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Security Deposit Laws in Colorado

Colorado landlords have a lot of freedom when it comes to asking for and storing security deposits, but they must explain any deductions in writing.

Colorado’s laws concerning security deposits are less strict than those of other states—there’s no legal cap on the amount a landlord can ask for, nor are they required to store the money in a specific account. The law does specify a timeline for returning a security deposit to a tenant, however, and expects landlords to provide a written explanation of any deductions.

There are no caps on security deposits in Colorado

There is no legal limit on the amount a Colorado landlord can demand for a security deposit,1 unless they are renting out a mobile home. In that case, the limit is the equivalent of one month’s rent for single-wide trailers and two month’s rent for multiwide units.2

Landlords can combine deposits with personal funds

Colorado landlords can hold and maintain a security deposit in any way they want. Unlike other states, they aren’t required to deposit it into an interest-bearing account, nor keep it separate from their personal funds.

The landlord is required to transfer the security deposit to anyone who either buys the landlord’s property or, in a rare and highly specific occurrence, buys the landlord’s right to profit from the lease.3

Landlords have 30 days to return a deposit

A landlord is required to return a tenant’s deposit within 30 days of either:

  • The end of their tenancy
  • The surrender of the property by the tenant

This period can be extended by the lease agreement, but not past 60 days.3

All deductions must be explained in writing

The landlord is entitled to deduct from the security deposit “for cause.” However, they must provide the tenant with a written statement listing the “exact reasons” for any deductions (along with a check for the remaining amount). If the landlord doesn’t provide the tenant with such a list, they forfeits their right to retain any of the deposit. The Colorado statute doesn’t mention every issue a landlord may deduct for, but does offer the following examples:

  • Unpaid rent
  • Abandonment of the premises
  • Unpaid utility bills
  • Repair work
  • Cleaning costs that the tenant previously agreed to pay

“Wear and tear” costs cannot be deducted from the deposit.3

“Willful” withholding by a landlord is illegal

If a landlord “willfully” withholds any portion of a deposit—in other words, if they deduct a portion of the money knowing they have no legal right to do so—they may be held liable to the tenant for triple the amount that they illegally deducted (plus court costs and attorneys fee).3 Tenants must give their landlord seven days’ notice before filing such a lawsuit.

One they’ve been notified, the landlord can’t just produce a written statement explaining their deductions and call it a day. The only way to avoid a lawsuit is the immediate and full return of the security deposit with the seven-day “notice period.”4 In any future litigation, the burden falls on the landlord to prove that their deductions were appropriate3

Keep in mind, however, that the Colorado courts have made “willfulness” a high burden for a tenant to meet. It’s not enough for a landlord to accidentally break the laws concerning security deposits. It must be proven that the landlord acted in bad faith—that they were aware that they were breaking the law and did it anyway.5 That said, if a landlord both withholds a deposit and fails to provide any reasons why, this will support a finding of bad faith.6

Next steps

If an applicant is putting down a security deposit for a rental, there’s a good chance they’re signing a lease, too. Make sure your lease doesn’t include any unenforceable terms—and that both landlord and tenant understand their responsibilities under the rental agreement.

[1] Colorado Revised Statutes Title 38, Article 12

[2] Colorado Revised Statutes 38-12-207

[3] Colorado Revised Statutes 38-12-103

[4] Mishkin v. Young, Supreme Court of Colorado, 2005

[5] Guzman v. Mcdonald, 570 P.2d 532 (1977)

[6] Martinez v. Steinbaum, 623 P.2d 49 (1981)

The information provided on this website does not, and is not intended to, constitute legal advice.