Overview
Colorado's security deposit laws are governed by Colo. Rev. Stat. § 38-12-101 et seq. The state recently enacted significant reforms through House Bill 24-1322 (effective 2025), which for the first time established a statutory cap on security deposits. Colorado law sets clear rules for deposit return timelines, required documentation, and tenant remedies.
This guide covers everything landlords and tenants need to know about security deposits in Colorado.
Deposit Limits
Colorado's deposit limits changed significantly with the passage of HB 24-1322:
- Effective 2025: Maximum deposit of 2 months' rent
- Before 2025: No statutory maximum (landlords could charge any amount deemed reasonable)
Additional rules:
- Nonrefundable fees: Must be clearly designated as nonrefundable in writing
- Pet deposits: May be charged in addition to the security deposit, but the total combined amount is subject to the statutory cap
Landlords are not required to hold the deposit in a separate account or pay interest on the deposit, unless specified by local ordinance.
cite: Colo. Rev. Stat. § 38-12-103
Allowable Deductions
Landlords may deduct from the security deposit for the following reasons:
- Unpaid rent: Any rent owed through the date the tenant vacates or the lease terminates
- Cleaning: Costs to restore the unit to the condition it was in at the start of the tenancy, minus normal wear and tear
- Damage beyond normal wear and tear: Repairs for tenant-caused damage exceeding ordinary use
- Unpaid utilities: Utility charges that are the tenant's responsibility under the lease
- Other lease obligations: Costs arising from the tenant's breach of lease terms, such as early termination fees if specified in the lease
What Constitutes Normal Wear and Tear?
Normal wear and tear includes:
- Minor scuffs or marks on walls from everyday living
- Small nail holes from hanging pictures or decorations
- Carpet wear from regular foot traffic
- Minor fading of paint from sunlight exposure
- Slight wear on fixtures and hardware from regular use
Damage beyond normal wear and tear includes:
- Large holes in walls, doors, or ceilings
- Stained, burned, or torn carpet or flooring
- Broken windows, blinds, or fixtures
- Pet damage (stains, scratches, odors, chew marks)
- Unauthorized alterations or modifications
- Excessive filth requiring professional cleaning
Return Timeline
Colorado has a tiered return timeline:
- 30 days: The default period for returning the deposit after the tenant vacates and the landlord receives possession
- Up to 60 days: If the rental agreement specifies a longer return period (maximum 60 days)
- 72 hours: If the premises are deemed uninhabitable due to a hazardous condition such as a gas leak, flood, fire, or other emergency
The landlord must provide:
- The remaining deposit amount (after lawful deductions)
- An itemized written statement listing each deduction, the reason for the deduction, and the amount
The statement and refund must be mailed to the tenant's last known address or forwarding address. If the landlord fails to return the deposit or provide the itemized statement within the required time, the landlord forfeits the right to withhold any portion of the deposit.
cite: Colo. Rev. Stat. § 38-12-103(1)
Dispute Resolution
If a tenant believes their deposit was wrongfully withheld, they can:
- Send a demand letter to the landlord requesting the return of the deposit with a specific deadline
- File a claim in Small Claims Court (up to $7,500 in Colorado)
- File a civil action in county court for larger amounts
If the landlord willfully retains the deposit in violation of the statute, the tenant may recover up to three times the amount wrongfully withheld, plus reasonable attorney's fees and court costs.
Important Documentation
Landlords should maintain:
- Move-in and move-out inspection reports (with photographs or video)
- Copies of all receipts for cleaning and repair work
- Records of communication with the tenant regarding the deposit
- The original lease agreement documenting deposit terms
Tenants should:
- Take dated photographs or video at move-in and move-out
- Request a move-out inspection with the landlord present
- Provide a forwarding address in writing
- Keep copies of all deposit-related correspondence