Colorado's Source-of-Income Law: Small Landlords and HB25-1240

If you own a couple of units and you’ve relied on Colorado’s small-landlord exemption from the voucher rules, you may have heard that 2025’s HB25-1240 wiped that exemption out. It didn’t. The exemptions are still on the books. But the same bill added a new obligation that applies to every landlord — including the small ones who are still exempt from the core voucher-acceptance rules — so it’s worth understanding exactly where you stand.

The rule: source of income is a protected basis

Colorado’s fair housing law bars refusing to rent, show, or offer housing based on a prospective tenant’s source of income — including Section 8 vouchers and other housing subsidies. This has been the baseline since HB20-1332 took effect in 2021, and it lives in the “unfair housing practices” provisions of C.R.S. § 24-34-502(1).

The small-landlord exemptions are still in place

Two separate exemptions soften this rule for smaller operations, and — contrary to what’s sometimes reported — HB25-1240 left both of them intact. The bill amended only paragraphs (1)(p) and (1)(q) of § 24-34-502 and added a new paragraph (1)(r); it did not touch the exemption subsections at all.

• The general small-landlord exemption (§ 24-34-502(1.5)(a)) — the source-of-income unfair-practice provisions in paragraphs (1)(l) through (1)(p) “do not apply to a landlord with three or fewer units of housing for rent or lease.” A landlord at or under three units remains exempt from those core provisions.
• The single-family voucher exemption (§ 24-34-502(1.7)) — a landlord with five or fewer single-family rental homes (and no more than five total rental units) is not required to accept federal housing choice vouchers for those homes as a source of income.

The bottom line on exemptions: if you qualify under either provision, you are still exempt from the underlying requirement to accept housing choice vouchers. That did not change in 2025.

What HB25-1240 actually added: a cooperation duty for everyone

The new obligation is the part small landlords should not overlook. HB25-1240 added § 24-34-502(1)(r), which makes it an unfair housing practice for any landlord to fail to:

• make reasonable efforts to timely respond to requests for information and documentation needed for a rental-assistance application, or
• cooperate in good faith with a tenant who is applying for rental assistance — including by refusing to provide documents a government agency or administering entity requires to support the application.

Here’s the key point for exempt landlords: the small-landlord exemption in (1.5)(a) only covers paragraphs (1)(l) through (1)(p). The new cooperation duty is paragraph (1)(r) — outside that range — so it applies even if you are otherwise exempt from accepting vouchers. You may not be required to accept a voucher, but if you have a tenant applying for rental assistance, you can’t stonewall the paperwork.

HB25-1240 also added a federal-style notice requirement before a nonpayment eviction of a subsidized tenant, and clarified that habitability-reimbursement calculations include rent paid by a housing subsidy — but the cooperation duty is the change most likely to catch a small landlord off guard.

The penalty is a real number

If a court finds a source-of-income discrimination violation — including a violation of the new cooperation duty in (1)(r) — it must award at least $5,000 in damages. On the civil-penalty side, the amounts escalate with a landlord’s history: up to $10,000 with no prior finding, up to $25,000 if there’s been another discriminatory housing practice finding within the preceding 5 years, and up to $50,000 with two or more findings within the preceding 7 years.

The income-requirement cap still applies

Separately, under SB23-184, a landlord’s minimum income requirement is capped at 2x monthly rent for every applicant — voucher holders included. For a voucher-holding applicant, the portion of rent the housing authority pays counts toward meeting that requirement, not just the tenant’s own income.

What to check in your own screening process

• Are you actually within one of the exemptions? Count carefully — three-or-fewer units for the general exemption, or five-or-fewer single-family homes for the voucher exemption.
• Even if you’re exempt from accepting vouchers, does your process cooperate with a tenant’s rental-assistance application — responding to document requests rather than quietly stalling them?
• Does your listing or application process, even informally, discourage voucher applicants (“no Section 8,” “must not require subsidy verification”)?
• Does your income requirement stay at or under 2x rent, counting the subsidy portion for voucher applicants?

The bottom line

The headline “small landlords lost the exemption in 2025” is not accurate — the exemptions survived HB25-1240. What changed is that every landlord, exempt or not, now has a duty to cooperate in good faith with a tenant’s rental-assistance application. A Lease Compliance Report doesn’t review your screening process, but if your lease or application materials reference the source-of-income rules, it’s worth confirming they line up with where you actually fall under the exemptions.

LeaseCheck for Landlords is an educational lease-compliance screening tool. It is not a law firm and does not provide legal advice. Colorado rental laws change; confirm specifics for your situation with a licensed attorney.