The state of Colorado protects its landlords and tenants with its statewide landlord tenant law. Included in this law are basic rules for the security deposits. Here are nine frequently asked questions about security deposits in Colorado.
9 Basic Questions About Security Deposits in Colorado:
- Limit- None
- Nonrefundable Deposit- Not Allowed
- Storing Deposit- No Requirement
- Written Notice After Receipt- Not Required
- Deductions- Damage, Unpaid Rent, Repair, Cleaning or Utility Bills, Abandoning Property
- Walk-Through Inspection- Not Required
- Returning Deposit- One Month. See Exceptions.
- Selling Property- Transfer Deposits to New Owner or Return to Tenants
- Violating Security Deposit Law- Tenant Could Be Awarded Three Times Amount Withheld
1. Is There a Security Deposit Limit in Colorado?
No. The state of Colorado does not set a limit on the maximum amount a landlord can charge a tenant as a security deposit.
2. Can You Charge a Nonrefundable Deposit?
No. A security deposit is always considered the property of the tenant. The landlord holds the deposit as “security” if the tenant violates the terms of his or her lease.
3. How Must You Store The Security Deposit in Colorado?
There are no specific requirements for how a landlord must store a security deposit in the state of Colorado. There is no requirement to place the deposit in a financial institution, nor is there a requirement that the deposit must earn interest.
4. Is Written Notice Required After Receipt of the Security Deposit in Colorado?
After receiving a tenant’s security deposit, a landlord does not have to provide the tenant with a written notice indicating that the landlord has received the deposit.
5. What Are Some Reasons You Can Keep a Tenant’s Security Deposit in Colorado?
In the state of Colorado, a landlord may be able to keep a tenant’s security deposit, or a portion of the deposit, to cover:
- Unpaid Rent
- Damage in Excess of Normal Wear and Tear
- Abandonment of the Premises
- Tenant’s Unpaid Utility Bills
- Tenant’s Unpaid Repair Bills
- Tenant’s Unpaid Cleaning Bills
6. Is a Walk-Through Inspection Required in Colorado?
No. A walk-through inspection is not required in the state of Colorado prior to tenant move-out.
7. When Must You Return a Tenant’s Security Deposit in Colorado?
- One Month: In general, a landlord has one month from the termination of tenancy to return a tenant’s security deposit.
- 60 Days: A landlord could have longer to return a tenant’s security deposit if a longer length of time is specified as a clause in the lease agreement. However, the maximum amount of time a landlord has to return the deposit is 60 days.
- 72 Hours: In the event that there is a hazardous condition involving gas at the property, the landlord has 72 hours from receiving a written notice of the gas hazard to have it fixed by a professional. If the landlord does not do so, the tenant is allowed to voluntarily leave and the lease agreement will become null and void. In this case, the landlord has 72 hours from the time the tenant moves out to return the tenant’s security deposit or the portion of the deposit owed to the tenant.
If a landlord has withheld any portion of a tenant’s security deposit, the landlord must include a written itemized statement along with the portion of the security deposit that is being returned to the tenant. This statement must specifically list each reason for deduction along with the amount deducted.
If a landlord has made deductions from the deposit and he or she does not include a written statement with the portion of the deposit being returned, the landlord may forfeit his or her right to keep the amount of money he or she had withheld.
The landlord is responsible for returning the portion of the security deposit owed to the tenant, plus the written statement, by mail to the last known address of the tenant.
8. What Happens to the Security Deposit If You Sell Your Property?
If you sell your property, you must either:
- Transfer the security deposit, or the remaining portion of the deposit, to the buyer and notify the tenant in writing that his or her deposit has been transferred to the new owner. You must mail this statement to the tenant and include the new owner’s name and address.
- Return the security deposit or the remaining portion of the security deposit, to the tenant.
Once the transfer is complete, the new owner becomes liable for the security deposit and for following Colorado’s security deposit laws.
9. What Happens If You Fail to Follow the Security Deposit Law in Colorado?
If you fail to follow the security deposit laws in the state of Colorado, the tenant could be awarded up to three times the amount wrongfully withheld, plus reasonable attorney’s fees and court costs.
If the tenant has the intention of filing a legal suit against the landlord, he or she must notify the landlord seven days before he or she does so. This time window allows the landlord to return any amount that may have been wrongfully or unintentionally withheld without having to go to court.
What Is Colorado’s Security Deposit Law?
Colorado’s security deposit law is Colorado Revised Statutes §§ 38-12-101 to 38-12-104.