Colorado Security Deposit Law

Maximum Security Deposit Amount

Maximum amount: Landlords in Colorado can charge up to one month of rent as a security deposit for residential properties. However, for mobile homes, landlords may only charge up to one month’s rent as a security deposit (CRS 2023 Title 38).

Other conditions, such as the length of the lease term, whether or not the unit is furnished, and the amount of properties in the landlord’s portfolio do not affect the maximum amount that landlords can charge as a security deposit in Colorado.

Pet deposits: Passed in 2023, Colorado’s House Bill 23-1068 limits pet deposits to no more than $300, which must be refundable to the tenant. Additionally, landlords are not permitted to charge tenants a pet deposit for emotional support animals (ESAs) or service animals under the federal Americans with Disabilities Act.

Penalties: If the landlord charges a security deposit over the limitations described above, the tenant may sue the landlord and obtain up to three times the excess amount, as well as reasonable attorney fees and court costs. To start the process, the tenant must notify the landlord at least seven days before filing legal action (CO Rev Stat § 38-12-103).

Handling Damage Deposits

Besides limiting the amount landlords may collect as a security deposit, Colorado law does not regulate how damage deposits may be collected and stored. Still, landlords in Colorado who wish to charge a security deposit must do so in accordance with the laws outlined below:

Security deposit storage: Colorado landlord-tenant law does not require landlords to store security deposits in a particular way. As a result, landlords in Colorado can store security deposits in any manner deemed fit.

Interest-bearing account: Colorado does not require landlords to store security deposits in an interest-bearing account or pay interest to tenants when returning the security deposit. However, Boulder requires landlords to pay 2.92% interest (as of 2025) on security deposits held for tenants.

Receipt: Landlords in Colorado are not required to provide tenants with a written receipt for their security deposit. With that said, though, it’s generally good practice to offer tenants a security deposit receipt regardless for record-keeping purposes.

Documentation: Though Colorado does not explicitly require landlords to maintain documentation related to security deposits, landlords will still benefit from keeping thorough records of all documents pertaining to collecting a tenant’s security deposit.

As part of that process, landlords may use a move-in checklist to avoid future tenant disputes. This form details all aspects of the property’s condition when the tenancy begins, preventing conflict over when and how damage to the property may have occurred.

Ownership transfer: If a landlord in Colorado decides to sell the property in the middle of a tenancy, the landlord can decide whether to return the deposit to the tenant (minus any deductions) or transfer the deposit to the new owner, to be returned to the tenant upon conclusion of the tenancy.

Deductions

What landlords can deduct: Landlords cannot make any deductions from the security deposit to cover damages caused by normal wear and tear. We’ll take a look at what that encompasses below.

On the other hand, landlords may deduct funds to pay for professional cleaning services and repair damages to the property that exceed normal wear and tear. Landlords can also make deductions for damages caused by smoking. Finally, landlords can make deductions to cover unpaid rent and utilities and costs incurred by property abandonment, such as storage of a tenant’s abandoned belongings.

To avoid using a security deposit to cover unpaid rent, consider using TurboTenant’s free landlord software to collect rent online.

Reasons landlords cannot deduct: As mentioned above, landlords cannot deduct from a security deposit to repair damages caused by normal wear and tear. Ordinary wear and tear includes relatively minor and/or cosmetic damages that occurred through regular use of the premises rather than action or negligence on the tenant’s part. Some examples of normal wear and tear include faded lamps or window shades, grimy tile grouting, and small chips in the plaster. HB25-1249 also places limits on carpet replacement or painting unless there is substantial and irreparable damage done that did not preexist the tenancy.

Return Timeline

Timeframe: Within 30 days of the tenant moving out, Colorado landlords must return the remainder of the security deposit, minus any deductions. However, Colorado landlord-tenant law does allow landlords to return the deposit within 60 days as long as this extended period is outlined in the lease agreement.

Deduction tracking: If the landlord makes any deductions from the security deposit, the tenant is entitled to receive a statement of deductions when they receive the security deposit. So, landlords must track all deductions thoroughly to easily provide this statement when the time comes.

The statement of deductions must include a thorough accounting of each security deposit deduction, an explanation of the charges, and copies of receipts or estimates for future repair costs (CO Rev Stat § 38-12-103).

Itemized deduction notification: Landlords must provide tenants with the itemized statement of deductions when returning the remainder of the security deposit. In Colorado, landlords must mail the remaining portion of the security deposit and the itemized statement of deductions to the tenant’s last known forwarding address within either 30 or 60 days, depending on the period outlined in the lease agreement (CO Rev Stat § 38-12-103(1)).

Penalties: If the landlord fails to return the security deposit and/or provide an itemized statement of deductions by Colorado security deposit law, the tenant may take legal action and sue the landlord for up to three times the amount withheld, as well as reasonable attorney fees and court costs (CO Rev Stat § 38-12-103(3)(a)).

Handling Disputes

Move-in/move-out checklist: Although Colorado landlord-tenant law does not require landlords to use a move-in or move-out checklist, these forms can greatly benefit landlords. Move-in and move-out checklists help landlords document the property’s condition before and after the tenant moves into a dwelling unit, preventing future disputes regarding property or smoking damages.

As part of using a move-in and move-out checklist, take photos confirming the property’s condition and jot down descriptions of the dwelling unit and its features—the more detailed, the better.

Tenant challenge: Even when you thoroughly adhere to all laws regarding security deposits in Colorado, tenants still have the right to challenge your handling of the security deposit. If the tenant takes issue with how you’ve made deductions from or returned the security deposit, be prepared to present documentation that proves beyond a doubt that you’ve followed Colorado security deposit laws to the letter.

If the tenant continues to push the issue and takes legal action against the landlord, it’s highly recommended that the landlord seek qualified civil legal assistance as soon as possible. The same documentation is required, though, as this could prove your innocence in a court case.