Key Points
- New Colorado tenant / landlord laws go into effect January 2026
- Many of the new laws are being misapplied
- Landlords do NOT need to offer installment plans for security deposits
- Allowable security deposit deductions have been significantly restricted
- Standardized move-out fees are no longer permitted
Colorado’s 2026 Rental Laws:
In our 48 years of providing rental management services to both landlords and tenants, we have never seen so many new rental laws over a two-year period. Many legal changes take effect January 1, 2026, and are creating understandable questions for both landlords and tenants.
At the same time, there has been a noticeable rise in misinformation circulating online. Recent social media discussions in Denver-area community groups have included legal claims that range from partially true to entirely incorrect. The result is growing uncertainty about what some of the laws require.
To bring clarity, several of the most commonly misunderstood laws are addressed below.
Security Deposit Limits:
A widely shared claim suggests that security deposits are now capped at one month’s rent. This is incorrect.
Under Colorado law, the maximum allowable security deposit remains equal to no more than two months’ rent, and landlords may not exceed this limit.
Security Deposit Payment Plans:
Another circulating claim asserts that tenants must be allowed six months to pay a security deposit. This is also false.
No law requires landlords to offer any type of installment plans or extended payment windows. Landlords may require the security deposit to be paid in full at move in.
Restrictions on Security Deposit Deductions:
This portion of the law reflects one of the most meaningful shifts in Colorado’s rental regulations. Recent legislation has significantly narrowed what landlords are permitted to deduct from a tenant’s security deposit at move out.
Deductions are now generally limited to specific, documented items such as unpaid rent or utilities, cleaning when clearly justified by the lease and property condition, and actual damage that exceeds legally defined normal wear and tear.
Standardized or universal move out fees are prohibited, meaning landlords cannot apply blanket charges such as flat cleaning fees or automatic carpet cleaning costs. Every deduction must be tied to the unique condition of the property and supported by clear, property specific documentation.
In addition, the legal definition of normal wear and tear has been revised and narrowed, further limiting what can be charged to tenants. As a result, deposit deductions are now more tightly regulated, more evidence driven, and subject to greater legal scrutiny.
Move In and Move Out Documentation Requirements:
Recent laws now formally require landlords to provide tenants with a move in condition checklist and allow a pre move out walkthrough. While these practices have long been standard among reputable property managers, they are now explicitly codified in Colorado law.
The intent is to ensure that the property condition is clearly documented at both the beginning and end of a tenancy so that tenants are only held responsible for potential damage that occurs during their occupancy. In practice, however, these requirements introduce logistical and legal complexity.
For example, the law includes conditions related to timing and property readiness, such as expectations around furniture removal and access for inspections. This can make it difficult for landlords to accurately assess responsibility for damage or estimate repair costs prior to a tenant vacating. As a result, compliance requires careful coordination, thorough documentation, and clear communication between landlords and tenants.
Grace Property Management & Real Estate - serving real estate investors and residents since 1978.
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.
Grace Property Management & Real Estate
2200 E 104th Ave Suite #105 Thornton, CO 80233, United States
303-255-1990
https://www.rentgrace.com/
