Understanding Lease Agreements in Colorado

What is a Lease/Rental Agreement?

“A lease is nothing more than a grant from one person to another of the right to possession of property.” (See Green Shoe v. Farber (1986) 712 P.2d 1014, 1016.)

“[T]he common meaning of the term ‘lease’ contemplates the transfer or conveyance of an interest in, and the right to possession, control, and use of, the property subject to the lease.” (See Ceja v. Lemire (2006) 143 P.3d 1093, 1095; Schneiker v. Gordon (1987) 732 P.2d 603 [a modern lease is a conveyance of an interest in the property as well as a contract]; Sundheim v. Bd. of County Comm'rs (1995) 904 1337 [absent some agreement to the contrary, a tenant is entitled to the possession of the leased premises to the exclusion of the landlord], aff'd, 926 P.2d 545 (Colo. 1996); Am. Coin-Meter, Inc. v. Poole (1972) 31 Colo.App. 316, 503 P.2d 626 [a lease gives the right of possession of the property leased and exclusive use or occupation of it for all purposes not prohibited by its terms].)

“The function of a lease is to transfer from the lessor to the lessee the use of the leased property for a consideration.” (See Glenwood Co. v. Glenwood Springs (1936) 98 Colo. 340, 344.)

Legal Elements to Lease Agreements

“In this jurisdiction, our Supreme Court has consistently held that express agreement both as to dimensions of the leased property and the amount, time, and manner of rental payments is prerequisite to a binding lease.” (See Mooney v. Craddock (1974) 35 Colo. App. 20, 25; see, e.g., Carlson v. Bain (1947) 116 Colo. 526 (Colo. 1947); see also Cook v. Hargis (1967) 164 Colo. 368, 435 P.2d 385.)

“An oral contract to lease property is created if there is agreement between the parties as to the extent and bounds of the property to be leased, the amount of rent to be paid, and the term of the lease.” (See Jarnagin v. Busby, Inc. (1993) 867 P.2d 63, 66; L.U. Cattle Co. v. Wilson (1986) 714 P.2d 1344.)

“A landlord who enters into a lease with a tenant reasonably expects to receive rental income over the course of the lease and, unless it chooses otherwise, to retain ownership of the property at the end of the lease.” (See Tremitek, LLC v. Resilience Code, LLC (2023) 535 P.3d 1005, 1013.)

“A ‘lease’ also contemplates that the transfer will be effective for a particular term.” (See Ceja v. Lemire (2006) 143 P.3d 1093, 1095; Van Dorn Retail Mgmt., Inc. v. City County of Denver (1994) 902 P.2d 383 [a lease normally provides that the lessor retains title to the property and reacquires possession of the property at the end of the lease term].)

“Consequently, the lessee generally acquires a property right together with the right to use or control the property for the duration of the lease.” (See id.)

Standard of Review for Breach of Contract

“In reviewing a breach of contract claim, we defer to the trial court's findings of fact if the record supports them but review its conclusions of law de novo.” (See Herrera v. Santangelo Law Offices, P.C. (2022) 520 P.3d 698, 705; Campbell v. Summit Plaza (2008) 192 P.3d 465, 475; Albright v. McDermond (2000) 14 P.3d 318, 322.)

Tenancy At Will

“It is fundamental to the relationship of landlord and tenant that an estate pass to the tenant and that he achieve possession and control of such property.” (See Hoffman v. King Res. Co. (1975) 187 Colo. 300, 302, 530 P.2d 961, 962.)

“Even a tenancy-at-will requires an agreement in which a landlord transfers possession to a tenant.” (See id; § 13-40-107(3) [Any person in possession of real property with the assent of the owner is presumed to be a tenant at will until the contrary is shown].)

“Such a tenancy is characterized by an agreement for possession for an indefinite period of time and the right of either party to terminate the lease at will.” (See id; Collins v. Shanahan (1974) 34 Colo. App. 82, 86-87, 523 P.2d 999, 1002 [lease didn’t create a tenancy-at-will when it provided that it would continue until terminated by lessees], aff’d inpart, rev’d in part on other grounds, 189 Colo. 169, 539 P.2d 1261 (1975).)

Joint Tenancy and Tenancies in Common

“At common law, joint tenancies were the favored form of concurrent ownership of real property. If property was conveyed to two or more persons, the law presumed that a joint tenancy was intended. For purposes of establishing a joint tenancy, the ‘four unities’ of time, title, interest, and possession were essential components.” (See Taylor v. Canterbury (2004) 92 P.3d 961, 964; Smith v. Greenburg (1950) 218 P.2d 514, 519; 4 David A. Thomas, Thompson on Real Property § 31.06(a).)

“This requirement meant that to create a joint tenancy, a conveyance had to convey to two or more persons at the same time the same title to the same interest with the same right of possession.” (See id.)

“Today, in Colorado, joint tenancies are no longer the presumptive form of concurrent ownership of real property. Rather, tenancies in common are favored and the very existence of the joint tenancy is circumscribed by statute. Courts strictly construe instruments purporting to create a joint tenancy and do not recognize joint tenancies created by instruments that lack statutorily prescribed language.” (See Taylor v. Canterbury (2004) 92 P.3d 961, 964; In re Kwatkowski's Estate (1934) 29 P.2d 639, 640.)

“The requirements for establishing a joint tenancy in real property are set forth in section 38-31-101(1), 10 C.R.S. (2003). That provision states: No estate in joint tenancy in real property, except when conveyed or devised to executors, trustees, or fiduciaries, shall be created or established unless, in the instrument conveying the property or in the will devising the same, it is declared that the property is conveyed or devised in joint tenancy or as joint tenants. The abbreviation ‘JTWROS’ and the phrase as joint tenants with right of survivorship or in joint tenancy with right of survivorship" shall have the same meaning. Any grantor in any such instrument of conveyance may also be one of the grantees therein.” (See id.)

“Thus, to establish a joint tenancy in Colorado, there must only be specific language evidencing the intent to create a joint tenancy. The four unities have been abolished by statute.” (See Taylor v. Canterbury (2004) 92 P.3d 961, 965.)

Sublease and Assignment

“The distinction between an assignment of a lease and a sublease is that, in an assignment, the assignor transfers his entire interest in the lease in so far as it affects the property on which the lease is assigned; whereas, in a sublease, the original lessee, or sublessor, retains an interest in the lease in so far as it affects the property subleased — by imposing some obligation upon the sublessee in favor of the sublessor, such as an obligation to pay additional rent to the sublessor.” (See V.O.B. Co. v. Hang It Up, Inc. (1984) 691 P.2d 1157, 1159; Gordon Investment Co. v. Jones (1951) 123 Colo. 253, 227 P.2d 336.)