Demand For Rental Assistance Rises As Payments To Landlords Flatline

Nonprofits and state agencies have long helped low-income households with rent payments during tough economic times. Unfortunately, when the money for these programs is reduced or dries up, renters are left with few options for financial relief. 

As a landlord, it can be difficult to see your tenant undergo this hardship. However, the underlying issue remains that your tenant likely can no longer afford their unit. 

This article covers your legal options when your tenant and their assistance program fall behind on rent payments. 

The Division of Housing (DOH) within the Department of Labor Affairs (DOLA) oversees Colorado’s emergency rental assistance program for low-income households struggling to make rent and pay utilities.  

During the COVID-19 outbreak, the state administered several federal grants to strengthen support services for renters impacted by the pandemic. These grants have since been sunsetted. 

The state has taken steps to continue making emergency relief available to qualifying renters. Nonprofits that received COVID-related funding will have to find other sources. And the problem is that there’s more demand for funds than funds available. 

Perhaps to address the reduced funding, the DOH limited the benefit period earlier this year from 18 months of rent to seven months of rent or a maximum payment of $10,000. Other agencies with rental assistance program funds, like nonprofits and churches, have their own benefit caps and eligibility criteria, although there is plenty of overlap.

When emergency rental assistance programs work as intended, they offer much-needed financial relief to tenants who have experienced serious economic setbacks. However, temporary monetary assistance is usually not a panacea for a tenant’s long-term financial troubles. Often, the tenant cannot afford future rent payments when the relief expires, triggering a landlord to initiate eviction proceedings. When this occurs, the tenant and landlord may negotiate a settlement involving a third-party agency that agrees to cover back rent on behalf of the tenant.

However, these agencies frequently discontinue payments once the immediate threat of eviction subsides, blindsiding the Colorado landlord and the tenant. 

And so the vicious cycle begins again: the tenant is in a frantic search for another program, while the landlord accrues more financial losses as they try to evict. 

Threats to public funding sources for these programs exacerbate this problem. 

A Colorado landlord who wants to break this cycle typically asks if they can refuse a third-party contract or assistance program payment from one of these agencies, particularly when the landlord has previously initiated an eviction of the same tenant. 

Colorado law prohibits landlords from discriminating against tenants based on their source of income, including money from a government assistance program to pay rent. C.R.S. 24-34-502(1)(m)

This statute mandates that a landlord must accept any lawful and verifiable source of money paid on a tenant’s behalf, including any government or private assistance, grant, or loan program—unless you are a landlord with:

• Five or fewer single-family rental homes; or

• No more than five rental units, including single-family homes C.R.S. 38-12-801(2.5)(b)

In other words, a larger property management company cannot generally refuse rent payments from a third party on behalf of a tenant facing eviction. This exemption is crucial for “mom-and-pop” landlords who likely still have mortgages on their properties. It shields them from strict regulations intended to reign in large property management companies expected to have more resources. 

However, we still need to tread carefully. Until a judge issues a judgment for possession in an eviction matter, a landlord must accept full payment from a tenant, including all past-due amounts stated in the notice of nonrepayment and any current rent owed. C.R.S. 13-40-115(4)

Postponing an inevitable eviction isn’t fair to you or your tenant, especially when their financial circumstances haven’t changed. Robinson & Henry’s eviction law attorneys know this cycle well and have helped many landlords get out from under it. Call 720-702-2892 to begin your case assessment now.