long and short, having a jury trial for evictions is a terrible idea that will lead to huge costs for Coloradoans and ultimately eliminate many rental properties due to the expenses. Please forward to your associates in real estate to let them know of this huge change so hopefully it can be changed before becoming law.
Additional Reading/Resources
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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.
Glen resides in Colorado, lends in Colorado, owns property in Colorado, and services loans in Colorado which provides a unique real estate prospective of what is actually happening on the ground both in Denver and throughout Colorado. My goal of this real estate blog is to provide an honest assessment of what I see happening in Colorado real estate and how it will impact real estate owners, buyers, realtors, mortgage professionals, etc…
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