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Warranty of Habitability for Denver Real Estate Investors - YouTube
Channel: Grace Property Management & Real Estate
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- Hi, I'm Marc Cunningham with
Grace Property Management.
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We are in part four of
reviewing the four new laws
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that the Colorado Legislature just passed,
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impacting Colorado real estate investors,
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Colorado property managers,
Colorado landlords,
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and Colorado tenants.
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So this month we're looking at the updated
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Warranty of Habitability
law, which is HB19-1170.
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Now this is a complicated,
very convoluted law.
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There are so many twists
and turns in this law.
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So we're not gonna be able
to go into super detail,
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but we'll give your pretty
solid overview of this.
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We've been working with our attorney
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to figure this thing out,
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'cause the way you read these laws
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are very, very complicated.
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But the overall view of the law is this.
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There's already a Warranty of
Habitability law in Colorado.
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There already is one.
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And for landlords to breach the old
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Warranty of Habitability law
a couple things had to happen.
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Number one, an item had to be included
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on what was called this 505 List.
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Why is it called 505, I don't know.
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A 505 List that the legislature put out.
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In this 505 List contained
requirements for habitability.
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Things like hey, if you're
gonna have a property
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the windows have to lock,
the doors have to lock,
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the heat has to work, big
picture things, right?
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The plumbing has to work,
there can't be running water.
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Standard habitability things
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that if the property
doesn't meet the 505 List,
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it's considered uninhabitable.
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And then secondly, the
landlord had to fail to address
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within a reasonable time,
and that was the legal law.
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A reasonable time, why?
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Well because it takes a
different amount of time
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to fix a non-working door versus
fixing an air conditioner,
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or heating unit that doesn't work.
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So it's a reasonable time.
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That was the old law, that went away now.
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With the new law it changes dramatically.
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Under the new law a premises
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can now be considered uninhabitable
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if an item is on the 505
List, which we already know,
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or if the condition that
makes the premises unfit
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for human habitation, lot of
room for interpretation there,
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or in any condition that
materially interferes
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with the tenant's life, health, or safety,
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or mold that is not remediated,
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would interfere with the
tenant's life, health, or safety.
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That's a lot of things,
but it gets more complex
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because that 505 List greatly expanded.
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So the 505 List now says
appliances have been added.
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Meaning if the dishwasher stops working,
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the tenant can claim the
property is uninhabitable.
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Now, I think that's a stretch,
but that's what the law says.
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So appliances are in there,
functioning appliances have
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to conform with this law as well,
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as well as additional
things on this new 505 List.
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So guidance number three is this.
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When a landlord receives tenant's
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Warranty of Habitability notice,
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so the tenant gives the landlord a notice
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of hey, there's a Warranty
of Habitability issue,
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the landlord has to jump
through a lotta hoops
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in a very, very, very specific and timely.
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And here's a quick overview,
they have to respond
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within 24 hours after receiving
the notice, number one.
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The response must indicate
the landlord's intent
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for remedying the condition.
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In other words, what are you
gonna do about it Mr. Landlord?
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Number three, the landlord
has to provide an estimate
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on the remediation will begin,
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and number four, provide an estimate
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on the remediation will be completed.
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Now, this just isn't practical.
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First of all, you've got 24 hours.
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That mean if a tenant sends an email
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at 12 o'clock midnight on Saturday night,
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the landlord has until 12 o'clock midnight
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on Sunday night to email the tenant back
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and say, "Hey, here's what we're gonna do,
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"here's how long it's gonna take,
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"or here's when we'll start,
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"and here's when it's gonna get done."
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We oftentimes as landlords have no idea
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when these things are gonna get done,
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depending on the
significance of the problem.
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All right if the dishwasher doesn't work,
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we know when that's gonna get done.
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If it's a mold issue, as the tenant said,
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we don't know how long that's gonna take.
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Do we just need to clean a wall,
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or do we need replace drywall?
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We don't know until the mold specialist
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can get to the property,
it doesn't matter anymore.
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We've now have 24 hours to tell them
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how long it's gonna take to start,
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and how long it's gonna take to get done.
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Impractical, not realistic,
but it's the law.
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Number four, if the condition is caused
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by the tenant or somebody
associated with the tenant,
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then it can't be considered a breach.
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So if the tenant caused the damage,
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then all this goes away from that extent.
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Number five, in mandated
times for the landlord
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to commence action to avoid breaching.
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So, and again, here's where
it gets tricky and sticky.
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But if the item's on the 505 List,
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we've got 96 hours to commence action.
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Otherwise, if it's an uninhabitable issue
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we still have 96 hours.
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If it materially interferes
with the live, health,
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or safety we've got 24
hours to commence action,
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and if it's mold we've got 96 hours,
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but requires additional specific action.
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So let's look at the mold aspect.
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And I know this is complicated,
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probably putting you to sleep,
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but it's important to make
sure you know this stuff.
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As it relates to mold-specific actions,
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you must within 96 hours
mitigate the immediate risk,
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and this is their language,
the immediate risk
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by installing a containment,
stopping the active source
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of water to be mold, and
installing a high-efficiency
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particulate air filtration device
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to reduce the tenant's exposure to mold.
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That's a lot in there.
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This is a great law if you
are a mold inspection company,
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because now you have to go in
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and install all these
things right off the bat.
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Additional things, you must
maintain the contained unit
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requirement remedial actions,
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until remedial actions are executed.
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So you gotta put what you can in there
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until you can start full remediation.
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There's more, you have to establish
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an appropriate protection
for workers and occupants.
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You must eliminate or
limit moisture sources
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and dry all the material.
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Decontaminate or remove damaged
material as is appropriate.
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Evaluate whether the premises
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had been successfully
remediated once its done,
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and then reasonably the premises
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to control the source of
moisture and nutrients,
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and therefore prevent or
limit recurrence of the mold.
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Now that's a mouthful, isn't it?
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And mold companies know
what this stuff means.
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You may not know what it means,
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but we've gotta make sure
we're abiding by this.
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There's a little more.
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Number seven, if it's a life,
health, or safety scenario,
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the tenant has the legal right to demand
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that the landlord move the
tenant to a couple things.
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Number one, a comparable unit
as selected by the landlord,
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number two, a hotel room as
selected by the landlord,
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number three, at the
expense of the landlord,
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so no expense to the tenant,
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however, the tenant still has to pay rent.
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So if this can't get fixed,
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and the tenant has to go to a hotel room,
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the landlord must provide that hotel room
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at the landlord's expense,
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but while the property
is sitting there vacant,
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the tenant still has to pay
rent during that period of time.
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Now the tenants also have a
new right to deduct their rent
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to make the repairs under
certain circumstances.
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And here it gets again, very, very sticky,
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and very hard to follow this,
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but a tenant can potentially
withhold their rent.
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They have to do a couple things.
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Number one, they have to
provide a specific notice,
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number two, the landlord
must fail to commence
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the legally required remedial action,
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number three, the tenant must then
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follow additional requirements.
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Meaning the tenant must give
the landlord another notice
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that says, it has to be 10 days prior
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to when their rent's
due, and it has to say,
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hey, I know my rent's due in 10 days,
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but I'm hereby informing you
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that I plan on deducting from my rent
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the work that needs to
be required to be done.
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The tenant's second notice,
the repair of the deduct notice
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that has to give additional
specific requirements.
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It has to say this, it
has to include a copy
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of at least one good-faith estimate
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of the cost to repair the issue,
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and that estimate must be
prepared by a professional
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who's unrelated to the tenant.
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So it can't be the tenant's brother,
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who happens to be a plumber.
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Has to be a professional and
that bid has to be submitted
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along with this other
documentation from the tenant
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if the tenant is attempting
to withhold their rent.
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Don't worry, it gets more complicated.
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Because after the landlord
receives that 10-day notice
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to repair or deduct, the
landlord has four days now
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to respond with its own estimate.
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If the landlord fails to
respond within four days,
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the tenant can then
proceed to deduct the rent
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until the entire amount of
the estimate is deducted.
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If the tenant repairs, they
have to use a professional.
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They can't do it themselves,
and just bill for their time.
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Now if the tenant is deducting rent based
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upon a malfunctioning
appliance specifically,
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it gets more complicated,
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because they don't have to repair it.
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They can just go buy a new appliance,
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and deduct the entire
cost of the appliance.
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They don't have to repair it.
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They have option of
purchasing a new appliance.
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Why, because the law says.
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Number nine, tenants
have no right to deduct
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or repair in subsidized properties.
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So the tenant is living
in a subsidized property.
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Think housing assistance,
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or any government housing,
this doesn't apply.
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They cannot withhold rent.
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The Warranty of Habitability
rule still apply,
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but they can't withhold rent.
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Now the tenants have more rights as well.
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So if the tenant's still isn't happy,
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the tenant has the right to
terminate the lease agreement.
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If it's a non-appliance issue,
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so remember appliances, we're
setting aside for a minute.
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So if the Warranty of Habitability
is non-appliance related,
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the tenant can terminate
within 14 days notice
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for breach of the same
condition within six months.
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So if the issue is repeating
itself, they can do that.
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If it's an appliance
issue they can terminate
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with 14 day notice for continued issues
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within the same six month period,
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but not if the landlord
has fixed the appliance
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within 14 days, then the
tenant cannot terminate.
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This is extremely complicated.
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If you are thinking that,
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then you're right, 'cause it is.
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It's gonna be really hard
to navigate this stuff.
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The landlord may not retaliate
or against the tenant.
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This is part of the law as well.
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It says, hey landlord, if you retaliate,
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now what is retaliation?
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That's, I don't even know.
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I mean how are you going to retaliate?
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Refuse to fix it maybe?
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I don't know how a
landlord would retaliate
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against the tenant, but if
the landlord does retaliate,
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then the tenant may
terminate the lease based
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on their retaliation claim,
whatever that would be,
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they could potentially awarded
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up to three times the amount of the rent,
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or three times the
tenant's actual damages,
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plus attorney fees.
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So don't retaliate Mr. Landlord
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if your tenant is claiming
a Warranty of Habitability.
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One more aspect on this,
then you can turn this off
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and go get yourself something to drink.
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Other Warranty of
Habitability requirements.
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The landlord must provide the tenant
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a copy of the lease, written if requested.
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Now these things have nothing to do
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with what we just talked about.
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These are not habitability issues at all,
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but these are just things
the Legislature added in
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to the bill as it relates
to the relationship
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between the property management
company and the landlord.
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And it says, the landlord
must give the tenant a copy
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of their lease, which that's standard.
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Of course landlord should be doing that.
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Number two, it requires the lease
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to include a specific statement
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indicating the name and the address
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of the person who is the landlord,
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or the landlord's authorized agent,
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which is again, that should be standard.
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That should be in the lease anyway.
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Number three, it must
provide written notice
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to the tenant within one business day,
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24 business hours, one business day,
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if the landlord or
authorized agent changes.
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So if you work with a different
property management company,
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if you sell your property
while the tenant's in place,
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you have 24 hours to give
notification to the tenant,
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or else you can be in breach
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of the Warranty of Habitability.
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Phew, that's a lot of stuff,
that is very complicated.
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It's rocking the industry
in the state of Colorado.
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It's shifting things around in a big way.
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It's hard for attorneys.
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It's hard for judges to
get a handle on this.
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We're doing our best for our clients.
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If you're a client of
Grace Property Management,
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don't worry, we got you covered.
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We're gonna keep you
protected with this stuff.
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But this is why it's so important
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as a property management
company, or as a landlord,
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to treat your customers well.
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Treat your tenants well,
they need to be protected.
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We want to be fair, we want to be accurate
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with our tenants, with
our landlords to ensure
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that we are conforming to
the Warranty of Habitability.
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If you've got questions,
give our office a call.
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We're happy to help anytime.
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