Key Points:
Colorado security deposit laws apply to all landlords—professional or DIY—without exception.
Tenants must receive their deposit or a written explanation within 30–60 days of move-out, depending on the lease.
Only specific, documented expenses (not wear and tear or upgrades) may be deducted from a security deposit.
One of the most common disputes between tenants and landlords occurs at the end of a lease: the return of the tenant’s security deposit.
Whether managing one single family rental property or an entire real estate investment portfolio, understanding Colorado’s security deposit law is essential. From professional property managers to do-it-yourself landlords, Colorado’s laws apply equally. Self-managing landlords are held to the same standards and requirements as licensed professionals.
Tenants who know their rights are more likely to receive the full deposit back upon move-out.
Grace Property Management works with both landlords and tenants. Below is a basic understanding of what each party should understand to avoid conflict and stay compliant with Colorado law.
*Grace Property Managements is not an attorney and this should not be advice.
How Much Can Be Charged for a Security Deposit?
Colorado law caps security deposits at a maximum of two times the monthly rent. For example, if rent is $1,000, the deposit cannot exceed $2,000. This amount must be clearly disclosed in the lease agreement.
Who Holds the Security Deposit?
The lease must specify who is holding the security deposit—whether it’s the property owner or a property management company. Tenants should review this lease section carefully to know where the funds are held. Property Management companies should hold this security deposit in a bank trust account, while individual property owners have no requirement on where they hold the security deposit for the duration of the tenancy.
How Long Will It Take for My Deposit to Be Returned?
Under Colorado law:
The security deposit must be returned—or a written explanation of deductions must be provided to the vacated tenant—within 30 days of move-out, unless the lease allows up to 60 days.
This timeframe allows landlords to gather invoices from vendors or utilities and finalize the process.
Landlords should work to return the security deposits or provide a statement of charges as quickly as possible.
What Can Be Charged Against My Security Deposit?
Permitted deductions include:
Outstanding rent or lease charges
Unpaid utility bills (if tenant responsibility is outlined in the lease)
Property damage (not to be confused with normal wear and tear)
Each deduction must correspond to a legitimate, documented charge.
What Cannot Be Charged Against My Security Deposit?
1. Existing Damage
Damage that existed before move-in cannot be charged against the deposit. Tenants should always complete a detailed move-in inspection sheet to document existing conditions.
2. Standard Deductions
Flat-rate or standards charges (e.g., "$100.00 cleaning fee") are not permitted unless specifically outlined and justified in the lease. The security deposit should is fully refundable, meaning that the goal of the landlord should start with the understanding that the security deposit fully belongs to the vacated resident and any deductions should be legitimate, legally allowable, and made in good faith.
3. Property Improvements
If a property item is damaged, the replacement must be like-for-like. Upgrades cannot be charged to the deposit.
4. Normal Wear and Tear
This category often causes disputes. Fortunately, Colorado law offers guidance on defining wear & tear.
What Counts as Normal Wear and Tear?
Colorado law as well as the Colorado Attorney General has provided both a legal definition as well as a practical understanding of what constitutes normal wear and tear. Wear & tear refers to deterioration that occurs through normal use—not due to tenant negligence or abuse. Two of the most common areas of dispute are paint and carpet.
Examples of normal wear and tear include:
Minor scuffs or chips on painted walls
Superficial nail holes or the repainting required from hanging pictures
General carpet wear from normal foot traffic
These types of items cannot be deducted from a tenant’s security deposit.
Understanding the difference helps avoid disputes and ensures deductions are legally justified.
For further clarification, check out these helpful resources:
Can Carpet Damage be Charged Against The Security Deposit?
If the lease calls for it, professional carpet cleaning may be required and charged—but tenants should be given the opportunity to first have the carpets themselves.
Carpet life expectancy (per HUD guidelines) is generally 5 to 7 years. This means that once carpet has exceeded its life expectancy, no charges should be made for the carpet damage or replacement – regardless of the condition the carpet is left upon move out.
If carpet damage does occur, any cost against this damage should be adjusted and prorated based on the remaining life expectancy.
What is the Security Deposit Return Process?
When a tenant gives their housing provider a notice to vacate, the housing provider should provide move-out instructions aligned with lease terms and state law. This includes setting proper expectations in order to facilitate the return of the tenants security deposit.
A move-out inspection should be conducted. Colorado law does not require the tenant to be present for this inspection.
The person conducting the inspection and calculating deductions should be trained and have an understanding of Colorado law and lease documentation.
All deductions must be itemized in writing.
Tenants retain the right to dispute any charges. A professional property management company should have a structured process in place for addressing these disputes.
Understanding Colorado's security deposit laws helps both landlords and tenants navigate the move-out process with fewer surprises and fewer disputes. Clear communication, documentation, and compliance with state law go a long way in protecting everyone involved.
This is not legal advice, for legal guidance specific to a particular situation, consult a qualified attorney or legal professional.
At Grace Property Management, we believe that when property management is performed with integrity and transparency, both tenants and landlords benefit. Property management is not just our business - it is a relationship between us, our owner-clients, and our tenant-residents.
If these are important to you, we may be a good fit to provide you, your property, and your tenant-resident with our full-service property management services.
Feel free to reach out to us for assistance.
Grace Property Management & Real Estate
Serving real estate investors and residents since 1978.
303-255-1990
