Have You Thought About ... Colorado's Property Owner Preservation Program?

Have You Thought About ... Colorado's Property Owner Preservation Program?

Aug 19, 2020

Client Alert

Brownstein Client Alert, August 19, 2020

In July 2020, the Colorado Department of Local Affairs’ Division of Housing (“DOLA”) launched the Property Owner Preservation (“POP”) Program and allocated $20 million in federal Coronavirus Recovery and Economic Stability (“CARES”) Act funds for rental assistance to landlords on behalf of their tenants. The POP Program allows owners of rental properties or mobile home parks, or their contracted agents to seek payment in arrears for tenants unable to pay their rental obligations (“POP payment”) with respect to the tenant’s rental unit within an apartment, townhome, single family home or mobile home (with lot rental) , or with respect to the tenant’s rental of a mobile home lot.

Summary

POP Payments offer landlords in Colorado some protection against financial stress caused by the COVID-19 pandemic. However, each landlord should consider whether the POP Program is suitable for its unique circumstances. In consideration for receipt of POP payments, landlords forego the right to pursue other remedies against tenants for non-payment of rent, and are prohibited from receiving additional monies beyond the amount of any POP Payment paid for such rents. Additionally, by participating in the POP Program, landlords become subject to state and federal reporting requirements, as discussed below.

Applicability and Eligibility

To qualify for the POP Program, landlords, tenants and the property owned by the landlord which houses the applicable unit or lot must meet certain eligibility requirements. If all eligibility requirements are met, a landlord may apply for POP payment through the POP Program.

Landlord Eligibility

Landlords must meet the following eligibility requirements:

  • landlord must not have a pending administrative or judicial action for violation of the Fair Housing Act or other federal equal opportunity requirements; and
  • landlord must not have been determined by a court or administrative agency to have violated the Fair Housing Act or other federal equal opportunity requirements.

Tenant Eligibility

The tenant for whom a landlord is seeking POP payments must have experienced financial need due to the first or second order effects of the COVID-19 pandemic. To evidence this need, the tenant must complete the Tenant Application, whereon the tenant must make the following written attestations:

  • The household was unable to pay all or part of the rent for its unit or lot because the household experienced financial need on or after March 1, 2020, due to the direct or indirect impacts of the COVID-19 pandemic;
  • The household did not receive rental assistance from any other local, state or federal program to pay rent for its unit or lot for the months assistance is needed; and
  • An affirmation that the tenant is requesting that the landlokrd request assistance on behalf of the tenant.

Additionally, the tenant must reside in the unit or on the lot receiving assistance in the month(s) for which the housing assistance payment is provided.

Property Eligibility

All Properties must meet the following eligibility requirements:

  • The property must be located in the state;
  • The property must not be in foreclosure or, if it is, a receivership must have been established by the courts;
  • State or local real estate taxes owed to date must have been paid; and
  • The unit or lot, and the property, must meet basic health and safety requirements, as evidenced by a self-certification with respect to any unit or property, or by a mobile home park self-certification with respect to any lot.
  • With respect to any lot, the mobile home park where a lot is located must be registered with the Mobile Home Park Oversight Program.
Process

The first step for a landlord to take advantage of the POP Program is for the landlord to register for the program online or through the mail. Online registration is available here, and paper applications may be requested by emailing DOLA_POP@state.co.us.

Registration requires the following:

  • Landlord information;
  • Payee information, if different from landlord;
  • Provision of a W-9 executed by landlord, dated no more than six months before the date of submission to DOLA;
  • Signed POP Housing Assistance Payment Agreement (the “HAP Agreement”); and
  • Certification of Housing Quality Standards and Certification of Mobile Home Park Quality Standards, as applicable.

Once registered, a landlord may request POP payments on behalf of their tenants who have experienced financial need due to the first or second order impacts of COVID-19. To request POP payments, a registered landlord must submit the following information:

  • Tenant Information, including:
    • Names of all tenants 18 years or older in the unit for which assistance is requested;
    • Number of youth and children under 18; and
    • Documentation that tenant has financial need and has requested assistance, set forth on a completed tenant application.
  • Information concerning the unit for which a POP Payment is requested, including:
    • Number of bedrooms; and
    • Monthly rent.
  • POP payment requested, specifying the months and amounts requested for each tenant (in arrears only). Note that DOLA will not accept requests for rent increases for the duration of the program (e.g., the rent requested for a unit or lot in August may not be higher than the rent requested for the same unit or lot in July).
  • Provision of the following documents:
    • Rent rolls indicating unit or lot number, monthly rent, name of occupant, rent paid by month indicating the shortfall requested;
    • One sample lease or other written agreement for tenants at the property. Note that DOLA may request additional leases or agreements for tenants assisted in the program; and
    • Completed Tenant Applications for assistance.

Once the application has been approved, DOLA may make POP Payments to the Landlord on behalf of the Tenant. POP Payments shall be made twice per month.

POP Payments are capped at certain maximum rents that vary by number of bedrooms per Unit and by the county where the Unit is located. A complete list of the maximum rents is set forth on a “rent schedule” promulgated by DOLA. A POP payment may cover all rent, maintenance, utilities and appliances to be provided and paid by the landlord in accordance with an applicable lease or other rental agreement. However, a POP payment may not be used to pay for late fees, interest, penalties or other charges.

Additional Considerations

The POP Program places restrictions on remedies available to landlords and imposes reporting obligations on landlords as set forth in more detail below.

Restricted Landlord Remedies

Participation in the POP Program and execution of the HAP Agreement imposes certain restrictions on alternative remedies available to Landlord, including:

  • Landlord will not commence eviction proceedings related to non-payment of rent or fees for tenants and months for which rent was paid by the State (See HAP Agreement, § 3(c)(i));
  • Landlord will stop any eviction proceedings related to non-payment of rent or fees for tenants and months for which rent was paid by the State (See HAP Agreement, § 3(c)(ii));
  • For the month following that for which rent was paid by the POP Program, the landlord must provide the tenant with at least thirty (30) days’ notice of any default for non-payment of rent or fees before initiating or filing action for forcible entry and detainer (See HAP Agreement, § 3(c)(iii));
  • Landlord must release any judgments or credit findings for tenants and months for which rent was paid by the state (See HAP Agreement, § 3(c)(iv));
  • Landlord must waive any late fees incurred for tenants and months for which rent was paid by the State (See HAP Agreement, § 3(c)(v));
  • Landlord must provide the tenant with a receipt acknowledging the payment of rent for the months for which rent was paid by the State (See HAP Agreement, § 3(c)(vi));
  • Landlord must not accept any payment for rent for the applicable Unit or Lot beyond the amount paid by the State. (See HAP Agreement, § 3(c)(vii)). Any Landlord who receives rent from a tenant or another assistance provider for the same Unit or Lot and month will be required to repay funds to the State.  (See POP Program Guidelines issued by DOLA).

The restriction requiring 30 days’ notice of a default for non-payment of rent may be interpreted to also mean that tenants who benefit from POP payments are entitled to 30 days’ notice before an eviction demand may be served. Landlords should note that accepting POP payments now may create a longer notice period in the future.

It is also important to note that POP payments are limited by DOLA’s rent schedule and that pursuant to the above limitations, the landlord may not accept any payment to cover the gap, if any, between the POP payments and actual rent due.

Landlord Reporting Obligations

By executing the HAP Agreement, a landlord authorizes the state to inspect and monitor all files, records, documents, communications, notes and other written materials, electronic media files, and communications pertaining to a lease for a unit or lot, and the landlord is obligated to maintain all such records for the state’s inspection for a period of six years following the expiration of the HAP Agreement, which reporting period is longer than the four year period currently required by the State Real Estate Commission.  (See HAP Agreement, § 10).  The state may pursue a return of funds from the landlord if the landlord fails to perform the landlord’s obligations or if funds were obtained through the submission of false statements or misrepresented information.  (See HAP Agreement, § 8(e)). There may be some limitations to the state’s right to inspection, including attorney-client privilege.

Additionally, the landlord must maintain current information in the Federal System for Award Management (and review at least annually after initial registration) until its final financial report is submitted under the POP Program.  (See HAP Agreement, § 13(e); Federal Provisions § 4.1, § 8).  If the landlord receives POP Payments in excess of $25,000 at any point, the landlord may be obligated to disclose the total compensation of its five most highly compensated executives for the preceding fiscal year. (See HAP Agreement, § 13(e); Federal Provisions § 5.1).  Reporting requirements are subject to change at any time by the U.S. Office of Management and Budget.  (See HAP Agreement, § 13(e); Federal Provisions § 6).

This document is intended to provide you with general information regarding updates related to coronavirus. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.

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