Overview
Colorado security deposit laws are governed by C.R.S. § 38-12-103. While Colorado doesn't cap deposit amounts, it has strict return timelines and documentation requirements. Recent legislation (HB 25-1249) is bringing significant changes effective January 1, 2026, clarifying tenant remedies and landlord obligations. Security deposit management software helps property managers stay compliant as these rules evolve.
Maximum Security Deposit
Colorado does not impose a statutory limit on the amount a landlord may charge as a security deposit. Landlords may request any reasonable amount.
Pet Deposit Limit
Under House Bill 23-1068, Colorado limits pet deposits to no more than $300. This pet deposit must be refundable to the tenant.
In practice, most Colorado landlords charge one to two months' rent as a security deposit.
Return Timeline
Under C.R.S. § 38-12-103, landlords must return the security deposit within one month after the later of:
- Termination of the lease, OR
- Surrender and acceptance of the premises
Extended Timeline
A written lease may extend this deadline to up to 60 days. Check your lease agreement for the specific timeline that applies.
Written Statement Required
If any portion is retained, the landlord must provide a written statement listing the exact reasons for retention. This statement must be delivered with any remaining balance.
Critical: If the landlord does not send the written statement within the time limit, they forfeit the right to keep any of the deposit.
Interest Requirements
Colorado state law does not require landlords to pay interest on security deposits or hold them in interest-bearing accounts.
Boulder Exception
Boulder has a local ordinance requiring landlords to pay interest on security deposits: (Utah has comparable requirements—see Utah security deposit laws.)
- 2025 rate: 2.92%
- Check with the City of Boulder for current rates and requirements
Storage Requirements
Colorado law does not require landlords to hold security deposits in a separate or interest-bearing account.
Allowable Deductions
Landlords may deduct from the security deposit for:
- Unpaid rent
- Damages beyond normal wear and tear
- Cleaning costs to return the unit to move-in condition
- Other lease violations
Important: No security deposit shall be retained to cover normal wear and tear. Ordinary use of the premises cannot be charged to the tenant.
Penalties for Non-Compliance
Colorado has strong penalties for willful violations:
- Treble damages: Willful retention of a security deposit in violation of the statute renders the landlord liable for three times the amount wrongfully withheld
- Attorney's fees: Tenants may recover reasonable attorney fees and court costs
- Notice requirement: Before filing suit, tenants must give landlords 7 days' prior notice of their intention to file legal proceedings
2026 Law Changes (HB 25-1249)
Effective January 1, 2026, Colorado's security deposit laws will be updated with additional clarifications:
- More detailed circumstances under which a security deposit is deemed withheld in bad faith
- Updated provisions in C.R.S. 38-12-103(2.5), (3), and (3.5)
- Clearer tenant remedies for improper withholding
Property managers should review the updated statute before January 2026 to ensure compliance. Request a demo to see how Passive keeps you ahead of regulatory changes.
Common Compliance Questions
What counts as "normal wear and tear"?
Normal wear and tear includes minor scuffs on walls, slightly worn carpet in high-traffic areas, small nail holes from hanging pictures, and faded paint from sunlight. It does not include large holes in walls, stained or burned carpet, broken fixtures, or damage from pets. When in doubt, document the condition at move-in with dated photos.
How should I document the unit's condition?
Complete a detailed move-in checklist with the tenant, noting existing damage, appliance conditions, and overall cleanliness. Take timestamped photos or video of every room. At move-out, repeat the process. This documentation protects both parties and makes deduction decisions defensible if disputed.
Can I deduct for unpaid utility bills?
Only if your lease specifically allows it and the utilities are in your name. If utilities are in the tenant's name, contact the utility company directly—they have their own collection processes. Never make unauthorized deductions, even for amounts you believe the tenant owes.