The Landlord Lens - NEW BILL: Landlords Will Pay for Tenants' Hotel Stays

Episode Date: April 28, 2025

A new bill in Denver could force landlords to cover hotel costs when a rental becomes uninhabitable. What does this mean for property owners and renters? Let’s break it down.

It is such a bummer because all landlords get grouped together. To put it down on somebody with two multifamilies or an ADU is patently absurd. And honestly, is the kind of risk that these starts to become unacceptable to even provide rental housing. Hey, everybody. Welcome back. I'm John, joined here by Seamus, our CEO. And fellow landlord. And fellow landlord, landlord extraordinaire.

Wow. Thank you, John. Today we're here to talk about some local news for us here in Denver. A new tenant protection bill. Let's watch the clip really fast. A pipe burst at Walton Park Apartments last winter. Residents were without water for weeks. The alternatives provided by the property owner was for folks to go into the alley to shower,

to go into the alley to get water. At a committee meeting this week, council members Chantal Lewis and Daryl Watson are saying relocation in situations like this should be a given. But as of right now, it isn't. And so that is the primary concept within the bill is to require that landlords offer relocations assistance when the Department of Public Health and Environment deems that the living quarters are uninhabitable. John, I know that's a clip about some local laws here in Denver, but I don't think it's that dissimilar to what's happening across the country and lots

the localities. So let's jump in. What were your observations and thoughts from watching that? Yeah. So there have been a lot of issues, especially at the city level, where some big multifamily operator makes a stupid decision, an obviously stupid decision. And the city council says, oh boy, this is a big story I can anchor some votes on for the next cycle. Let me go engage some tenant protection people and make a huge problem for all of the small landlords in the in the in the locality that's what i saw you're not categorizing the toilets and showers in an alley as a stupid decision are you john it's a pretty stupid decision especially march in denver i mean imagine you wake up it's it's 2 a.m you wake up you really got to use the restroom and outside it's 22 degrees

and you've also got to go down you know it's however many flights of stairs to get there to go use the port-a-potty and you're paying rent probably 22 2400 for that privilege. It's a stupid decision. Maybe you get to wait in line, though, behind a neighbor. That's right. Yeah, everyone in their robes, right, freezing in the alleyway. Yeah, it's a stupid decision. They'd made a stupid decision. It's clearly wrong and bad. Yeah, and it is such a bummer because all landlords get grouped together, right? You have this large multifamily making a poor decision that feels anything but human, honestly.

and that's going to impact laws that will impact all landlords in the city, including those that maybe have a ADU, right? Yeah. Or maybe they have a one single family or a couple single family properties that they're renting out, and they're on a first name basis for their tenants, right? And they understand how to treat them humanly. Exactly. Yeah.

And so it's sort of absurd to create this new obligation on landlords to put up tenants for some huge amount of time when there are already some solutions to solve for that with renters insurance and other pieces that some education might solve. But I guess that doesn't get city council members elected. It's not quite as exciting at the very least. But let's dive into renter's insurance because you mentioned that as a landlord, we always suggest for all of the turbotenant landlords require renter's insurance, right? That is the renter's protection on their own personal belongings in a property. It also covers any damage they create to the property that is of their own negligence. And then there's this other aspect, which is actually, it's called AL, additional

living expenses. And it's for this exact situation where a tenant is displaced. The property is uninhabitable. They then have to go elsewhere for a period of time. And that's written writing to the policy. But there's some problems with how renter's insurance works. John, what's one of those problems. Well, renters insurance will not pay the landlord. Yes. And so that that creates an issue because typically the landlords a lot got more, got some cash on hand in reserves to be able to solve these problems quickly and then can turn around and ask insurance for the money to pay it back. Renters might not be able to do that. Yeah. And I've had this very exact situation occur to me where there was some damage. It was actually a tree fell on the property. We had about three days where

the tenants couldn't be in that property while it was repaired, we paid out of pocket for that looking to then get reimbursed from our insurance company. And the reality is our tenants had renters insurance. And so if they paid out of pocket for those accommodations, they could have then filed a claim and got paid back from renter's insurance. And honestly, I wasn't that aware that that was even an option up front. And you're in a situation as a landlord where you want to act both swiftly but also kindly, right, from a, from a human position and not put someone out. And so we kind of jumped to that. And then in retrospect, we're like, oh, wow, they had renter's insurance and no claim was filed. If we were to do it again, what we would have had to do is we

would have had to talk to them, explain to them that they should make a claim for renter's insurance, convince them to then pay out of pocket so they could get reimbursed for the hotel that we put them in for three days. I'm not sure if that would have worked. It requires a lot of trust. It requires a ton of trust. It requires people to interact with insurance companies, which no one's excited about doing. And so I'm not sure if the result would have been any different, but at the time, I didn't even realize that was an opportunity. Yeah, it's, uh, renters insurance is an interesting problem, too, because I know a lot of landlords do not require it or keep up to date even with whether it's still active. It's one of those interesting line items that pops up, you know, every month in a renter's

account that they might just lump in with their, oh, you know, I finish this show on this thing, I'll cancel that. Oh, and here's this other subscription from lemonade. What's that? And then delete, right? And if a landlord doesn't have a way to know that that's happening, they're not able to actually advise the tenant appropriately on the types of productions that it provides. Yeah. I recently was talking to CEO of a renders insurance company in the industry. And they were saying the biggest amount of cancellations they actually see is within the first 30 days of someone buying it. No way.

It's entirely people purchasing it up front so they have that certificate, right? Where they upload that policy to sign that lease and then they cancel it right away. And that makes it so that when you do look to utilize some of these protections, they're not in place. The good news is there's a lot of platforms like a turbo tenant, which actually has helps you keep track of your renters insurance policies for your tenants and will alert you if they get canceled. So you can follow up and take action. But all right, let's go back to renter's insurance is one of the possible ways that could help in this situation. However,

if the city mandates that it is the landlord's responsibility, you're kind of left not being able to utilize renter's insurance because you can't like claims as a landlord and the insurance company who's not going to pay you directly, right? Yes. So not an option. Not an option. I mean, one thing that comes out of these city bills or the state bills sometimes, and I, you know, as we watch the litigation here and some landlord groups and, you know, the apartment association comes in to start weighing in. What might end up happening is some exclusions get applied. That happens sometimes on property age, right? If you've looked at your own local tenant landlord laws, you'll probably notice sometimes it says only relevant for properties built before 1990 or something. But that also applies to operators based on a number of rental units.

managed. And I can see a very good case for creating something where, hey, if you have less than 50 rental units, actually, you don't have this obligation. And you can manage it through the insurance structure that the country has to support the groups. I could see that happening. These things always happen over time and through council meetings, which are a pain in the butt to track and follow. But that would be my hopeful outcome here is that something like this does pass to prevent multifamily companies from doing this ridiculous, you know, robe out. and 2 a.m. in the Port-a-Potty decision for someone paying $2, $2,400 in rent.

And they actually do have laws because multifamilies are responsive to these kind of punitive laws. But to put it down on somebody with two multifamilies or an ADU is patently absurd. And honestly, is the kind of risk that these starts to become unacceptable to even provide rental housing. Exactly. And we know a lot of real estate investors that based on that risk, right, they just choose not to invest in certain areas.

Yeah. Right. And I'd certainly hate our own backyard to become one of those locations where landlords don't want to invest for fear of situations like this. I do want to mention, though, something that landlords can do and make sure they write into their lease agreements to protect them from these sorts of situations, whether it's a situation that is mandated by local government or just for your own protection. And that is a clause that basically says if there's a storm, a fire, or something else,

that happens outside of your control as a landlord that makes a property uninhabitable, you can actually terminate that lease. You do have to pay, you can keep prorated rent, but at the time of that, any rent that's been paid ahead, you give that back. In most cases, landlords are also just going to return that security deposit, but that is a way to let your tenant out of that lease so that if the property is going to be uninhabitable for a month, two months, it probably makes sense. a landlord to let them let them out of that as opposed to worrying about those additional expenses

and then really focus on getting that unit inhabitable again so that you can bring tenants in. It's unfortunate that these cycles always play out in these cities looking at you, Washington, where these multifamily units just make these hairbrained inhuman decisions and it trickles into these much more complicated legal environments for folks that are doing this, just on the side. I agree. I think landlords out there. If you live in a location where there's laws like this already in place, please sound off in the comments, even share a link to it so we can understand what might start to happen in our backyard. And also just, once again, cannot stress enough. It's important to stay aware of what's happening in your locality and how that may change your

business as a rental investor and get involved if you need to. Thanks, Seamus. Appreciate it. Thanks for watch it everybody. TurboTenant is the all-in-one platform for landlords to manage their rental properties. From vacancy to tenancy, we have you covered with industry-leading tools and expert advice. Landlord better from anywhere for free at turbotenant.com.