Security Deposit Law
What Colorado landlords must do with security deposits — the cap, interest, return deadline, account rules, and penalties — with citations to the statute itself.
Verified as of June 15, 2026
This page is general information, not legal advice. Statutes change — verify with the cited sources or an attorney.
Deposit cap
Maximum of two months' rent; plus an optional refundable pet deposit capped at $300.
Interest
No Colorado statute requires interest on residential security deposits — but the City of Boulder does by local ordinance.
Return deadline
30 days after lease termination or surrender (whichever is last); a lease may extend this to no more than 60 days.
C.R.S. § 38-12-102.5 (added by SB23-184, effective August 7, 2023) provides that 'a landlord shall not require a tenant to submit a security deposit in an amount that exceeds the amount of two monthly rent payments under the rental agreement,' and § 38-12-106 caps any additional pet deposit: 'A landlord shall not demand or receive an additional security deposit of more than three hundred dollars' and 'the security deposit must be refundable to the tenant.' SB26-054 (signed April 20, 2026) amends § 38-12-102.5 so that 'ON AND AFTER JANUARY 1, 2027, SUBSECTION (1) OF THIS SECTION DOES NOT APPLY IF THE LANDLORD AND TENANT HAVE EXECUTED A POST-CLOSING OCCUPANCY AGREEMENT PURSUANT TO A PURCHASE CONTRACT WHEREBY THE LANDLORD PURCHASED THE RESIDENCE FROM THE TENANT' — a narrow home-sale rent-back exception, not a general loophole.
C.R.S. § 38-12-102.5 · SB23-184 (2023), official bill page · C.R.S. § 38-12-106 (pet deposits, HB23-1068) · SB26-054 (2026), Final Act, amending § 38-12-102.5
Nothing in C.R.S. §§ 38-12-101 to 38-12-104 requires a landlord to pay or accrue interest on a security deposit, and HB25-1249's January 1, 2026 rewrite of § 38-12-103 adds no interest requirement (verified against the enrolled act text). Boulder landlords are the exception: Boulder Revised Code ch. 12-2 (Ordinance 7320) requires interest, set at 2.08% for 2026.
C.R.S. § 38-12-103 · HB25-1249 (2025), enrolled act · City of Boulder, 2026 security deposit interest rate notice (B.R.C. ch. 12-2, Ordinance 7320)
Effective January 1, 2026, HB25-1249 amended § 38-12-103(1)(a): 'A landlord shall, within THIRTY DAYS after the termination of a lease or surrender OF A premises, whichever occurs last, return to the tenant the full security deposit... unless the lease agreement specifies a longer period of time, but not to exceed sixty days.' If actual cause exists to retain any portion, the landlord must provide 'a written statement listing the exact reasons for the retention of any portion of the security deposit' and deliver the difference between the sum deposited and the amount retained, along with any documentation required by subsection (8). Compliance is achieved by sending statement, payment, and documentation to the tenant's last-known address or an email address the landlord has actual notice of, or by a consented secured electronic transfer under subsection (10).
C.R.S. § 38-12-103(1), as amended by HB25-1249 §§ 2-3 (effective Jan. 1, 2026) · HB25-1249 (2025), official bill page
No Colorado statute requires deposits to be held in a separate, escrow, or trust account, and none requires disclosing where the deposit is held; the enrolled HB25-1249 text adds no such requirement. On any sale or transfer of the property, § 38-12-103(4) (as amended) requires the person in possession of the tenant's deposit to transfer it or account for it within sixty days of cessation of the landlord's interest.
C.R.S. § 38-12-103 · HB25-1249 (2025), enrolled act, § 38-12-103(4)
Under § 38-12-103(2) as amended, if a landlord 'FAILS TO... COMPLY WITH THE REQUIREMENTS OF this section OR OTHERWISE WRONGFULLY WITHHOLDS A SECURITY DEPOSIT OR ANY PORTION OF A SECURITY DEPOSIT, THE LANDLORD FORFEITS THE LANDLORD'S rights to withhold any portion of the security deposit.' Subsection (3)(a): wrongful retention 'RENDERS a landlord liable for treble the amount of that portion of the security deposit wrongfully withheld from the tenant, together with reasonable attorney fees and court costs,' provided the tenant notifies the landlord of the demand and intent to sue at least seven days before filing — and the landlord bears the burden of proving the withholding was not wrongful. A good-faith landlord who otherwise complied but reasonably over-retained is liable only for the excess amount and court costs (§ 38-12-103(3.5)(d)).
C.R.S. § 38-12-103(2), (3), (3.5), as amended by HB25-1249 (effective Jan. 1, 2026) · C.R.S. § 38-12-103 (pre-2026 text)
City of Boulder is the notable overlay: Boulder Revised Code ch. 12-2 (Ordinance 7320, adopted 2004) requires landlords to pay interest on tenant security deposits at a city-set annual rate — 2.08% for 2026 per the city's official notice (no interest is due on last month's rent held as such). No Denver or other Colorado municipal ordinance imposing a separate deposit cap, interest, or escrow requirement was identified during verification; Boulder landlords should confirm calculation details against B.R.C. §§ 12-2-2 and 12-2-4 through 12-2-7.
As of January 1, 2026, § 38-12-103(1)(b) is exclusive: 'EXCEPT AS PROVIDED IN SUBSECTION (3.5)(a)(IV) OF THIS SECTION, A LANDLORD HAS ACTUAL CAUSE TO RETAIN REASONABLE AMOUNTS FROM the security deposit ONLY for: (I) Nonpayment of rent; (II) Nonpayment of utility charges; (III) NONPAYMENT OF OTHER LAWFUL CHARGES LISTED IN THE LEASE; OR (IV) NECESSARY REPAIR WORK FOR DAMAGE OR DEFECTIVE CONDITIONS THAT EXCEED NORMAL WEAR AND TEAR AND DID NOT PREEXIST THE TENANCY.' The subsection (3.5)(a)(IV) carve-out means even a listed ground fails if the retention is for an unlawful, retaliatory, or discriminatory purpose. Old catch-alls — abandonment, contracted cleaning or repair work as standalone grounds — were struck.
Under § 38-12-103(8), the fourteen days runs from the tenant's written request: when a tenant makes a written request, the landlord must deliver the written statement within fourteen days after that request and with it 'PROVIDE DOCUMENTATION IN THE LANDLORD'S POSSESSION OR CONTROL, INCLUDING PHOTOGRAPHS, INSPECTION FORMS OR REPORTS, RECEIPTS, INVOICES, OR ESTIMATES, THAT IS RELEVANT TO THE RETENTION OF THE TENANT'S SECURITY DEPOSIT OR ANY PORTION OF THE SECURITY DEPOSIT.' The statute gives the tenant no 14-day window to ask — the clock is on the landlord's delivery duty, and failing to timely provide the statement and all relevant documentation is per-se wrongful withholding under § 38-12-103(2.5)(a). Separately, § 38-12-103(1.5) requires a walk-through inspection (in person or by video) at a tenant's request, at a mutually convenient time before termination or surrender and after the tenant has had the opportunity to remove furniture.
C.R.S. § 38-12-103(8), (1.5), (2.5)(a), as amended by HB25-1249 · HB25-1249 (2025), official bill page and summary
§ 38-12-103(11) bars retaining for whole-unit carpet replacement 'UNLESS THERE IS SUBSTANTIAL AND IRREPARABLE DAMAGE TO THE CARPET THAT EXCEEDS NORMAL WEAR AND TEAR AND DID NOT PREEXIST THE TENANCY' (partial-area replacement is allowed on the same showing), and 'A LANDLORD SHALL NOT DEEM CARPET TO BE SUBSTANTIALLY AND IRREPARABLY DAMAGED IF THE CARPET HAS NOT BEEN REPLACED WITH NEW CARPET WITHIN TEN YEARS PRECEDING THE TERMINATION OF THE LEASE OR SURRENDER OF THE PREMISES.' Whole-interior repainting requires substantial damage to walls or ceiling throughout the unit; these rules do not apply to mobile homes in mobile home parks (§ 38-12-103(12)).
§ 38-12-103(3.5)(a) defines bad-faith retention (unreasonably exceeding actual damages, no actual cause, knew-or-should-have-known excess, or retention for an unlawful, retaliatory, or discriminatory purpose), and (3.5)(b) creates a presumption: 'AN AMOUNT RETAINED BY A LANDLORD IS PRESUMED TO UNREASONABLY EXCEED THE AMOUNT OF ACTUAL DAMAGES THE LANDLORD INCURRED IF THE AMOUNT RETAINED IS ONE HUNDRED TWENTY-FIVE PERCENT OR GREATER THAN THE ACTUAL DAMAGES INCURRED.' In court the landlord bears the burden of proving its actual damages (§ 38-12-103(3.5)(c)).
§ 38-12-103(9): if a refund payment sent to the tenant's last-known address is returned, the landlord must hold it for at least one year after receiving it back and disburse it within fifteen calendar days after the tenant's request. § 38-12-103(10) permits payment by mail to the last-known address or, with the tenant's consent, by secured electronic transfer.
Codified § 38-12-103(1) (the HB25-1249 Section 3 version, operative because HB25-1168 became law) commands: 'A landlord shall not retain the security deposit to cover normal wear and tear OR FOR ANY DAMAGE OR DEFECTIVE CONDITION THAT PREEXISTED THE TENANCY.' Doing so is wrongful withholding — forfeiture plus treble-damages exposure — and § 38-12-103(7)(b) voids any lease clause assigning the tenant fees for wear-and-tear or preexisting conditions as against public policy.
C.R.S. § 38-12-103(1), (7)(b), as amended by HB25-1249 § 3 (per § 4(3), the Section 3 text is codified because HB25-1168 was signed May 22, 2025) · HB25-1168 (2025), official bill page
The deadline is now thirty days (sixty maximum if the lease says so); blowing it forfeits all rights to withhold any portion and is one of the four per-se wrongful-withholding grounds in § 38-12-103(2.5), opening the door to treble damages, attorney fees, and costs.
C.R.S. § 38-12-103(1)(a), (2), (2.5), as amended by HB25-1249
§ 38-12-103(2.5)(b) makes it per-se wrongful withholding if the landlord 'PROVIDES A WRITTEN STATEMENT THAT FAILS TO LIST THE EXACT REASONS FOR THE RETENTION OF ANY PORTION OF THE SECURITY DEPOSIT,' and (2.5)(a) does the same for failing to timely provide the statement and all documentation required by subsection (8) — keep photos, inspection reports, receipts, invoices, and estimates ready to deliver.
Retaining 125% or more of actual damages is presumed bad faith under § 38-12-103(3.5)(b), bad-faith retention is per-se wrongful withholding under (2.5)(d), and the landlord bears the burden of proving actual damages in court — even a good-faith over-retention leaves you liable for the excess plus court costs.
Both are statutory violations: § 38-12-102.5 caps the deposit at two monthly rent payments (the only exception, for post-closing occupancy agreements where the landlord bought the home from the tenant, doesn't operate until January 1, 2027), and § 38-12-106 caps the additional pet deposit at $300 refundable; SB23-184 ties cap violations to Colorado's unfair-housing-practice enforcement scheme.
C.R.S. § 38-12-102.5 · C.R.S. § 38-12-106 · SB23-184 (2023) and SB26-054 (2026), official bill pages
At most two months' rent. C.R.S. § 38-12-102.5 says a landlord 'shall not require a tenant to submit a security deposit in an amount that exceeds the amount of two monthly rent payments under the rental agreement.' You may also collect a refundable pet deposit of up to $300 under § 38-12-106. Starting January 1, 2027, SB26-054 adds one narrow exception: the cap does not apply if the landlord and tenant executed a post-closing occupancy agreement under a purchase contract in which the landlord bought the residence from the tenant (a home-sale rent-back).
Thirty days after the lease terminates or the tenant surrenders the premises, whichever is later — your lease can extend that, but never beyond sixty days. This changed from 'one month' to thirty days on January 1, 2026 under HB25-1249. If you keep any portion, the same deadline applies to the written statement of exact reasons and the refund of the difference.
HB25-1249 rewrote § 38-12-103: the return window is thirty days; deductions are limited to four exclusive grounds (unpaid rent, unpaid utilities, other unpaid lawful lease charges, and necessary repairs beyond normal wear and tear that didn't preexist the tenancy); tenants can request a pre-move-out walk-through inspection; and if a tenant sends a written request, the landlord must deliver the written statement — along with all relevant documentation in its possession or control (photographs, inspection forms or reports, receipts, invoices, estimates) — within fourteen days after that request. Note the clock runs from the tenant's request and binds the landlord; the statute does not give the tenant a 14-day deadline to ask. The act also added the bad-faith rules, including a presumption against retaining 125% or more of actual damages, plus strict limits on charging for whole-unit carpet replacement or repainting.
Not under state law — no Colorado statute requires interest on residential deposits, and the 2026 amendments added no such requirement. The big exception is the City of Boulder, which requires landlords to pay interest under Boulder Revised Code ch. 12-2 (Ordinance 7320); the city sets the rate annually, 2.08% for 2026.
You forfeit all rights to withhold any portion of the deposit, and wrongful retention makes you liable for treble the amount wrongfully withheld plus the tenant's reasonable attorney fees and court costs. The tenant must give you written demand and at least seven days' notice before filing suit — treat that seven-day window as your last chance to return the money, because in court you bear the burden of proving the withholding wasn't wrongful.
Only narrowly. Since January 1, 2026, you cannot charge for replacing carpet throughout the unit unless it has substantial and irreparable damage beyond normal wear and tear that didn't preexist the tenancy — and carpet that hasn't been replaced with new carpet within the ten years before move-out can't be deemed substantially and irreparably damaged at all. Whole-interior repainting requires substantial damage to walls or ceilings throughout the unit; otherwise you may only charge for the damaged portion.
This page is general information, not legal advice. Statutes change — verify with the cited sources or an attorney.
Statute facts on this page were verified against the cited official sources on June 15, 2026.
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