Contained in the Colorado landlord-tenant laws are security deposit rules. These rules apply to all Colorado landlords that ask for a security deposit as part of the move-in costs. 

A security deposit is a one-time payment that tenants make to a landlord prior to moving into their rental. It acts as a financial cushion to a landlord against potential issues that emanate from certain negligent tenant actions. 

The following are answers to frequently asked questions regarding the Colorado security deposit law. 

Are There Limits to How Much a Landlord Can Charge for a Security Deposit in Colorado? 

No, there is no limit. As a landlord, you are free to charge whatever amount of security deposit you wish. This isn’t to mean, however, that you should overcharge your Colorado tenants, as that can prove to be counterproductive. As a general rule of thumb, charge no more than 2X the rent amount as a security deposit. 

Can a Landlord Charge an Additional Pet Deposit in Colorado? 

Yes. Landlords who allow pets in their rental unit can also charge an additional pet deposit. That said, a landlord should be careful not to impose an additional pet deposit for Colorado renters with service animals. 

One of the protected classes under the Fair Housing Act is disability. People who use service animals are entitled to full and equal housing access. Besides disability, the Act also provides protection to the following classes:

  • Race
  • Color
  • Religion
  • National origin
  • Familial status
  • Gender

security deposit laws

A landlord can, however, hold a tenant liable for any damages their animal causes to the property. 

Are There Requirements for How to Store the Security Deposits in Colorado? 

No, there are none. Landlords in the state of Colorado are under no obligation to store their tenants’ security deposits in any particular manner. This means that a landlord can store it in any way they like, whether in an interest-bearing account, a normal account, or even by posting it as a surety bond. 

Must Landlords Provide their Renters with Written Notices After Receipt of a Security Deposit in Colorado? 

No. Colorado landlords don’t have to provide their tenants with a written notice showing they have received any security deposits. Landlords are encouraged to do so, nonetheless. In the proper notice, a landlord may want to let their tenant know of the following:

  • Amount of security deposit received
  • The date on which the landlord received it 
  • The conditions that the tenant must fulfill in order to get their Colorado deposit back 

Do Landlords have a Right to make Deductions to a Tenant’s Security Deposit? 

Absolutely! A landlord may be able to keep part or all of their Colorado tenant’s security deposit for any of the following reasons:

  • If they fail to make their rent payments 
  • If they abandon their rental premises 
  • In the event, the tenant moves out without clearing their repair bills, utility bills, or cleaning bills 
  • If they cause damage exceeding normal wear and tear 

returning a tenant security deposit

The following summarizes the differences between these two types of rental damages:

Normal Wear and Tear

  • Small stains on the carpet
  • Faded hardwood floor due to sunlight exposure
  • Loose door handles
  • A few dings or crapes in a wood floor

Excessive Property Damage

  • A torn carpet or stained 
  • A missing floorboard
  • A missing door or door handle
  • Water damage on the hardwood floor
  • A hole on the floor

A landlord can only make deductions on their tenant’s deposit if they cause damage to the rental unit exceeding normal wear and tear. 

Do Colorado Landlords have to do Walk-through Inspections? 

No. walk-through inspections aren’t required in Colorado before a tenant can move out unless it’s been included in the lease agreement.

When Must Colorado Landlords Return the Security Deposit? 

In general, landlords have exactly one month after a tenant moves out to return their security deposit. A landlord may also have up to 60 days to do so if the lease agreement specifies it. But, the maximum amount to return a tenant’s security deposit is capped at 60 days. 

In the event there is a hazardous gas condition at the property, you’ll have 72 hours once you’re notified to have a professional fix it. If a landlord doesn’t, their tenant has a right to leave without having further responsibilities under the lease. Once the tenant leaves, you’ll have a maximum of 72 hours to return their deposit. 

handling a Colorado security deposit

In case of deductions, the landlord must include a written itemized statement along with the portion of the deposit you’re returning. In the statement, you must specifically list each reason for the deduction, as well as the appropriate repair cost. 

What Must a Landlord Do if They Decide to Sell the Property? 

If a landlord decides to sell the Colorado property, they’ll have two options to consider. 

  • Transfer the deposit to the incoming landlord in Colorado. A landlord must then notify the tenant of this. Once you’ve done this, the new owner will become liable for the deposit, as well as for abiding by the security deposit rules. 
  • Return the deposit, or whatever portion remains, back to the tenant. 

What Happens if a Landlord Fail to Follow Colorado’s Security Deposit Laws?

If a landlord fails to abide by these rules, they risk facing certain repercussions. Including, losing any right to keep any portion of the security deposit, paying the tenant up to 3X the deposit amount, and being liable for the attorney and court fees. 

Bottom Line

If you’re asking for a security deposit it’s important that you fully understand your legal duties. You should also ensure that you understand the legal eviction process, leasing breaking, and rent increase laws. 

For expert help in managing your rental properties and remaining legally compliant turn to the experts at Keyrenter Denver. We can help you build a successful rental investment portfolio by handling all the day-to-day operations of your Denver rental property reliably and professionally. Get in touch to learn more!

Disclaimer: This blog should not be used as a substitute for professional legal advice from a qualified attorney. Also, laws change and this content may not be updated at the time you are reading it.