Colorado security deposit rules for landlords

What changed on 1 January 2026

Colorado rewrote its security-deposit statute. If you are working from guidance written before 2026 — or from a lease template older than that — several things you believe are true are no longer true. The four that matter most to a self-managing landlord:

• The deadline is now thirty days, not "one month". A lease may still extend it, but never past sixty days. 38-12-103(1)(a)
• Treble damages no longer require you to have acted wilfully. The old statute punished willful retention; the amended one punishes wrongful retention, and defines that to include simply failing to send the written statement on time. 38-12-103(2.5), (3)(a)
• You cannot withhold for anything that was already wrong when the tenant moved in. Preexisting damage and defective conditions are now explicitly off limits. 38-12-103(1)(a)
• You carry the burden of proof. In a tenant's action you must prove the withholding was not wrongful, that you complied with the section, and the amount of your actual damages. 38-12-103(3)(b), (3.5)(c)

The deadline, and what has to be in the envelope

Within thirty days of the later of the lease terminating or the tenant surrendering the premises, you must return the deposit in full — or send a written statement listing the exact reasons for any retention, together with the balance you are not keeping and any documentation required by subsection (8). The lease may specify a longer period, capped at sixty days. 38-12-103(1)(a)

You are treated as having complied by sending the statement, payment and documentation to the tenant's last-known address, or to an email address for the tenant you have actual notice of. Payment may go by post to the last-known address or, with the tenant's consent, by secure electronic transfer. 38-12-103(1)(a), (10)

This is not only about lateness, and it is not a partial failure. If you fail to comply with the requirements of the section or otherwise wrongfully withhold, you forfeit the right to withhold any portion of the deposit — not just the part in dispute. A statement that does not list exact reasons, or missing documentation, forfeits just as a late one does. 38-12-103(2)

What you may actually keep

The amended statute replaces an open-ended list with a closed one. You have actual cause to retain reasonable amounts only for: nonpayment of rent; nonpayment of utility charges; nonpayment of other lawful charges listed in the lease; and necessary repair work for damage or defective conditions that exceed normal wear and tear and did not preexist the tenancy. 38-12-103(1)(b)

Two things that used to be on that list are no longer on it: "abandonment of the premises", and "repair work, or cleaning contracted for by the tenant". Both were struck. Cleaning now has to fit as a lawful charge listed in the lease, or as necessary repair work — and a lease charge for cleaning due to normal wear and tear or a preexisting condition is void under subsection (7)(b) regardless. If you are working from a pre-2026 lease or an old habit, this is the likeliest place to go wrong. 38-12-103(1)(b), (7)(b)

"Normal wear and tear" was also widened. It now covers deterioration, damage or uncleanliness arising from the use the unit is intended for or is reasonably and typically used for, without negligence, carelessness, accident or abuse. It does not cover uncleanliness that leaves the unit substantially less clean than it was when the lease began. 38-12-102(4)

Carpet and paint have their own rules

You have no actual cause to retain for replacing carpet throughout the unit unless there is substantial and irreparable damage exceeding normal wear and tear that did not preexist the tenancy. You may still retain for a portion — but only where that portion is itself substantially and irreparably damaged beyond normal wear and tear and not preexisting. The same structure applies to painting the whole interior, where the test for a portion is substantial damage to that portion. 38-12-103(11)(a), (11)(b)

One rule with teeth: carpet cannot be deemed substantially and irreparably damaged if it has not been replaced with new carpet within the ten years before the lease ended or the premises were surrendered. So if the carpet was already a decade old, you cannot retain for replacing it. Whether some narrower repair cost could be retained under (1)(b)(IV) is a question the statute does not answer. 38-12-103(11)(c)

The walk-through

On either party's request, and if reasonable and practicable, the landlord and tenant must conduct a walk-through inspection — in person, or via a telecommunication-assisted interactive walk-through — to identify in writing any damage or defective conditions beyond normal wear and tear that did not preexist the tenancy. Where a tenant requests one, you must provide it at a mutually convenient time, before the lease terminates or the premises are surrendered, and after the tenant has had the opportunity to remove furniture. 38-12-103(1.5)

This is the single cheapest piece of protection available to you. A dated, written, two-party record of the unit's condition is the evidence you will need if you later have to discharge the burden of proof the statute now puts on you.

What counts as wrongful withholding

You are deemed to have wrongfully withheld if you fail to provide the written statement and all required documentation on time; provide a statement that fails to list the exact reasons; fail to return the difference on time; or retain in bad faith. 38-12-103(2.5)

Retention is in bad faith where the amount unreasonably exceeds your actual damages, is retained without actual cause, is an amount you knew or should have known exceeded your actual damages, or is retained wholly or partly for an unlawful, retaliatory or discriminatory purpose. 38-12-103(3.5)(a)

There is a bright line at 125%. An amount retained is presumed to unreasonably exceed actual damages if it is 125% or more of them — and a court may still find a smaller amount unreasonable. 38-12-103(3.5)(b)

What it costs to get it wrong

Wrongful retention makes you liable for treble the wrongfully withheld portion, plus the tenant's reasonable attorney fees and court costs. 38-12-103(3)(a)

The tenant must first notify you of their demand for the deposit and their intention to file, at least seven days before filing. They may bring the treble-damages action only if you fail to return the deposit or the withheld portion within seven days of receiving that demand. 38-12-103(3)(a), (3)(c)

That seven-day window is the most useful sentence in the statute for a landlord who has made an honest mistake. A demand letter is not the end of the matter. But read (3)(c) carefully: what has to go back is the entire deposit or the whole withheld portion — not the part you have decided to concede. Returning all of it within seven days of receiving the demand is what forecloses the treble-damages action, and with it the fees and costs.

The good-faith safe harbour

If you retained in good faith, complied with every requirement of the section, and a court nonetheless finds you reasonably retained more than your actual damages, you are liable only for the excess amount and court costs — not treble damages, not fees. 38-12-103(3.5)(d)

Read that alongside the forfeiture rule and the shape of the statute becomes clear. Procedural compliance is what protects you. Getting the arithmetic slightly wrong while having done everything else properly is survivable; being late is not.

Two rules that catch people out

You cannot contract out of any of this. A lease provision waiving or modifying a part-1 provision for the tenant's benefit is void as against public policy. So is any provision assigning the tenant a fee or charge for repairs, cleaning or other work due to normal wear and tear or to a condition that preexisted the tenancy — a non-refundable cleaning fee of that kind does not survive. 38-12-103(7)(a), (7)(b)

Selling the property does not end your obligation. On cessation of your interest in the unit — sale, assignment, death, receivership — whoever holds the deposit has sixty days to transfer or return it, and must notify the tenant by mail of the transfer and of the transferee's name and address. 38-12-103(4)

And if a refund you sent comes back to you, hold it for at least a year and pay it out within fifteen calendar days of the tenant asking. 38-12-103(9)

Documentation — and an ambiguity worth knowing about

Subsection (8) applies to a lease terminated or premises surrendered on or after 1 January 2026. The documentation itself is clear enough: whatever is in your possession or control that is relevant to the retention — photographs, inspection forms or reports, receipts, invoices, estimates. 38-12-103(8)

What is not clear is the trigger. The sentence reads: "if a landlord provides a tenant with a written statement pursuant to subsection (1) within fourteen days after a written request by the tenant, the landlord shall provide documentation...". Read literally, the duty attaches only where the statement happens to go out within fourteen days of a written request. Read the other way — as some Colorado practitioners do — a written request starts a fourteen-day clock to hand the documentation over. We are not going to tell you which reading a court will take.

What is not ambiguous is the direction of the risk. Subsection (1)(a) requires the statement to be delivered "along with any relevant documentation required by subsection (8)", and subsection (2.5)(a) makes failing to timely provide the statement and all relevant documentation a wrongful withholding — which is the treble-damages trigger. Sending the documentation with the statement costs nothing. Withholding it on the narrower reading of (8) is a bet with treble damages on the other side of it. 38-12-103(1)(a), (2.5)(a), (8)

One carve-out

The walk-through right and the carpet and paint rules do not apply to a rental agreement concerning occupancy of a mobile home in a mobile home park. Everything else does. 38-12-103(12)

Where this comes from

The amendments are HB25-1249, "Tenant Security Deposit Protections", signed 3 June 2025 and enacted as chapter 401 of the 2025 session laws, effective 1 January 2026 and applying to conduct on or after that date. Subsection (1) has a wrinkle worth knowing: the act carried two alternative versions of it, one to apply if HB25-1168 became law and one if it did not. HB25-1168, "Housing Protections for Victim-Survivors", was signed on 22 May 2025 as chapter 229 — so the operative text of subsection (1) is the act's section 3 version, which also provides that a tenant terminating under C.R.S. 38-12-402(2)(a) is not liable for damage caused by the responsible party or during an incident of unlawful sexual behaviour, stalking, domestic violence or domestic abuse.

Primary sources: HB25-1249 and HB25-1168 at the Colorado General Assembly. Read the statute itself before you set a policy.