Colorado-Real-Estate-Journal_348190

Page 30 - June 21-July 4, 2023 www.crej.com Law & Accounting GTL AW.COM Helping our Clients keep their property tax valuations on course 1144 15th Street | Suite 3300 Denver, CO 80202 | 303.572.6500 Greenberg Traurig is a service mark and trade name of Greenberg Traurig, LLP and GreenbergTraurig,P.A.©2023 GreenbergTraurig,LLP.Attorneys at Law.All rights reserved. AttorneyAdvertising.°These numbers are subject to uctuation. 38357 GREENBERG TRAURIG, LLP | 2650 AT TORNEYS | 45 LOCATIONS WORLDWIDE ° WORLDWIDE LOCATIONS United States, Europe and the Middle East, Asia, Latin America Greenberg Traurig lawyers are prepared to assist Colorado property owners in seeking a fair market value assessment for properties impacted by the current sustained growth, including pursuing a tax abatement or refund. For questions, please call Neil Oberfeld | 303.685.7414 | oberfeldn@gtlaw.com Carlos Schidlow | 303.572.6580 | carlos.schidlow@gtlaw.com Moye White’s real estate attorneys represent owners, developers, landlords, tenants, contractors, insurers, borrowers, lenders, and investors in all facets of real estate law, including nancing, leasing, development, acquisition, investment, and disposition. OWNERS DEVELOPERS LANDLORDS TENANTS CONTRACTORS INSURERS BORROWERS LENDERS INVESTORS www .moyewhite.com | 303-292-2900 Jake Tiernan Vice-Chair, Real Estate Section 303-292-7925 jake.tiernan@moyewhite.com Merc Pittinos Chair, Real Estate Section 303-295-9812 merc.pittinos@moyewhite.com REAL ESTATE I n what is being hailed as the largest expansion of required licensing in Denver history, a recent local ordinance will even- tually require all residential land- lords to obtain a license from the city and county of Denver (the “city”) in order to legally rent out their residential rental properties for more than 30 consecutive days (the “ordinance”). (Denver Ord. No. 420-21, § 1, 5-3-21) The ordinance specifically applies to long-term residential rental properties. Short-term rent- als, such as vacation rentals or Airbnb rentals that are rented out for less than 30 consecutive days, are not subject to this ordinance, though they are still regulated by the city. (See Denver Ord. No. 262- 16, § 1, 6-13-16; Ord. No. 240-20, § 1, 3-31-20.) Beginning on Jan. 1, 2023, all owners of residential rental prop- erties with two or more dwelling units (i.e., apartment complexes, duplexes and multiunit homes) were required to obtain a license from the city. Beginning on Jan. 1, 2024, all single-unit residential rental properties (i.e., single fam- ily homes, rowhouses and condo- miniums) will also be subject to the requirements of the ordinance. The licensure process involves an inspection of the rental prop- erty by the Denver Department of Public Health and Environ- ment (or an approved third-party i n s p e c t o r ) , the license a p p l i c a t i o n and payment of the license fee, which ranges from $50 to $500 depending on the number of dwelling units on the prop- erty (though the license fee for single dwelling units has been reduced to $25 through the end of 2023). Once the city issues a license, it remains good for four years unless revoked for violations of city law or ownership changes. See the city’s Residential Rental Property webpage at https:// denvergov.org/Government/ Agencies-Departments-Offices/ Agencies-Departments-Offices- Directory/Business-Licensing/ Business-licenses/Residential- rental-property. Perhaps the most demanding requirement of the ordinance is the inspection, though properties needonlymeettheminimumlevel of habitability already required by law, which includes address- ing issues such as black mold, broken windows and nonfunc- tioning heaters. The inspection requirement is intended to pro- mote the health and safety of ten- ants, so the licensing requirement really operates as an additional accountability and enforcement mechanism for the city. “We’re not talking granite countertops here; we’re talking minimal housing standards,” said Eric Escudero, communications director of the city’s Department of Excise and Licenses. To aid inspection acces- sibility, the city has published a list of approximately 45 third- party inspection companies and individuals that are authorized to conduct inspections in satisfaction of the requirement. Since the licensing requirement went into effect earlier this year, the city has issued approximately 6,500 residential rental licenses. Escudero says this number is “better than we expected.” But, while the city is encour- aged by the number of residential rental licenses issued thus far, the city estimates there are approxi- mately 25,000 multiunit rental properties in Denver that would be subject to the ordinance, mean- ing a lion’s share of these rental properties remain unlicensed. The city estimates the number of single-unit rental properties that will be subject to the next phase of the ordinance is approximately 25,000, as well. And, while the city is still pro- cessing applications each day and is optimistic about its licensing compliance rates, it has also begun enforcement efforts in response to noncompliant property owners. To monitor noncompliant rental properties, the city searches the internet looking for online rental property listings that are not on the city’s list of licensed rental properties. If the city finds a prop- erty is required to be licensed, but is not, the city will issue a Notice of Violation, which is a first warn- ing letter to landlords that they will receive a fine and citation if they do not begin the process to get licensed. “We understand that there are going to be people we don’t reach,” Escudero said. “We look at citations and fines as a last resort, best reserved for the land- lords that just refuse to comply with the law.” The city has also been intention- al about its enforcement efforts. The first group that was moni- tored by the city’s task force were properties with records of pre- vious health code violations or complaints. Since January, the city has issued just over 1,000 Notices of Viola- tion. If, after receiving a Notice of Violation, a property owner does not begin the licensing process, they will receive a fine of $150, followed by a $500 fine, and then a $999 fine each day if their non- compliance reaches the third stage of citations and fines. Of the ini- tial Notices of Violation, just over 50 have resulted in fines of $150 actually being issued, seemingly suggesting that some property owners may simply be unaware of the new ordinance, rather than blatantly flouting the law. But the fact of the matter is that it is now illegal to rent out a multiunit residential property in Denver without a license, and the city is serious about enforcing monetary penalties against non- compliant property owners. “It’s pretty cut and dry. Your prop- erty is either required to have a license or it’s not required to have a license,” Escudero said. While the ordinance is not par- ticularly complicated, attorneys and brokers in the Denver real estate market can assist their landlord clients and colleagues through education and outreach, especially as the ordinance shifts to include single-unit dwellings next year, potentially applying to a large number of private and individual landlord-property owners who may be less in tune with these changes. In Denver, where rent costs are at a historic high, it will be espe- cially important for landlords to verifiably demonstrate to poten- tial tenants that their property is safe. “I think it’s going to be a source of pride for a lot of land- lords in the future,” Escudero said. s jlang@sennlaw.com License to lease: New local ordinance will require licensure Jade Lang Attorney, Senn Visciano Canges P.C.