March 2018

Current Rental Application Bill Needs to be Defeated
The Importance of a Social Media Strategy

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Volume 19 • Issue 3

MARCH 2018

Landlord

News

3600 South Yosemite Street Suite 828, Denver, Colorado 80237

thsnews@thslawfirm.com www.thslawfirm.com

Denver Phone 303.766.8004 FAX Completed Eviction Forms To: 303.766.1181 or 303.766.1819

Colorado Springs Phone 719.550.8004 FAX Completed Eviction Forms To: 719.227.1181

CURRENT RENTAL APPLICATION BILL NEEDS TO BE DEFEATED

House Bill 1127 (HB-1127) has passed the Colorado House of Representatives and is pending in the Colorado Senate. If passed, HB-1127 (The Application Bill) will significantly impact the rental application process. The Application Bill also would result in significant unrecoverable costs to landlords while at the same time significantly increasing the landlord’s potential liability. The Application Bill is a good example of a potentially neutral or arguably good idea gone amok. The bill is also an excellent example of why the rental industry needs to be more vigilant than ever against bad legislation.

Currently, the rental application process is regulated by the free market. Landlords are free to charge what the market will bear. However, if the landlord’s application fees are excessive, tenants can go down the road and apply at a community with lower application fees. This is called competition. Competition regulates prices in a free market economy. However, if The Application Bill passes, government will regulate application fees.

The Application Bill limits application fees to a landlord’s actual cost. A landlord’s cost can be based on the actual amount incurred by the landlord in processing an application. Alternatively, the landlord can charge an applicant the average amount the landlord charges applicants based on the average costs incurred by landlord. The Application Bill does not make it clear whether staff time can be included as part of application costs.

The average charge seems problematic as costs change all the time. Changing costs, mathematical errors, and staff time (whether you can include as part of costs) could lead to class-action lawsuits. For example, if landlord’s average cost was $90, but landlord charged $92.33, the landlord would be liable for 2x the application fees, plus attorneys’ fees and costs. If 100 tenants

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THE IMPORTANCE OF A SOCIAL MEDIA STRATEGY

With 2 billion users on Facebook and 328 million on Twitter, apartment owners cannot ignore social media if they want to create brand awareness. Social media can drive traffic to an apartment community’s website. Quality, clickable content [with pictures] will generate interest that will entice prospects to call or schedule a tour to see your community.

Multifamily Industry communities who are not leveraging social media to its full potential are missing out on accessing positive contact with thousands of leads. The apartment landscape is an ever-evolving industry, as are resident expectations. Now, add to that the element of social media, which has grown in epic proportions, and you are faced with the need to react and respond almost instantaneously. More and more studies demonstrate that residents cite reviews and social media channels as part of their process that influence leasing decisions.

According to rental industry marketing specialists, the Denver metro area is one of six major locations that are considered a really great place to live but are also identified as the most saturated and highly competitive rental markets in the country. The other five are Seattle, Houston, San Francisco, Atlanta and Boston. Today, one of the most recognized keys to successfully marketing your apartment community in a highly saturated area like Denver is a strong social media presence.

Social media can be effectively used to tell a story that showcases the lifestyle at your community that will attract, engage and retain residents. By using social media platforms like Instagram, Twitter, and Facebook, property managers have an opportunity to market their properties to prospective residents at relatively no cost. Through the use of social media property managers are able to instantly

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CURRENT RENTAL APPLICATION BILL

NEEDS TO BE DEFEATED

continued from page 1

were involved in the lawsuit, the landlord would pay out $18,000 or $180 per tenant, and the attorneys would probably get tens of thousands of dollars, or who knows how much. Probably the only way to stay out of trouble will be to charge less than your actual costs so you have a buffer against going over or being accused of being over what you actually incur as costs.

Like most legislation it’s not all bad. We agree with the provision that mandates that all prospective tenants be charged the same application fee. However, fair housing laws already require landlords to charge the same fees for all applications. Thus, one of the few good parts of the bill is redundant and unnecessary because it is already covered by both state and federal fair housing laws.

The Application Bill requires landlords to provide applicants with either a written disclosure of the landlords anticipated application expenses or a receipt that itemizes the landlords actual application expenses. Since the legislation requires that a landlord cannot charge more than landlords actual expenses, we are not sure why the landlord would not be required to disclose landlords actual expenses versus anticipated expenses.

The application fee limits, set forth in the bill, are problematic but the provisions requiring criteria disclosure will greatly increase costs and is likely to result in increased litigation. Disclosure of rental criteria is not the problem. Good landlords already disclose the rental criteria in writing. Landlords disclose rental criteria because they don’t want unqualified applicants applying. Disclosing them in writing avoids countless disputes. “What do you mean having an armed robbery on my record disqualifies me?” “It’s right there in our criteria, applicants with felonies are ineligible.”

If certain criteria can be the basis for denying a tenant application, The Application Bill requires them to be “clearly stated” in the disclosure. This includes criminal history, rental history, credit history, income, failure to provide accurate or complete information, or failure to pay the required application fee. What if the denying or disqualifying criteria are stated in the written disclosure, but a court later concludes that they weren’t “clearly stated”?

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THE IMPORTANCE OF A SOCIAL MEDIA

STRATEGY continued from page 1

connect and engage with prospective and current residents on a larger scale than ever before.

Social media users are constantly inundated with endless amounts of information on a daily basis. This means that capturing the attention of these social media users and standing out amongst the competition can often

be a challenging task. With only a few seconds to engage a user, property managers need to ensure that they create original, unique, informative and visually stimulating content to grab the attention of current and prospective residents. This includes creating content that specifically appeals to a property’s core target audience, utilizing images, infographics and even video. In fact, social media posts that utilize visual content tend to get more engagement than those that don’t.

Another challenge for an apartment community to take into consideration when developing and/or utilizing a social media platform strategy is determining what platform is best for what target audience and adjusting content accordingly. Younger generations are much more active on Instagram and Snapchat compared to Baby Boomers. Marketing research shows that 72 percent of Boomers are active on Facebook and only 18 percent on Instagram. This makes it extremely crucial for property managers to ensure they have identified the specific demographic of their targeted prospects and where they are most active in order to ensure that they are successfully reaching their core target audience.

As previously stated, studies demonstrate that residents cite reviews and social media channels as a major part of what influences their leasing decisions and younger residents, in particularly, heavily base their rental decisions on a property’s social media presence. Since an overwhelming majority of prospective residents rely on social media platforms when apartment hunting, it goes without saying, that if you do not have a social media strategy and if people don’t know about your apartment community, generating leads is going to be pretty tough. It can be especially challenging if you’re in a competitive market like the Denver metro area. Just hoping and waiting for the right people to find you is a gamble. An effective social media strategy is a powerful way to connect with new leads or current tenants and build meaningful relationships that will help your apartment community thrive.

March 2018

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Landlord News

CURRENT RENTAL APPLICATION BILL

NEEDS TO BE DEFEATED

continued from page 2

By far, the biggest problem with The Application Bill is the adverse action notice requirement. Under this section of the proposed legislation, if the landlord denies the application, the landlord shall provide a written notice of the adverse action to the prospective tenant that states the reasons for the adverse action. This is a huge departure from the rental application status quo.

Currently, landlords submit tenant applications to third party credit verification companies or processing companies. These third parties either approve, approve with conditions, or deny based on an individual landlord’s criteria, and also usually in conjunction with the third party’s proprietary software or algorithms. If the application is denied, the landlord issues an adverse action letter. However, under current law (the Federal Fair Credit Reporting Act), the landlord is only required to state in the adverse action letter that the denial was based on information contained in a Consumer Credit Report that was issued by ‘X’ Company, and here is how to contact them if you want to discuss or dispute the information.

In other words, current law correctly directs the applicant (the tenant applicant) to the source of the information so that they can take it up with the source. This only makes sense because it is the Consumer Credit Reporting Agency providing the report that is ultimately liable for its accuracy. Consumers of Consumer Credit Reports (landlords) can only be liable under the Fair Credit Reporting Act for failure to make the required disclosures when credit is denied, i.e. we based this decision on a Consumer Credit Report from ‘X ‘Company, and here is how to get a hold of them.

At a minimum, based on the way the Application Bill is written, landlords and onsite teams will become the focal point of disputes. Specifically, once the landlord provides the applicant the reason or reasons for why an application was denied, the applicant will now contact the landlord and argue about the veracity or accuracy of that information. “I was never evicted from Shady Oaks”, or “I don’t owe my prior landlord a balance, he was paid in full”. Worse, if the landlord refuses to verify or verifies and the applicant still isn’t satisfied, the applicant may sue. If a landlord refuses to verify, and ultimately it turns out that Aimee Applicant was never evicted from Shady Oaks is the landlord liable for denying her application? Even though landlords will still be required to issue the federally required adverse action notice and will direct

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applicants to take it up with the Consumer Credit Reporting Agency, most tenants will try to resolve directly with the landlord.

The current system is structured the way it is for reasons. Specifically, the folks issuing the reports are and should be legally responsible for its contents. Thus, it makes more sense for the applicant to take problems directly up with the source. Consumer Credit Reporting Agencies are going to be much more effective in resolving disputes. First, they know the law, and are experienced in handling and resolving these types of disputes. Second, because ultimately, they are liable if they are wrong, they are incentivized to accurately resolve these disputes.

The Application Bill is a good example of trying to change the process based on some anecdotes of abuse. The adverse action portions are not needed because they are already covered under federal law. The premises for the legislation are flawed. It is not a mystery out there in rental land. Tenant applicants almost always know why they were denied, or whether they are likely to be denied because landlords disclose criteria in advance. If a landlord doesn’t disclose its rental criteria in writing in advance, the solution is simple. Don’t apply. You wouldn’t buy something without knowing the price. Similarly, folks know what their credit scores are, and whether they have a criminal record. No one is making anyone apply at five apartment communities at $200 per application. The biggest application abuse perpetuated by a handful of below board landlords is not even addressed in the bill. Specifically, the practice of a contemptible few of taking multiple applications when a rental is already rented just to get the application revenue. For the reasons stated, HB-1127 needs to be defeated.

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Landlord News

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March 2018

IMPORTANT THS MARCH DATES

MARCH 13th Advanced Fair Housing

545 E. Pikes Peak., Ste 105

Colorado Springs, CO

1:00 p.m. – 4:00 p.m.

MARCH 14th Evictions Workshop THS Lower Conference Center 3600 S. Yosemite Street Denver, CO

9:00 a.m. – Noon

MARCH 21st WEBINAR WEDNESDAY

Topic TBD

Check THS Events Workshops

9:00 a.m. Online

MARCH 23rd AASC EXPO

The Antlers Hotel

45 S. Cascade Ave.

Colorado Springs, CO

7:00 a.m. – 4:30 p.m.

MARCH 26th – 30th NO DOUGLAS COUNTY COURT

MARCH 26TH NO DENVER COURT

CESAR CHAVEZ DAY

AASC

EDUCATION CONFERENCE & EXPO

March 23rd 7:00 a.m – 4:30 p.m.

The Antlers Hotel

45 S. Cascade Ave. Colorado Srings, CO

STOP BY THE

THS BOOTH

PIECING

TOGETHER

Why is March 14

National Pi Day?

Because

3.14 is the value of pi