Why Landlords Shouldn’t Use Zillow To Create Lease Agreements
Colorado landlords are, unfortunately, finding out the hard way that their online-generated lease agreements don’t pass legal muster. My team doesn’t want this to happen to you. This article explores the issues emerging from this burgeoning industry and how you can protect yourself from a legal nightmare.
Look, I get it. As a landlord, you have financial responsibilities that go way beyond collecting monthly rent checks. You’ve got property taxes, insurance premiums, and repair contractors to pay – maybe even a mortgage to consider. You, no doubt, try to save time and money anywhere you can. So when you see advertisements for companies like Zillow offering to build your lease agreements with a service that’s “as simple as answering a few questions,” you’re intrigued.
But I need you to remember:
Your lease agreement is the most important document you will create as a landlord.
If your tenant isn’t paying rent and/or refuses to leave, the last thing you’ll want to hear from a lawyer (like me) is that your DIY lease agreement can’t do what you thought it could.
I’m all for landlords getting the best deal possible on a service. But outsourcing the lease-drafting process is not the way to go — even if the commercial company deals in real estate or has the word “law” in its name.
These “services” – let’s call them online contract generators – are part of a cottage industry that promises to generate legal documents quickly and for less. But, do these fast and cheap contract templates reflect the latest in state law? Unless you’re closely monitoring Colorado landlord-tenant legislation, you won’t know. And if you haven’t mastered our state laws, you’ll have no idea whether the contract’s terms are even in your best interest.
Now some of these companies claim to have networks of attorneys who might take a look at your contract if you pay a subscription fee to access the platform. But are these attorneys licensed in Colorado? And how will you know if the “attorney” reviewing the lease has any experience in landlord-tenant law? Again, you won’t.
That’s why you really need to have a landlord-tenant lawyer review, if not draft, your lease agreement, especially if you want one that’s enforceable. If you choose to use an online service, you will, in the end, get what you paid for: a somewhat legitimate-looking PDF with words.
The Problem With Online Contracts
So, how do I know so much about online-generated contracts? Well, they cross my desk all the time. Landlords come to me for help as they’re gearing up to go to court, and I want to share with you what I consistently find wrong in these fast and free lease agreements:
Problem 1: No Fee-Shifting Provision
Landlords usually want to recover monetary damages when they evict a bad tenant – either to compensate for unpaid rent or cover the cost of property repairs. So I’m specifically looking for a mention of a fee-shifting provision in the lease agreement.
The United States adheres to the so-called “American Rule” doctrine, which essentially says that each party must pay its own attorney’s fees. Now, this is the default, but there is a clause that leaves room for fee-shifting in specific circumstances. Each state has its own set of rules to clarify what counts as a specific circumstances. Here’s how Colorado’s has been summarized:
“In the absence of an express statute, court rule, or private contract to the contrary, attorney fees generally are not recoverable by the prevailing party in a contract or tort action.” Allstate Ins. Co. v. Huizar, 52 P.3d 816, 818
Colorado’s Rules for Fee-Shifting
In 2021, an amendment to Colorado landlord-tenant law made it illegal to have fee-shifting provisions that could only benefit one party in a property dispute. But in 2023, lawmakers expanded on this amendment, adding that fee-shifting provisions can be included if the court has seen and approved the specific language beforehand. C.R.S. 38-12-801
The online-generated lease agreements I’m seeing consistently leave out the option to include a fee-shifting provision entirely. Zillow’s lease-building tool offers regionally specific lease templates “created by Zillow, together with local law firms.” But it seems to me that Zillow and their partner law firms haven’t caught up with a Colorado amendment that went into effect in 2023.
A Zero-Sum Game
When you have no way of knowing if a company offering one of these tools has updated its template to reflect current law – you risk being unable to seek damages in court legally.
When there isn’t a fee-shifting provision in the lease, the damages you might win in court could end up going toward paying your attorney’s fees. Had there been a fee-shifting provision included in the lease, your bad tenant would be stuck with that bill.
Problem 2: Unenforceable Provisions
No landlord drafts a lease agreement hoping that someday it will become a talking point in court. But things happen. And when they do, you will want an enforceable lease that protects your interests.
You would be surprised by how many of these online-generated leases are full of provisions that sound great, but aren’t enforceable, and, therefore, are legally invalid.
In fact, it’s likely that you’re being prompted to include mistakes by Zillow’s or any other company’s “online wizard.” An online wizard is just a user interface that asks you a series of questions about your tenant, property, terms, and rights. It goes something like this:
Who are the tenants?
What type of property is it?
What day of the month is the rent due?
But then, the simplified questions get more complicated, especially if you’re someone new to this business:
Do any easements, covenants, conditions, or restrictions apply to the property?
Will there be any prorated rent when the tenant moves in?
Do any homeowners association rules apply to the property?
Sometimes these platforms anticipate user confusion by offering a link to a footnote that might clarify general aspects of the law. Some sites provide a chat box to ask a question that a bot will try to answer.
This is where my clients are likely to start guessing, and that’s a problem.
Not All Wizards Are Trying To Help You
Most of the time, my clients add information they think is correct, or sounds correct. And that’s the big problem with DIY-style online lease agreements. Unless you know exactly what you’re doing, you risk being hit with statutory penalties. I see this a lot with late rent payment provisions.
How Bad Rent Provisions Cost Landlords Cash
In Colorado, landlords can’t charge tenants a late fee unless the rent hasn’t been paid in at least seven days.
If you try to charge your tenant for a late fee any sooner, you violate. C.R.S. 38-12-105 You could end up paying a penalty between $150 and $1,000.
There’s also a limit to how much landlords can charge tenants for late rent: $50 at most or 5% of the amount of past due rent.
How Zillow Gets Colorado Rent Provisions Wrong
Zillow’s online wizard notes that seven “is the minimum allowed and most common” number of grace period days allowed before a tenant who hasn’t paid rent goes into default. The problem with that is Zillow lets the landlord input whatever number they want. Can you see how this careless entry just opened you up to legal consequences? C.R.S. 38-12-905
Problem 3: Ineffective, Outdated Provisions
Another common issue I see among the leases created online are dated provisions. I wrote about Colorado House Bill 23-1095 last year after it went into effect. One of the rules in this law makes it illegal for landlords to ask tenants for additional rent. So you can’t call something like utilities “rent.” Yet, I still see provisions on leases from Zillow and other companies seeking additional rent.
I’ve also come across leases that provide for landlords to receive a pre-determined amount of money if a tenant violates the terms of the contract. While this may sound great, it isn’t enforceable under HB 23-1095.
Landlords also cannot ask for nonrefundable security deposits for pets. HB 23-1068, which went into effect on January 1, 2024, makes that illegal. But yet — it’s still showing up in online created leases.
The R&H Lease Agreement Package
Zillow is a household name. Its business model aims to be a one-stop shop for all things real estate. Its lease-building tool is designed to be simple and easy to use. But the law isn’t designed to be simple, and relying on a tool that oversimplifies it won’t protect your interests.
When you purchase a Robinson & Henry lease agreement package for a flat fee, you’re going to get a lease agreement that:
is fully compliant with Colorado law
adaptable to meet your needs
includes all of the different disclosures and addendums you’ll need (lead paint, marijuana, etc.)
has a provision specific to HOAs, usually not included in online lease agreements
Protect Your Rental Investment With an Enforceable Lease Agreement
As a landlord, you shouldn’t feel obligated to memorize every relevant to landlord-tenant law in Colorado. That being said, you should have someone in your corner who knows the law well and can properly advise you. That’s what my team will do for you. Don’t leave your legal protections up to an online wizard. Call (720) 797-0677 to schedule your case assessment.
