Colorado Could Ban Price Coordination Software for Landlords

Last June, the FBI raided the Atlanta headquarters of apartment management company Cortland as part of an investigation into rental price-fixing by the software firm RealPage.

Cortland owns and manages fourteen buildings in the Denver area. The Biden administration later found RealPage’s influence covers over 45 percent of Denver’s multifamily rental units, costing renters an average of $136 extra per month than if the software hadn’t been used.

Cortland is just one of 21 large landlords the FBI examined as part of the bureau’s investigation into how RealPage increased the price of rent nationwide. According to the FBI, major apartment companies worked together to set prices instead of competing, with over 70 percent of multi-family apartment buildings nationwide having employed RealPage’s services since 2016.

The Biden administration, along with Colorado Attorney General Phil Weiser and others, sued RealPage over the allegations. The Trump Administration has indicated the Department of Justice may drop the lawsuit, removing the White House’s informational page about the topic from the DOJ website.

However, RealPage and other similar software companies could face repercussions in Colorado no matter the result of the lawsuit if a new bill that would ban such technology passes.

State Representative Javier Mabrey and Senator Steven Woodrow, who both regularly work on legislation for renters, are the prime sponsors of House Bill 15-1004. According to Woodrow, the Trump Administration’s early indication that antitrust enforcement won’t be a priority makes the bill even more crucial.

“It's incumbent upon the states to take action,” Woodrow says. “Competitors aren't allowed to call each other up and collude with each other and decide what price they're going to charge people. Competitors have to compete in the marketplace.”

The bill would prohibit landlords or their representatives from coordinating rental pricing or engaging in “consciously parallel pricing coordination.” Additionally, coordinating such arrangements would also be disallowed if the legislation passes, with the activities considered a class-five felony in violation of the Colorado State Antitrust Act as an illegal restraint of trade or commerce.

Woodrow says the use of algorithms to price rent or determine lease terms already goes against the principles of free trade and commerce, but labeling it a specific violation of state law is needed in case renters want to sue their landlords for that behavior.

“It's affecting hundreds of thousands, maybe more, people who are overpaying every month,” Woodrow says. “Me and my colleagues were brought in a few months ago to give property tax relief, and that was just to give homeowners something to the order of $70 to $150.”

If the former White House's estimates are correct, Woodrow says, 45 percent of Denver renters are being charged around that amount in excess monthly, much less yearly.

“Are we really, as a legislature, going to say, ‘well, it's more important for us that landlords be able to price fix than to save people $1,600 a year? $136 a month?’” Woodrow questions. “I can't justify that.”

However, according to the Apartment Association of Metro Denver, landlords aren’t using algorithmic technology to unfairly hike rent prices, but as a research tool to do work that would take humans way more time to complete.

“They find them valuable, primarily as an inventory control device,” Drew Hamrick, AAMD senior vice president of government affairs says. “It's extremely important to a rental housing provider to get accurate market information and not be setting the prices by trial and error.”

Each day a rental unit sits empty by being priced improperly represents a loss for the landlord that will never be recovered, Hamrick says. For landlords with properties in different parts of metro Denver, the technology provides valuable internal data, especially if a landlord has one property in Aurora and another in Longmont that may not be comparable, he adds.

Plus, different-sized units move at different rates, providing another factor for landlords to track. By plugging the information into software, landlords can price their units correctly more easily, he says. According to Hamrick, AAMD members have found rent pricing technology can increase their revenue by as much as 4 percent by decreasing excess inventory sitting idly on the market at the wrong price — but not by price-fixing.

As Hamrick sees it, price collusion has three elements: competitors communicating about current prices, those competitors being big enough to influence the market, and communicating about future prices. He argues that while the first two may be true of price-setting software, the third is not.

“They're communicating about past prices,” Hamrick says. “They're saying, yesterday or today, or even five minutes ago, I leased this property for X amount of money. So it's a device that accurately measures the market, but not a device that manipulates it.”

Additionally, Hamrick says the technology can lead to landlords decreasing rents to ensure excess inventory isn’t sitting empty.

But the lawsuit brought by attorneys general in eight different states alleges RealPage manipulates the market by limiting price decreases even in downward economic times, making landlords justify why they are rejecting the software’s recommendations with more than a “mere preference.”

Hamrick says those allegations haven't been proven yet, calling the 45 percent number for the Denver market “ludicrous." He estimates closer to 20 percent of the metro Denver apartment market uses price-setting tools.

“Some of the bigger operators in the state are going to be much more sophisticated and inclined to use a service like this than the smaller operators,” Hamrick says. “It's a big-girl-and-boy-kind-of-tool more than just the mom-and-pop landlords.”

Woodrow argues that price-setting tools hurt mom-and-pop landlords, too, as they don’t have the same tools and therefore can’t compete fairly. Banning the technology would even that playing field, he says.

Hamrick says AAMD is asking for amendments to the legislation, which currently says landlords can’t use computation in price setting along with not being allowed to use a computer to communicate about prices. AAMD believes banning computation goes too far and would even disallow his organization’s quarterly rent report, which complies and shares data about average rents and rental units across the organization.

“To try to say a supplier of housing can't look at a report like that and say, ‘oh, I need to lower my rent,’ is silly in my mind,” Hamrick says. “We're going to propose amendments to [Woodrow] and the other representatives down there to carve back to allow the use of public information or information that's a bit older to make these decisions.”

Woodrow tried to pass similar legislation last session but believes this time around will be more successful because last year the topic was too new.

“I'm really excited by the momentum we have,” he says. “This is a big deal. We can't allow landlords to collude with each other and fix prices. …When competitors stop competing, consumers lack choice and they always end up paying more.”

House Bill 1004 currently has a fiscal note requiring an appropriation of $64,318 to the Department of Local Affairs for the 2025-2026 fiscal year for a public education campaign to inform residents of the new legal framework. The public education campaign would be required until 2027. The measure's first hearing is scheduled in the House Business Affairs & Labor Committee on February 20.