Security deposit disputes are among the most common conflicts between landlords and former tenants, and they can be surprisingly expensive to lose. A deduction that seemed reasonable at move-out can become a claim for three times the amount withheld, plus the tenant’s attorney’s fees and court costs. On January 1, 2026, Colorado raised the stakes further by rewriting key parts of its security deposit laws.
Governor Polis signed House Bill 25-1249, titled Tenant Security Deposit Protections, on June 3, 2025. The law amends Colorado’s security deposit statute, C.R.S. § 38-12-101 and following sections, and it applies to conduct on or after January 1, 2026. At Anzen Legal Group, we represent landlords and property managers in Fort Collins and across Northern Colorado. This article compares existing law before 2026 with current law and explains how landlords can adjust their move-out procedures to keep returning deposits on time and in compliance.
If you have questions regarding a security deposit or tenancy, please call our office at (970) 893-8857 to schedule a consultation with an experienced Colorado landlord attorney.
What Is the Colorado Security Deposit Law?
Colorado law defines a security deposit broadly as any advance or deposit of money, whatever it is called, whose primary function is to secure performance of a residential rental agreement (C.R.S. § 38-12-102(6)). The statute controls how much a landlord may collect, when the deposit must be returned, what the landlord may deduct, and what happens when a landlord wrongfully withholds money. Tenant protections in the statute cannot be waived or modified by lease (C.R.S. § 38-12-103(7)), and the statute applies to security deposits for residential premises throughout Colorado.
Key Changes Under HB25-1249
For landlords who want the short version, the most important changes under HB25-1249 include:
- A 30-day default deadline to return the deposit or provide an itemized statement[1]
- An expanded definition of normal wear and tear that now includes deterioration, damage, or uncleanliness from ordinary use, though not uncleanliness that leaves the unit substantially less clean than at move-in
- New limits on carpet replacement and painting deductions
- A duty to provide relevant documentation within 14 days of a tenant’s written request
- A pre-move-out walk-through inspection, in person or by video, when reasonable and practicable
- A presumption that retaining 125 percent or more of actual damages is unreasonable
- Lease clauses that shift normal wear and tear or pre-existing damage to tenants are void
How Much Can a Landlord Collect?
Colorado generally caps a residential security deposit at two months’ rent (C.R.S. § 38-12-102.5). In other words, the maximum security deposit equals two monthly rent payments. Many Colorado landlords collect a security deposit equal to one month’s rent, or one monthly rent payment plus a pet deposit, which falls well within the limit. Beginning January 1, 2027, SB26-054 will add a narrow exception for certain post-closing occupancy agreements in residential real estate sales, which does not affect typical rental properties.
Pet Deposits
A landlord may collect an additional refundable pet security deposit of no more than $300 (C.R.S. § 38-12-106). Monthly pet rent is also capped at the greater of $35 or 1.5 percent of the monthly rent (C.R.S. § 38-12-106(2)). Charging more than these limits creates exposure before the tenancy even begins, so we recommend reviewing lease forms and application packets to confirm the numbers match current law.
The 30-Day Return Deadline and Itemized Statement
Under the amended statute, a landlord must return the tenant’s security deposit, or deliver a written statement listing the exact reasons for any amount retained along with the balance, within 30 days after lease termination or after the tenant vacates and surrenders the premises, whichever occurs later. The lease may set a longer period, but never more than 60 days (C.R.S. § 38-12-103(1)).
What the Written Statement Must Include
Colorado law requires the written statement to list the exact reasons for any amount retained, and it must be accompanied by payment of the difference between the sum deposited and the amount retained. We recommend that the written statement listing each deduction identify the specific damage or defective condition, the amount charged, and the exact reasons for the charge. An itemized statement explaining each deduction separately is far easier to defend than a single lump-sum charge. Vague entries such as “cleaning and repairs” invite a challenge.
How to Deliver the Refund
A landlord may send the statement, any refund, and any required documentation to the tenant’s last known address, and the statement may also be sent to an email address the landlord knows the tenant uses (C.R.S. § 38-12-103(1)(a)). That is why we recommend requesting a forwarding address before the tenant leaves. Payment by secured electronic transfer is permitted when the tenant consents (C.R.S. § 38-12-103(10)).
Returned Refund Payments
If the landlord’s payment refunding the deposit comes back undelivered, the landlord must hold the funds for at least one year and pay them to the tenant within 15 calendar days of the tenant’s request.
Normal Wear and Tear Under the 2026 Definition
No security deposit may be retained to cover normal wear and tear. HB25-1249 expanded the definition in C.R.S. § 38-12-102(4). Normal wear and tear now means deterioration, damage, or uncleanliness that occurs from the intended use of the unit, without negligence, carelessness, accident, or abuse by the tenant, household members, or guests. The definition does not include uncleanliness that leaves the dwelling unit substantially less clean than it was at move-in.
In practice, faded paint, minor scuffs, small nail holes, and carpet worn from ordinary foot traffic usually fall within normal wear. Holes in walls, pet stains, burns, and broken fixtures usually exceed normal wear, but each condition depends on the facts. A dwelling unit left with heavy grime or debris after the tenant moved out may be substantially less clean than at move-in, which can justify a reasonable cleaning charge.
Allowable Deductions: What Can a Landlord Deduct in Colorado?
Under the amended statute, a landlord may retain reasonable amounts for:
- Unpaid rent owed through the end of the tenancy
- Unpaid utility charges
- Other lawful charges that are listed in the lease
- Necessary repair costs for damage beyond normal wear and tear that did not exist before the tenancy began
When a tenant fails to pay the final month of rent, unpaid rent is often the largest item on the itemized statement. Each deduction should reflect costs the landlord incurred or reasonably estimates, supported by records. A landlord who retains money for repairs that exceed normal wear should be able to show what the repair cost and why it was necessary.
Deductions That Are Not Allowed
A landlord may not deduct for normal wear and tear or for any damage or defective condition that existed before the tenancy. Under HB25-1168, a separate 2025 law, a tenant who ends a lease early as a victim-survivor of unlawful sexual behavior, stalking, domestic violence, or domestic abuse, and who provides the required documentation, is not liable for damage caused by the responsible party or during the incident (C.R.S. §§ 38-12-103(1)(a), 38-12-402).
Carpet Replacement and Painting Deductions
HB25-1249 adds specific limits on two of the most common move-out charges.
Carpet
A landlord may not charge for carpet replacement throughout a unit unless there is substantial and irreparable damage beyond normal wear and tear. A landlord may not deem carpet substantially and irreparably damaged if it has not been replaced with new carpet within the 10 years before the lease ended or the tenant surrendered the premises. When the substantial and irreparable damage is limited to part of the unit, the landlord may charge only for replacing carpet in the damaged portion.
Paint
A landlord may not charge for repainting an entire unit unless there is substantial damage to the paint throughout the entire unit. We recommend limiting painting deductions for a damaged wall or room to the area actually affected.
Lease Clauses That Are Now Void
Lease terms that make a tenant responsible for normal wear and tear or for pre-existing conditions are void as against public policy. Landlords who use older lease forms with automatic carpet cleaning fees, flat repainting charges, or similar provisions should update those forms now.
Documentation and Walk Through Inspection Requirements
HB25-1249 gives tenants new tools to test a landlord’s deductions.
The 14-Day Documentation Rule
If a tenant makes a written request, the landlord must provide, within 14 days, the documentation in the landlord’s possession or control that supports the deductions on the written statement. Because the statute also ties documentation to the statement itself, the safest practice is to include it with every statement. Documentation supporting a deduction can include photographs, inspection reports, receipts, invoices, and repair estimates. Because a tenant’s request can arrive at any point, landlords should organize these records at the time of the inspection rather than after the tenant’s request arrives.
Walk Through Inspections
Upon request of either party, and if reasonable and practicable, the landlord and tenant must conduct a walk through inspection before the lease ends or the tenant surrenders the premises. The inspection may take place in person or by video, at a mutually convenient time after the tenant has had the opportunity to remove furniture, and it should identify in writing any damage beyond normal wear and tear that did not exist before the tenancy.
Bad Faith, Treble Damages, and the 125 Percent Rule
The penalty provisions are where landlords face the greatest risk under current law.
When Withholding Is Wrongful
If a landlord fails to comply with the statute or otherwise wrongfully withholds the deposit, the landlord forfeits the right to withhold any portion of it (C.R.S. § 38-12-103(2)). The amended statute treats retention as bad faith in several situations, including when the landlord retains money without actual cause.
Actual cause is tied to the categories the statute lists: unpaid rent, unpaid utilities, other lawful charges listed in the lease, and necessary repairs for damage beyond normal wear and tear that did not exist before the tenancy (C.R.S. § 38-12-103(1)(b)). A deduction without actual cause is the kind of bad faith retention that exposes a landlord to the statute’s harshest penalties.
The 125 Percent Presumption
A landlord is presumed to have retained an unreasonable amount if the amount retained is 125 percent or more of the actual damages. A smaller amount can still be found unreasonable. The landlord bears the burden of proving actual damages, and a landlord who overestimated damages in good faith and otherwise complied with the statute may owe only the excess plus court costs.
Treble Damages and the Seven-Day Notice
When a landlord wrongfully withholds a deposit, the tenant may recover three times the amount wrongfully withheld, plus reasonable attorney’s fees and court costs (C.R.S. § 38-12-103(3)). Before filing legal action, the tenant must give the landlord at least seven days’ notice of the demand and of the intent to sue, which gives the landlord a final opportunity to return the disputed amount. In court, the landlord bears the burden of proving that the withholding was not wrongful and that the landlord complied with the statute.
What Treble Damages Can Look Like
If a court finds that $1,500 was wrongfully withheld, the landlord could owe $4,500 plus the tenant’s attorney’s fees and court costs. That math is why we encourage landlords to treat every deduction as something they may need to prove in court.
A Move-Out Checklist for Colorado Landlords
Compliance with the Colorado security deposit law starts long before the tenant leaves.
We recommend that landlords and property managers build these steps into every tenancy:
- Document the unit at move-in with dated photographs or video and a written condition report signed by the tenant.
- Record when the carpet was last replaced and when the unit was last fully painted.
- Review lease forms and remove any clause that charges for normal wear and tear or pre-existing conditions.
- Calendar the 30-day deadline for returning deposits on the day the lease ends or the tenant vacates, whichever is later.
- Respond promptly to any walk through request and keep written notes and photographs from the inspection.
- Save every receipt, invoice, and estimate tied to a deduction so documentation can be produced within 14 days of a written request.
- Itemize each deduction with a specific reason and amount.
- Treat a seven-day notice of intent to sue as a signal to reevaluate the deduction with counsel.
Security Deposits After an Eviction
An eviction does not suspend the security deposit law. After a landlord recovers possession, the same deadline and itemization rules apply, and the deposit may be applied to unpaid rent and qualifying damage. A money judgment from the eviction case and the deposit accounting should be coordinated so the landlord does not double count charges or miss the return deadline while the case is pending. Our Fort Collins eviction attorneys handle both pieces together.
How We Help Landlords With Security Deposit Compliance
At Anzen Legal Group, we review residential lease forms for compliance with the 2026 changes, prepare itemized statements, respond to tenant demand letters, and defend landlords in deposit disputes. When a disagreement turns on lease interpretation, our contract dispute attorneys can assist. Learn more about our landlord-tenant legal services, call us at (970) 893-8857, or contact our Fort Collins office.
Frequently Asked Questions About Colorado Security Deposits
How long does a landlord have to return a security deposit in Colorado?
Thirty days after the lease ends or the tenant surrenders the premises, whichever occurs later. A lease may extend the deadline, but not beyond 60 days.
How much can a security deposit be in Colorado?
Generally no more than two months’ rent under C.R.S. § 38-12-102.5, with a separate refundable pet deposit capped at $300.
What is considered normal wear and tear in Colorado?
Deterioration, damage, or uncleanliness that results from the intended use of the unit, without negligence, carelessness, accident, or abuse. It does not include uncleanliness that leaves the unit substantially less clean than at move-in.
Can a Colorado landlord charge for carpet replacement or repainting?
Only in limited circumstances. Full carpet replacement requires substantial and irreparable damage beyond normal wear and tear, and carpet that has not been replaced with new carpet within the past 10 years cannot be treated as substantially and irreparably damaged. Full repainting requires substantial damage to the paint throughout the entire unit.
What happens if a landlord misses the security deposit deadline?
The landlord forfeits the right to withhold any portion of the deposit and may face treble damages, attorney’s fees, and court costs if the tenant pursues the claim after giving seven days’ notice.
Does HB25-1249 apply to commercial leases?
The bill is titled Tenant Security Deposit Protections and the security deposit statute addresses residential rental agreements. Commercial lease deposits are generally governed by the lease itself, and we recommend reviewing each commercial lease individually.
This article provides general information about Colorado law and is not legal advice. Reading it does not create an attorney-client relationship. Please consult a licensed Colorado attorney about your specific situation. Anzen Legal Group, LLC, 343 W Drake Road #270, Fort Collins, CO 80526, 970-893-8857.
[1] A lease can still allow for longer periods, up to 60 days.
