October 2019

FAQ’s About The New Warranty of Habitability Law
What is in a Name? A Lot More Than People Realize
2020 THS Schedule of Events

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Volume 20 • Issue 10

OCTOBER 2019

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

FAQ’S ABOUT THE NEW

WARRANTY OF HABITABILITY LAW

This month we continue answering frequently asked questions the about new laws. In this issue we focus on questions regarding HB19-1170 the Residential Tenants Health and Safety Act which became effective August 2, 2019. This bill amended what is commonly referred to as the Warranty of Habitability Act (WHA). The original WHA was enacted in 2008. The 2019 law rewrote WHA and created significant legal obligations for Colorado landlords. As a result, we get asked a lot of questions about the new law. So many questions, we will answer some in this issue and the rest in next month’s issue.

What are the major changes to the warranty of habitability law? The WHA now breaks WH claims into four distinct categories. Similar, to the old law, the new law classifies some WH claims as Section 505 claims. These claims are called Section 505 claims because the list of these claims is set forth in C.R.S. § 38-12-505. First, if a property lacks any of the characteristics on the 505 list, then it is considered uninhabitable. The 505 List can be found here: tinyurl.com/505-List. Second, any other condition at a property if the condition makes the property “unfit for human habitation”. What makes a property unfit for human habitation is a judgment call that is determined by the courts. The any other condition is often referred to as the catchall category. The third category is any condition that “materially interferes with a tenant’s life, health, or safety.” Matters that impact a tenant’s life, health, or safety (“LHS” claims) are deemed more serious in nature. Fourth, mold but only if the mold would “materially interfere with a tenant’s life, health, or safety” if not remedied. Thus, the presence of mold and the failure to remediate it does not automatically violate the WHA.

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SOMETHING TO THINK ABOUT AND ALSO REMEMBER TO DO

For those of you who are parents, or who has ever been a child this may have a familiar ring. “How many times do I have to remind you to —- or remind you not to —–?” We are sure that this is something that we have all heard at some time ——–as both

someone who is the reminder or the person being reminded. With that as our focus we are assuming the rule of a gentle “reminder” for our clients in our secondary article which is an oldie but goody penned by attorney Pete Muccio several years ago. We are doing this because recently our Eviction Team has been receiving a large number of documents bearing incorrect registered entity names. So here is our gentle reminder of why it is so important for you to get it right!

What is in a Name?

A lot more than people realize!

We have written about the importance of filing cases in the correct party name. It seems like a simple concept, file the case in the name of the property, but there is more to it, and not filing in the correct name can carry serious consequence. A simple inadvertent error can lead to a very large expense and loss of time. The best way to illustrate this is a fictional situation inspired by true events. Be

advised the names have been altered to protect the

innocent.

Let us meet our cast of characters.

The Apartment Community is Blackacre Square Apartments. Blackacre Square Apartments is a relatively new community. They have been operating for 2 years.

The Ownership is an entity Ownership, LLC

The Management Company, LLC manages lots of apartments and is commonly referred to as MC on their signs and branding.

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WARRANTY OF HABITABILITY LAW

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The WHA now covers appliances. Appliance means “a refrigerator, range stove, or oven that is included within a residential premise by a landlord for the use of the tenant pursuant to the rental agreement or any other agreement between the landlord and the tenant.” The law is written so that landlords can’t sidestep coverage by putting appliances in a separate written agreement outside of the lease.

The law now covers mold. “Mold” means microscopic organisms or fungi that can grow in damp conditions in the interior of a building. The mold provisions are some of the most onerous and confusing portions of the new law and are likely to cause landlords the most problems. Some of landlord’s mold obligations are discussed this month, and some will be discussed next month.

The new law drastically changes relocation rights and obligations. Under the old law, a landlord could, at the landlord’s discretion, move a tenant to a comparable unit after paying the reasonable costs that were actually incurred by a tenant in connection with a move. Under the new law, the tenant can request that the landlord move the tenant to a comparable unit or hotel, both of which would be selected by the landlord. However, a tenant can only make such request if the WH claim at issue is a LHS (life, health, or safety) claim. It is especially interesting that landlords are not required to relocate tenants for mold WH claims for two reasons. First, the new law subjects qualifying mold claims to hazardous waste-type protocols. Second, mold only becomes a WH issue if it would interfere with the tenant’s life, health, or safety.

Similar to the old law, tenants are required to give written notice. However, the new law requires landlords to respond to such notices in specific ways and in specific time frames. The law specifically provides that tenants can give landlords electronic notice of warranty of habitability (WH) claims. “Electronic notice” means notice by electronic mail, or an electronic portal, or management communications system that is available to both a landlord and a tenant. As discussed, since the enactment of the law and at length in last month’s edition of Landlord News, landlords can dictate where tenants are required to send electronic notice in their leases. Accordingly, we strongly recommend that every landlord state in their lease where tenants are to send electronic WH notices (e-mail address

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The Tenants, Abbey & Ben

Now that the stage is set and the players identified we can share with you the costly convoluted drama of the Owner, the Management Company, the Tenant and “THE NAME”.

The Landlord is listed on the lease in the name of the owner’s entity Ownership, LLC. Ownership, LLC is an entity that is licensed to do business in Colorado. Blackacre Square Apartments is managed by Management Company, LLC. Management Company, LLC manages lots of apartments and is commonly referred to as MC on their signs and branding. Management Company, LLC merged with Old Management Company, LLC about a year ago. Old Management Company was the original manager of Blackacre Square Apartments. Tenant’s routinely make their checks out to Blackacre Square or Blackacre Square Apartments. The tenant’s Abbey and Ben, are behind on their rent.

The case starts off with a demand for payment or possession given by Management Company. The manager signs and serves the demand. The community name on the demand is listed as Blackacre.

The tenants fail to pay rent after the demand has expired. Management Company proceeds to send off the expired demand to their law firm. The Management Company files their eviction cases under the abbreviation MC.

Abbey and Ben file an answer to the Court claiming that they do not know who MC is because MC is not on their lease agreement. Their lease agreement is with Old Management Company, and Abbey and Ben counterclaim for a million dollars for a claim of damages. The details of the damages are not important. The important aspect is that a counterclaim above $15,000 is beyond the jurisdiction of the County Court. The counterclaim results in the case being transferred from County Court to District Court resulting in a delay. The hearing is set promptly, but the District Court deals with a variety of cases both criminal and civil, and while evictions are set on a fast track, that fast track in District Court is not as fast as it is in County Court.

The District Court sets this matter for a possession hearing. Abbey and Ben, prior to the possession hearing, do some research on the Secretary of State’s

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WARRANTY OF HABITABILITY LAW

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or electronic portal). However, landlords need to be aware that tenants can deliver WH written notice by hand, or by any other delivery method, e.g. US Postal Service, Fed-Ex, etc.

The revised WHA significantly redefines and expands tenant remedies. Tenants can now seek injunctive relief in county court, where before tenants could only seek injunctive relief in district court. The most significant remedy change is that that tenants are now allowed to make repairs and deduct the cost of such repairs from the rent. The repair and deduct process, in the new law, is extremely complicated and may likely lead to significant disputes. With respect to appliances, in addition to repairing an appliance and deducting the cost of the repair from the rent, tenants also have the right to replace the appliance. Finally, even if a landlord remedies a WH issue, if the same issue arises within six months, tenants now have the right to terminate the lease upon fourteen days written notice.

The new WHA drastically increased the potential liability of landlords for retaliation. Under the old law, a landlord could not be liable for retaliating against a tenant for asserting a WH claim unless the tenant could prove that the landlord breached the WH. This made much more sense. Specifically, if a tenant didn’t have a good WH claim, how could landlord’s actions (raising rent or non-renewing) be in retaliation for tenant making a WH claim. Under the new law, a court could find that the landlord did not breach the WH, but the landlord could still be liable for retaliation.

What triggers a landlord’s legal obligations under the WHA? Reasonably complete written notice (RCWN) from a tenant triggers a WHA claim and starts the clock for a landlord to respond. Nowhere in the statute is “reasonable complete written notice” defined. However, the statute does state “reasonably complete written or electronic notice of the condition described” with respect to 505 claims, catchall claims, and LHS claims. At a minimum, a tenant’s notice must describe a condition that falls into one of the four categories previously discussed.

Does the tenant’s notice need to state, “warranty of habitability” or “I’m making a warranty of habitability claim”? No, a tenant’s notice does not need to state that that it is a WH issue or mention the statute. Because the notice must merely “describe the condition”, the law places the burden on the landlord to determine whether

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website, and discover that Blackacre Square Apartments and Blackacre Square are not registered tradenames. And, neither is the Management Company’s nickname MC. Abbey and Ben decide to go ahead and register the tradenames of Blackacre Square Apartments, Blackacre Square and MC into their names personally. Abbey and Ben raise the issue at the possession hearing that the case is not filed in the correct name, because Abbey and Ben are the legally registered owners of the tradename MC as well as Blackacre Square and Blackacre Square Apartments. Despite, the obvious trickery of the tenants, Abbey and Ben, the Court continues the possession hearing to give the parties an opportunity to amend their pleadings.

The case is amended into the name of the ownership on the lease agreement, Ownership, LLC. The Court at the next possession hearing, considers the motion to amend and allows the change of the name from MC to Ownership, LLC. The Court continues the case one more time to allow Abbey and Ben to get an attorney and reconsider their position with the current case in the Ownership’s name.

Prior to the hearing, Abbey and Ben attempt to get the case dismissed based on the name of the parties and they try to get money for sanctions against the Ownership entity. Ownership, responds to the motions and the Court takes them under consideration at the possession hearing. After hearing arguments, the hearing is allowed to proceed, but only after Abbey and Ben file additional motions to try and delay the possession hearing based on the name change. And, so the soap opera continues!

While you never can predict what will happen in Court, an issue with the name of the Plaintiff can create delays and additional costs. What started off as a straightforward rent demand case, ended up being an extended case of litigation, resulting in delays, and additional costs. While in the above case, the tenant’s were likely to use or manufacture anything they could to create a delay, it is a good reminder of what

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the tenant’s notice involves a WH claim. Accordingly, landlords will be required to make the WH determination

on every maintenance request regardless of what the tenant’s notice states.

A couple of examples illustrate landlords’ new burden. For example, the tenant’s notice might simply state that his “electrical lighting” is not working. Since electrical lighting is on the 505 List, this would be a WH claim. By way of additional example, the tenant’s notice might state “I hereby put you on notice that you are violating the WHA because my garbage disposal doesn’t work”. Because garbage disposals are not a WH item, this would not be a valid WH claim. Overall, tenants will submit notices that are WH claims without mentioning the WHA, and tenants will also submit notices mentioning WH that aren’t covered by the WHA.

Mold notices complicate the situation even further. Tenants put mold potentially into play as a WH issue by providing any notice of mold. But under the law, mold is only a WH violation if it would materially interfere with a tenant’s life, health, or safety. Further, a landlord breaches the WHA over mold if the landlord doesn’t act within ninety-six hours. Thus, landlords are going to have to leap into action and determine within four days whether a mold claim violates the WHA if not addressed. The landlord’s responsibility to determine whether every maintenance request is a WHA claim and to leap into action even on routine mold claims are some of the most daunting aspects of the new law.

Upon receipt of “reasonably complete written notice” (RCWN), what does a landlord have to do? A landlord must respond to RCWN within twenty-four hours. Landlord’s response must indicate landlord’s intentions for remedying the condition, including an estimate for when the remediation will commence and when it will be completed. The law doesn’t require landlord’s response in writing, but obviously this would be best practice.

We’re not open on Saturday or Sunday; do we still have to respond within twenty-four (24) hours? Yes. The law makes no exceptions. Everyone is also closed on holidays. Similarly, to many other issues in this law, the

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could happen if a name is not registered with the State and should serve as a cautionary tale to be taken seriously. Given the issues raised by Abbey and Ben in their counterclaim, it is clear that regardless of the name issue this dispute would have resulted in prolonged litigation, it is an important reminder to avoid giving the opposing side any argument that you can easily take away. So make sure that you are filing cases in the proper name, and that the entity is registered to do business in the State of Colorado, and that the Landlord has the authority to act on behalf of that entity. Or the next “Name Issue” soap opera at THS could feature you and your property in a starring role.

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1:00 – 4:00 pm THS Lower Level Conf Room

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FAQ’S ABOUT THE NEW

WARRANTY OF HABITABILITY LAW

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General Assembly didn’t really think through the complete ramifications of the 24-hour notice requirement. Additionally, the fact that mold issues do not require a 24-hour response only further illustrates how poorly the law was drafted.

Fortunately, the poor drafting benefits landlords because the new law fails to state any consequences or ramifications for failing to respond within twenty-four hours. Specifically, failing to respond to a notice within twenty-four hours is not a default in itself or even an element of default. Rather, a landlord can only breach the WHA when a landlord fails to commence remedial action after receiving RCWN within applicable time periods (96 hours for less serious offenses and mold, and 24 hours for LHS issues) after receipt of notice from a tenant.

We want to meet our 24-hour response obligation by having a form, template, or stock response to maintenance requests, is this possible? What’s the ideal language? Does THS have language? Yes, you can have a canned response. There is no perfect or ideal language. No, THS does not have language. Your canned response will be determined by your policies. Maintenance policies and maintenance practices vary significantly. Accordingly, there is no one size fits all solution especially given the number of permutations. Every possible solution that we’ve seen has advantages and disadvantages. Communication strategies for both the WHA and the new Bed Bug law which becomes effective January 1, 2020, were discussed in last month’s edition of Landlord News.

A discussion of two possible canned responses illustrates the difficulty of any one canned response. One commonly discussed response is the generic “we will address the problem”. It looks something like this: Thank you for your request. We intend to remedy the problem. Repairs will commence within the statutory time period. Repairs will be completed as soon as possible.

This auto response checks all of the boxes on the surface. It does clearly indicate that landlord intends to fix the problem. However, it doesn’t provide much

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information about when work will start and when it is likely to be completed. For the most part, it seems like it would work if the tenant’s request was actually a warranty of habitability claim.

But what if it is not a legitimate WH claim? You’ve just committed to address a routine maintenance issue within four days. The new law doesn’t require this. Multiply this by hundreds or thousands of maintenance requests and you’ve made a lot of commitments to get stuff done quickly when it should have been addressed on regular maintenance time frames. What happens when you have real warranty of habitability claims that to need to be handled quickly, pushing back all of these commitments. What if it is a request to repair damage caused by the tenant? You’ve just agreed to repair damage that is both not covered by the WHA, but that is the tenant’s financial responsibility. This type of generic response hampers your flexibility and undermines the best practice of dealing with maintenance requests in the order received with emergencies having priority.

One maintenance supervisor said we will just add a disclaimer. So, their canned response says that they intend to fix it within the statutory time frame “if it is covered by the WHA. If it is not, then it will be addressed in accordance with the standard maintenance policy.” Tenants probably will argue that this response doesn’t comply with the statute because the clear intent was to get a specific response to tenant’s notice. The law requires landlord’s response to “indicate the landlord’s intentions for remedying the condition, including an estimate of when the remediation will commence and when it will be completed.” Arguably, this response, doesn’t check any of the boxes (landlord has committed to fix, doesn’t say when they will start, and when it will be done). The response does appear to provide flexibility by not pinning you down but could make a lot of tenants angry due to lack of commitment and information. As discussed last month, you need to review your current policies, formulate an auto-response that fits with those policies, monitor it to see how it works, and be prepared to make adjustments knowing that there probably is never going to be the perfect solution.

At some point, every landlord is going to have to determine whether every maintenance request is a WH claim. Since you are going to have to make the call, why not make the call right up front instead of later?

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Perhaps best practices are to determine right from the start whether it is a WH claim. This would certainly have the advantage of immediately filtering countless maintenance requests so that only a small clearly identifiable set of WH claims remain, making them much more manageable. Specifically, instead of trying to automate the handling of every maintenance request to comply with the WHA regardless of whether it’s a WH issue, you now can make sure that a fractionally smaller subset of legitimate WH claims gets the required legal compliance. But most landlords do not want to commit the resources to do this or don’t have the resources. But stating that you don’t have the resources or don’t want to commit the resources begs the question. Again, all landlords will have to make the call at some point. So, at some point every landlord is going to need the resources to make the required WH determinations. Only time and experience will reveal the best practice.

When do landlords have to commence repairs? The law requires landlords to promptly commence remedial action upon receiving RCWN from a tenant. How promptly is dictated by the category of WH claim. If the WH claim is a 505 List item, falls under the catchall provision (any condition that makes the premises unfit for human habitation) or involves mold, a landlord must commence remedial action within ninety-six (96) hours, but only if the tenant has included permission to enter the premises in the RCWN. Landlords must commence remedial action for LHS issues within twenty-four (24) hours regardless if the tenant has included the tenant’s permission to enter the premises.

When must a landlord complete repair for WH claims? Except for mold, the new law is silent regarding landlord’s time to cure WH issues. The previous law required WH issues to be cured within a reasonable time. Generally, when the law states no time, a reasonable time is implied. A reasonable time is how long it would take a diligent

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property manager to complete repairs under similar facts and circumstances. Landlord’s original estimate of time to complete (assuming it is actually made) will bear on whether landlord has completed within a reasonable time. However, if landlord is using an autoresponder that deploys a generic response, there likely will not be an estimated date of completion. On the surface, landlords may think this advantageous because it doesn’t pin them down. However, this may lead to a lot of unnecessary and time-consuming communication, and angry tenants. “Look, the law requires you to give an estimate. So, when is it going to be completed”?

Frankly, it’s not surprising that the new law is silent as to when WH issues need to be cured, except for mold. It is not a surprise because the new law was drafted by attorneys with little to no experience in WH matters in very short period of time and was literally jammed through the

Colorado General Assembly by its tenant advocates without any meaningful input from the top legal experts on WH issues. As discussed previously, this is just one of many drafting flaws. The right way and fair way to draft a law was the way it was done in 2008. The genesis of the original 2008 law was from a committee of interested stakeholders who met many times over a year, and who constantly debated and revised the law. None of the 2008 stakeholders were given any meaningful opportunity to participate in the creation of this law.

Next month, we will finish answering questions about the new warranty of habitability law.

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Landlord News

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