Colorado landlords face another round of legislative changes with the passage of House Bill 1240, “Protections for Tenants with Housing Subsidies.” Though only eight pages long, the bill introduces sweeping new rules that every housing provider—large or small—must understand about Section 8 vouchers. House Bill 1240 became effective on May 29, 2025. The passage of HB 1240 is another reminder that Colorado’s rental housing environment continues to evolve rapidly, often with little advance notice. Owners and property management companies must remain proactive, informed, and legally compliant to better protect themselves from costly fines and disputes. Additionally, when interacting with government agencies, it is wise to become familiar with their acronyms.
What Is The Section 8 Voucher Program?
The Housing Choice Voucher Program, also known as Section 8, helps low-income families, elderly persons, veterans, and individuals with disabilities afford housing in the private market. Program participants can choose any eligible housing unit, including single-family homes, townhouses, and apartments, with rent partially covered by a subsidy paid directly to the landlord.
Applicants must meet the following eligibility requirements to qualify for the Section 8 program.
- Generally, families must be extremely low-income or very low-income to qualify.
- A family’s annual income and family size determine eligibility under the program. Check Housing and Urban Development (HUD)’s income limits for the Denver area.
- Applicants must be a U.S. citizen or an eligible non-citizen as defined by HUD.
- The head of the household must have a valid Social Security number.
- Certain crimes may make an applicant ineligible.
Mandatory Acceptance of Subsidies: The most impactful change is the removal of any exemption for small landlords. In the past, owners and property managers managing a few rental units could opt out of accepting tenants with Section 8 vouchers. That is no longer the case. Under HB 1240, declining to receive a subsidy is considered a fair housing violation. Beyond that, landlords must cooperate in good faith with subsidy administrators, which includes completing paperwork promptly, responding to communications quickly, and avoiding unnecessary delays in moving a lease forward.
Section 8 Housing Example: Section 8 tenants in Colorado are not limited by a state‑wide “maximum” rent they can rent. Instead, the most they can afford depends on two factors:
Government Portion Based on Fair Market Rent (FMR): Each Public Housing Authority (PHA) sets a payment standard, which is the maximum amount they will pay toward rent and utilities. This standard is closely tied to the FMR for the area, as determined by HUD. FMRs typically include rent plus utilities and are adjusted annually by HUD. The FMRs below represent the maximum gross rent, including utilities, that the PHA will contribute—anything above that cost must typically be covered in full by the tenant.
Efficiency: $1,639
1‑Bedroom: $1,789
2‑Bedroom: $2,140
3‑Bedroom: $2,794
4‑Bedroom: $3,127
Tenant’s Portion: Section 8 rules require tenants to pay 30% of their adjusted monthly income toward rent. In some cases, that may stretch to 40%. If a tenant qualifies for a 2-bedroom voucher, the local payment standard is $2,140 per month.
For example, if a tenant in Denver earns $2,000 per month and qualifies for a two-bedroom voucher, their required contribution is 30% of income, or $600. With the local payment standard set at $2,140, the Housing Authority would cover the difference of $1,540. However, if the chosen apartment rents for $2,500, the tenant must also pay the gap between the rent and the payment standard, which is $360. In total, the tenant’s monthly share of rent would be $960, comprising the $600 income-based portion and the $360 above the voucher limit.
Additional and Expanded Tenant’s Rights in Colorado
Extended Eviction Notices: What began as temporary protections under the Federal Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, has now become permanent Colorado law. If a tenant who receives rental assistance falls behind on rent, landlords must now issue a 30-day demand notice before filing for eviction. Additionally, landlords with federally backed mortgages (such as FHA, VA, or Fannie Mae/Freddie Mac loans) are required to give the same 30-day notice to non-subsidized tenants. Many owners may not be aware whether their loans are federally backed, so it’s wise to confirm this detail with their lenders.
HB 1240 also limits the amount landlords can charge subsidized tenants for late rent. The maximum fee is now $20, regardless of lease terms. Landlords should update their leases to reflect this cap, as charging more could put them in violation of the law.
Habitability Requirements and Refunds: The bill also strengthens tenant protections regarding habitability issues. If a property becomes partially or fully uninhabitable, landlords must reduce rent in proportion to the problem. For example, if a tenant loses access to part of the home, the property manager needs to adjust the rental rate accordingly. Any prepaid rent—whether by the tenant or by a subsidy agency—the landlord must refund the prorated portion.
Enforcement and Penalties: The most urgent takeaway is the level of penalties for non-compliance. Violations of HB 1240 carry a starting penalty of $5,000 per incident and can escalate to $50,000, plus additional civil penalties.
Practical Next Steps for Landlords: Here’s what landlords should do now:
- Review lease agreements and revise any late-fee provisions to align with the $20 cap.
- Check rental mortgages to determine if the properties are federally backed, which affects eviction timelines.
- Train property managers on the new requirements for accepting subsidies and issuing eviction notices.
- Develop systems for issuing rent reductions or refunds in cases of habitability problems.
- Seek legal guidance to confirm your practices are fully compliant with HB 1240.
Is Colorado Too Far Over Its Skis?
The Trump administration might consider Colorado’s tenant protections under the Federal Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, as an overreach. The Act is no longer active on the Federal level, and Colorado’s decision to make its provisions permanent might expose the state to legal action by housing provider trade groups. Colorado is on a slippery slope to becoming too hostile to rental real estate investment and management. The time to act may be now.
DenCO Property Management provided a comprehensive overview of HB 1240 in this blog; however, it is not intended as legal advice. Housing providers should consult with qualified legal counsel to ensure compliance with relevant laws and regulations.
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