Governed by the Colorado Revised Statutes, the state's security deposit framework was recently updated by HB 25-1249 ("Tenant Security Deposit Protections"). These provisions took full effect on January 1, 2026, establishing new standards for how landlords process deductions and handle walk-through inspections.

Official Law Citation: The rules and regulations outlined on this page are strictly configured under the official Colorado Revised Statutes (C.R.S. § 38-12-103)Preview unavailable.

Deposit Limits and Installments (Effective Jan 1, 2026)

Colorado landlords are subject to the following standards regarding move-in costs:

• Maximum Amount: The provided legal sources (HB 25-1249) do not specify a maximum security deposit amount.
• Installment Payments: The current statutes do not provide specific requirements or rights for tenants to pay security deposits in monthly installments.
• Eviction Protections: There are no specific statutory provisions in HB 25-1249 addressing eviction protections related to missed security deposit installment payments.

Holding the Deposit

The provided legal sources do not specify requirements for how landlords must hold security deposits, such as mandates for separate or interest-bearing escrow accounts.

Allowable Deductions

A landlord may not retain a security deposit to cover "normal wear and tear," and Colorado law provides an expanded definition of this term. Key restrictions include:

• Preexisting Damage: A landlord may not retain a security deposit for any damage or defective condition that preexisted the tenancy.
• Carpets and Paint: Deductions for carpet replacement or painting are restricted. A landlord cannot retain funds for these unless there is substantial and irreparable damage exceeding normal wear and tear that did not preexist the tenancy.
• The 10-Year Rule: Carpet may not be deemed substantially and irreparably damaged if it has not been replaced with new carpet within the 10 years preceding the termination of the lease or surrender of the premises.
• Minimum Necessary Amount: If a landlord has actual cause for retention, they may retain only the minimum amount necessary for replacement or repainting in the specifically damaged area.

Walk-Through Rights

Upon a reasonable and practicable request from either the landlord or tenant, a walk-through inspection must be conducted to identify in writing any damage or defective conditions beyond normal wear and tear that did not preexist the tenancy.

• Format: The inspection may be conducted in person or via telecommunication.
• Timing: The inspection must occur at a mutually convenient time before lease termination or premises surrender, and after the tenant has had the opportunity to remove furniture.

Return Deadlines and Required Documentation

If actual cause exists for retaining any portion of a security deposit, the landlord must provide the tenant with a written statement listing the exact reasons for retention and the difference between the sum deposited and the amount retained.

• Documentation Requests: If the tenant makes a written request, the landlord must deliver any relevant documentation in their possession or control (such as receipts or estimates) within 14 days of that request.
• Transfer of Interest: Upon cessation of a landlord's interest in a dwelling unit, the person in possession of the deposit must transfer it to the successor in interest or return it to the tenant within 60 days.
• Returned Payments: If a refund payment is returned to the landlord, the landlord must hold it for at least one year and disburse it to the tenant within 15 calendar days upon request.

Penalties for "Bad Faith" Withholding

A landlord wrongfully withholds a security deposit if they fail to timely provide the written statement and required documentation, provide an inadequate statement, fail to timely return the difference, or retain the deposit in bad faith.

Bad faith retention occurs if the amount retained:

• Unreasonably exceeds actual damages (presumed if the amount is 125% or greater than actual damages).
• Is retained without actual cause.
• Is an amount the landlord knew or should have known exceeded actual damages.
• Is retained for an unlawful, retaliatory, or discriminatory purpose.

In any court action, the landlord bears the burden of proving the amount of actual damages incurred.

Simplify Colorado Compliance

Handling 14-day documentation deadlines and managing walk-through requests manually can lead to legal disputes. Landager streamlines the documentation process, digitizes move-in inspection records, and archives repair receipts, ensuring you are audit-proof under the new Colorado laws.

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How Landager Helps

Landager tracks lease terms, required compliance items, and accounting records - making it easy to stay compliant with Colorado regulations.

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