Colorado’s security deposit laws cap deposits at one month’s rent for leases signed on or after January 1, 2026, require landlords to return the deposit (or an itemized statement of deductions) within one month of the lease ending, and expose landlords who wrongfully withhold funds to three times the amount kept plus the tenant’s attorney fees. HB 25-1249, signed in June 2025, tightened rules that had already been strengthened by SB 23-184.
How Much a Landlord Can Charge
For leases entered on or after January 1, 2026, the deposit cannot exceed one month’s rent.1Colorado General Assembly. HB25-1249 Tenant Security Deposit Protections If rent is $1,800, the deposit ceiling is $1,800. A separate rule allows an additional pet deposit of up to $300, and that amount must be refundable.2Colorado General Assembly. HB23-1068 Pet Animal Ownership in Housing The pet deposit sits on top of the regular security deposit but is subject to the same return and itemization rules.
Labels don’t control. A “nonrefundable move-in fee” or any other sum collected to guarantee a tenant’s lease obligations is treated as a security deposit under Colorado law, and the caps and return rules apply regardless of what the landlord calls it.
What Landlords Can and Cannot Deduct
A landlord can keep part or all of the deposit only for specific reasons: unpaid rent, unpaid utility charges, abandonment of the unit, repair costs for damage beyond normal wear and tear, and cleaning the tenant agreed to in the lease.3Justia. Colorado Code 38-12-103 – Return of Security Deposit A landlord cannot deduct for general cleaning unless the lease specifically says the tenant will pay for it.
Normal wear and tear is never a valid deduction. Faded paint, minor scuffs on hardwood, and carpet showing its age after years of use all fall into that category. Holes in drywall, broken fixtures, and pet stains are damage beyond normal wear, and those deductions are legitimate.
Carpet and Paint
HB 25-1249 tightens the rules on the two most common deposit fights. A landlord cannot deduct for carpet replacement unless the carpet has substantial, irreparable damage beyond normal wear and tear that did not exist before the tenant moved in. And if the carpet was not replaced with new carpet within the ten years before the lease ended, the landlord cannot claim it was substantially damaged at all.1Colorado General Assembly. HB25-1249 Tenant Security Deposit Protections The same principle governs paint: deductions require substantial damage, not the need for a fresh coat between tenants.
Even for a valid carpet or paint deduction, the landlord can keep only the minimum amount necessary to address the damaged area, not the cost of recarpeting or repainting the whole unit.
Preexisting Damage
HB 25-1249 also bars deductions for any damage or defect that existed before the tenancy began.1Colorado General Assembly. HB25-1249 Tenant Security Deposit Protections If a tenant requests it in writing, the landlord must produce any relevant documentation in the landlord’s possession within fourteen days.
Walk-Through Inspections
Starting in 2026, either the landlord or the tenant can request a walk-through inspection before the lease ends. If the request is reasonable and practicable, both parties must participate. The inspection can happen in person or by video call, and it has to take place after the tenant has had a chance to remove furniture and before the lease terminates or the tenant surrenders the unit.1Colorado General Assembly. HB25-1249 Tenant Security Deposit Protections
The purpose is to identify any damage beyond normal wear and tear in writing while both parties are present. If you are a tenant, request the walk-through in writing and keep a copy. Tenants who skip this step lose a chance to contest deductions before they happen; landlords who skip it may struggle to prove damage existed at move-out rather than before the tenant arrived.
Deadlines and the Itemized Statement
The landlord has one month after the lease ends or the tenant surrenders the unit (whichever comes last) to return the full deposit or deliver a written statement explaining the deductions and any remaining balance.3Justia. Colorado Code 38-12-103 – Return of Security Deposit A lease can lengthen this window, but never past 60 days.
The written statement has to list exact reasons for each deduction. Vague descriptions like “damage” or “cleaning” are not enough; the statement needs to spell out what was damaged, what was cleaned, and how much each item cost. Missing the deadline is the most expensive mistake a landlord can make: if no written statement is delivered on time, the landlord forfeits all rights to keep any portion of the deposit, even if the deductions would have been perfectly valid.3Justia. Colorado Code 38-12-103 – Return of Security Deposit
A shorter track applies to uninhabitable conditions. Under CRS 38-12-104, if a landlord fails to make necessary repairs within 72 hours of written notice and the condition remains hazardous, the tenant may vacate and declare the lease void, and the landlord then has an additional 72 hours after the tenant vacates to deliver the refund.
The landlord satisfies the mailing requirement by sending the statement and any refund to the tenant’s last known address. Tenants who move out should provide a forwarding address in writing. Without one, the landlord only needs to send the refund to the rental unit address, and it may never reach you.
Penalties for Wrongful Withholding
A landlord who willfully retains a security deposit in violation of Colorado law is liable for three times the amount wrongfully withheld, plus the tenant’s reasonable attorney fees and court costs.3Justia. Colorado Code 38-12-103 – Return of Security Deposit Improperly keeping $1,500 can lead to a $4,500 judgment plus legal fees.
Bad Faith Presumption
HB 25-1249 adds a presumption of bad faith when the amount withheld is 125% or more of the actual damages.1Colorado General Assembly. HB25-1249 Tenant Security Deposit Protections Bad faith also includes retaining funds without actual cause, keeping an amount the landlord knew exceeded real damages, or holding funds for a retaliatory or discriminatory purpose. In court, the landlord bears the burden of proving the withholding was justified.
Seven-Day Demand Letter
Before filing suit for treble damages, the tenant must give the landlord written notice at least seven days in advance of filing.3Justia. Colorado Code 38-12-103 – Return of Security Deposit The letter identifies the amount owed and warns that the tenant intends to pursue legal action, including treble damages, if the funds are not returned. Skipping this step can undermine a treble damages claim, so send the letter before filing.
Small Claims Court
Most security deposit disputes fit within Colorado’s small claims jurisdiction, which covers claims up to $7,500.4Colorado Judicial Branch. Opening a Case You don’t need a lawyer for small claims court, though you can hire one. Treble damages claims exceeding $7,500 have to be filed in county court instead.
When the Property Is Sold
If a landlord sells the property, dies, or otherwise stops being the owner, they have two options under CRS 38-12-103(4). They can transfer the deposit (minus any lawful deductions) to the new owner and notify the tenant in writing of the new owner’s name and address, or they can return the deposit directly to the tenant.3Justia. Colorado Code 38-12-103 – Return of Security Deposit HB 25-1249 requires that transfer or return within 60 days of the landlord’s interest ending.1Colorado General Assembly. HB25-1249 Tenant Security Deposit Protections After a valid transfer, the former landlord is released, and the new owner assumes the same obligations. Get written confirmation of who holds your deposit after any ownership change.
Assistance Animals
The $300 pet deposit cap does not apply to service animals or emotional support animals. Under the federal Fair Housing Act, landlords must waive pet fees, pet deposits, and breed or size restrictions as a reasonable accommodation for a tenant with a disability-related need for an assistance animal, because an assistance animal is not legally a pet. A landlord can still hold the tenant responsible for actual damage caused by the animal, deducting those costs from the regular security deposit like any other damage beyond normal wear and tear. What they cannot do is charge an extra deposit upfront simply because the animal exists.
Military Service Members
Tenants who terminate a lease under the Servicemembers Civil Relief Act get additional federal protections. Advance rent paid beyond the termination date must be refunded within 30 days. A landlord who knowingly seizes or holds the security deposit or personal property of a service member (or a dependent) who has lawfully terminated a lease commits a federal misdemeanor, punishable by a fine, up to one year in prison, or both.5Office of the Law Revision Counsel. 50 USC 3955 – Termination of Residential or Motor Vehicle Leases Colorado’s standard deposit return rules still apply alongside these federal protections, so a landlord dealing with a military tenant’s departure has to comply with both.