COLORADO SPRINGS, Colo. (KRDO) -- Two Democratic state lawmakers from El Paso County co-sponsored a bill signed into law by Gov. Jared Polis that will eliminate repeated application fees charged by apartment managers to prospective and current tenants.
One of the co-sponsors, Sen. Tony Exum, said that he has experienced the fee situation.
“The place where I usually stay — and I’ve been there since 2017 — raised the rent," he explained. "So, I was shopping around and went to another place, filled out an application and they wanted $500. I just went back to my old apartment. I even heard that one constituent went homeless temporarily, because of having to pay these fees."
Apartment managers levy the fees -- often ranging from $30 to several hundred -- to pay for screening reports, which essentially are background checks performed by third-party agencies..
Those agencies use the reports to determine rental eligibility based in factors such as income, credit score and rental history; paying a fee doesn't guarantee that an application will be accepted.
"Landlords will even charge the fees to tenants who have lived in the same apartments for years, when their leases expire," Exum said.
As a result, many prospective tenants end up paying fees several times with every apartment application -- making it more difficult to afford renting in a tight housing market affected by inflation and rising rent costs.
The screening report bill is designed to require only a one-time fee during an initial application, and allow its use for subsequent applications.
"There's some good guardrails around the bill," Exum said. "The report has to be from a reliable source, and it has to be within the last 30 days. You can submit it on paper or online. Why we didn't get support from Republicans on this, baffles me."
Destiny Bossert, of the Colorado Apartment Association, said that she's glad to see the new law because it will make rental housing easier to acquire.
"But with apartment managers collecting fewer fees, those costs are going to have to be made up somewhere or passed on, unfortunately, in other fees or higher rents," she said.
Still, Bossert said existing state laws ban landlords from charging a fee that’s higher than their actual screening costs -- such as paying a service to run a background or credit check.
"Although it varies, these services tend to cost between $30-40," she said. "Landlords are also required to provide you with a receipt outlining their expenses — and if they didn’t use all your money, they have to refund the extra within 20 calendar days."
Exum shared his thoughts about why some fees are much higher.
"It's a way to make money," he said. "And it's a way to discriminate against people whom you don't want living at a complex, for whatever the reasons."
A Colorado Springs apartment manager, speaking anonymously, said that she doesn't like the new law because it allows people to use false or stolen information in the creation of screening reports.
"The solution is to enter personal information on a secure site that verifies its accuracy," she said.
Exum doesn't consider abuses of the law likely.
"There are abuses in everything we do," he said. "There are enough safeguards in the law that, eventually, anyone who tries to abuse it will be weeded out."
The new law is effective Jan. 1, 2024.
