By understanding Colorado security deposit law, landlords can avoid common issues like disagreements over deductions, missed return deadlines, or improper withholding.
This guide gives landlords a clear overview of these rules by covering the maximum amounts landlords can request, how to store deposits, whether interest applies, legal grounds for deductions, returning deposits, handling disputes, and more.
Statutes Regulating Colorado Security Deposits
Colorado’s security deposit laws are set out in Article 12 (Sections 38-12-101 through 38-12-106) of the Colorado Revised Statutes, which govern how landlords collect, hold, and return deposits. These provisions also establish penalties for noncompliance and outline tenant remedies.
Maximum Security Deposit Amounts Under Colorado Law
Colorado law does not place limits on how much a landlord can collect as a security deposit. Landlords set amounts they consider reasonable, and the law keeps these guidelines consistent across lease types, contract lengths, and other rental arrangements.
Colorado law also does not outline any exceptions to deposit maximums, and no local jurisdictions in the state set different limits.
Security Deposit Storage Regulations
Colorado law does not require landlords to store funds in any specific account or provide a receipt when holding a security deposit. With no formal storage rules in place, landlords can choose the method that works best for their rental business, as long as they protect the funds and meet all return requirements.
Security Deposit Interest in Colorado
Colorado law does not require landlords to place security deposits in interest-bearing accounts or to make any interest payments to tenants.
Making Security Deposit Deductions
Tenants sometimes fall short on rent or cause damage to properties, and landlords must use deposit funds to complete repairs that return the unit to its original condition and keep it ready for future renters.
When Landlords Can Deduct
Colorado landlords may draw from a tenant’s security deposit for reasons, including:
- Repair damage exceeding normal wear and tear
- Cover unpaid rent that built up before the tenant moved out
- Address cleaning costs needed to restore the unit to its earlier condition
- Repair tenant-caused damage to appliances, fixtures, or flooring
- Recover expenses that result from a tenant abandoning the rental
When Landlords Can’t Deduct
Colorado landlords may not draw from a tenant’s security deposit for reasons, including:
- Address issues that fall within normal wear from everyday use
- Perform improvements intended to upgrade or modernize the rental
- Repair damage that existed before the tenant took possession
- Cover routine maintenance tasks required for property upkeep
- Pay costs unrelated to any action by the tenant
Necessary Documentation to Accompany Deductions
When a landlord withholds part of a security deposit in Colorado, the landlord must send the tenant an itemized written list that explains each deduction and the amount withheld.
What to Do When Deductions are Greater Than the Deposit
Some tenants leave unpaid rent or cause damage that goes beyond what a security deposit can cover. When that happens, the landlord can request additional payment from the former tenant and should keep clear documentation of all charges before seeking reimbursement. If the tenant refuses to pay, the landlord can hire a collection agency to contact the tenant or pursue the balance through Colorado’s small claims court.
Returning Security Deposits to Tenants
Colorado law outlines how landlords must return any remaining portion of a tenant’s security deposit after making all lawful deductions.
Required Timeline for Return
Colorado landlords must return the security deposit within 1 month after the tenant moves out (unless the lease extends this period up to 60 days). The clock starts ticking when the tenant vacates and hands back possession of the property to the landlord. To hold up their end of the bargain, landlords must also provide an itemized list of deductions within the same timeframe.
Method for Return
Landlords in Colorado must send the remaining deposit and the itemized deduction statement to the tenant-provided last known address or forwarding address. The law does not require a specific payment method, so landlords may use a check or another reasonable option as long as the funds and documentation arrive within the legal window.
Penalties for Late Return
If a landlord misses the deadline or fails to provide the required documentation, they lose the right to keep any portion of the deposit. When a landlord wrongfully withholds funds, a court may award the tenant up to three times the amount wrongly withheld in damages (along with reasonable attorney fees and court costs).
Security Deposit Disputes
Tenants who disagree with how a landlord handles their security deposit have every right to raise a dispute. Most tenants begin by requesting clarification in writing and sharing any supporting documentation with the landlord. If they’re unable to negotiate a solution, the tenant may seek mediation or take the matter to court for a final decision.
As a landlord, prepare for security deposit disputes by using a move-in and move-out checklist, staying on top of accounting and bookkeeping, and including clear terms within your lease agreement. Strong documentation, knowledge of Colorado laws, and consistent attention to required timelines will help landlords manage disputes with more confidence.
Using Condition Reports to Document Damage
Security deposits in Colorado are much easier to manage when landlords use detailed move-in and move-out condition reports to track changes during a tenancy, show responsibility for any damage, and simplify conversations with tenants. Solid documentation from the start makes deductions far less negotiable.
Landlords can also create clear digital reports with photos and videos by using property management software on their smartphone to document a unit’s condition before move-in and after move-out.
Sign up for a free TurboTenant account to collect security deposits, document property condition, and store every inspection record in one secure place.
FAQs: Colorado Security Deposit Law
Can a landlord deduct painting from a security deposit in Colorado?
A Colorado landlord may deduct painting costs only when the damage goes beyond normal wear and tear. Light touch-ups typically reflect normal wear and tear, but repainting caused by stains, markers, or unauthorized colors qualifies as a valid deduction.
Are nail holes considered normal wear and tear in Colorado?
In Colorado, small nail holes from standard picture hanging count as normal wear and tear, so landlords cannot deduct for them. Larger holes or wall anchors that require more extensive repair may warrant a deduction when the damage exceeds routine patching.
Who has to pay for carpet cleaning in Colorado, the landlord or the tenant?
Landlords in Colorado may deduct for carpet cleaning only when a tenant leaves the carpet excessively dirty or damaged. When the carpet shows everyday use, routine cleaning does not qualify for a deduction and remains the landlord’s responsibility.
What happens if a landlord doesn’t return a security deposit within 30 days in Colorado?
If a Colorado landlord misses the 30-day deadline, or a lease-extended deadline up to 60 days, the landlord loses the right to keep any portion of the deposit. Courts may also award up to three times the amount wrongfully withheld in damages, along with reasonable attorney fees, when a landlord wrongfully withholds funds.
