Renting a place in Colorado? Then one should be aware of the regulations concerning security deposits. These laws determine the extent that a landlord may demand, the way your money should be managed, and at what time it should be refunded. A large number of tenants are losing some of their deposit due to lack of full knowledge of what does and does not constitute damage as well as what is considered normal wear and tear.
Colorado security deposit law provides tenants with high-security and also establishes clear responsibilities of landlords in 2026. This guide will inform you of the main rules, your rights in the role of a renter, and what you can do in case of the unfair deprivation of a deposit.
It is also a clever thought to include renters damage insurance. This kind of cover would cover the accidental damage that you may do to the property, and you as well as your deposit is safe. Renter damage insurance creates a soothing atmosphere and helps to prevent minor accidents to be transformed into expensive conflicts.
How much can a landlord charge?
In the case of Colorado, the landlords are not permitted to pay any amount of fees that they desire when it comes to security deposits. The Colorado security deposit law draws a very definite boundary, where landlords are not allowed to demand prices exceeding two months of rent as security deposits on a residential lease.
In doing so, the expenses involved in moving into their apartments become manageable to the tenants, who do not have to move at the last minute with unexpected expenses or heavy initial billing. However, the trick is that only the principal damage or security deposit is covered by this rule at the move-in. Landlords are not prohibited to charge other forms of permitted fees, such as application fees and pet deposits.
In the case of the tenants and the owners, a good property management firm can assist them in making sure that the laws are properly adhered to. Property managers are informed about the state regulations and ensure that deposits, fees and rights of tenants are addressed fairly and within the law.
Quick tip: If you ever see a listing demanding more than two months’ rent as a deposit, ask the landlord to explain where that’s allowed in the law. If they can’t, that’s a red flag, don’t sign until it’s corrected.
Legal Limits on Late Fees in Colorado
Falling behind on rent can be stressful enough, and Colorado security deposit laws make sure landlords can’t pile on unfair charges. Under C.R.S. 38-12-105, late fees are strictly capped. A landlord can charge no more than $50 or 5% of the overdue rent , whichever amount is greater.
Let’s say your rent is $1,200, the maximum late fee would be $60 (5%). And if you are paying $700 as rent, the cap would be $50. These limits apply to all residential leases, no matter if your agreement is written down or just a verbal understanding.
The idea is simple and clear – not to promote excessive penalties while still giving landlords a way to encourage on-time payment. The law also makes it clear that landlords cannot keep stacking on penalties. They’re not allowed to:
- add interest to unpaid late fees,
- charge additional fees if the first late fee isn’t paid, or
- take late fees out of future rent payments.
Why does this matter? Without these rules, tenants could easily fall into a spiral — where a single missed payment snowballs into hundreds of dollars in extra charges and even an eviction risk. Colorado’s limits are designed to stop that from happening.
When Should the Deposit Be Returned?
Once you move out and hand over the keys, the landlord has 30 days to return your security deposit or give you a written breakdown of any deductions.
There’s a small catch: your lease might say the landlord has up to 60 days. That’s legal, but 60 days is the maximum allowed. Anything longer than that would violate Colorado law.
If your landlord doesn’t return the deposit or give you that written explanation within the legal timeframe, they lose the right to keep any of it. That’s a big deal because it gives tenants a strong position if things ever go to court.
What’s Changing in 2026?
The new law, HB 25-1249, makes the rules even clearer and offers more protection to tenants. Here’s what’s different starting in 2026:
1. A Stronger Definition of “Normal Wear and Tear”
The law now spells out what landlords can’t charge for. Routine deterioration from everyday living, like worn flooring, faded paint, or minor scuffs—cannot be deducted from your deposit.
2. Carpet Rules
Landlords can only charge tenants for carpet replacement if there’s substantial, irreparable damage (like a giant burn hole or water damage). Even then, the carpet can’t be treated as ‘irreparably damaged’ unless it has been replaced with new carpet within the last 10 years. So if you move into an apartment with decade-old carpet, the landlord can’t make you pay to replace it when you move out.
3. Paint Rules
Repainting after a tenant leaves has always been a gray area. Starting in 2026, it’s much clearer: landlords can’t charge tenants for routine repainting. Whole-unit repainting can only be charged if there is substantial damage throughout; otherwise, landlords may only bill for the specific damaged areas.
4. Cleaning Costs
Automatic cleaning fees written into leases are no longer enforceable. Landlords can only deduct for cleaning if the unit is significantly less clean than when you moved in. So a little dust or a few smudges aren’t enough—only substantial uncleanliness justifies a deduction.
5. Walk-Through Inspections
Tenants now have the right to request a walk-through before move-out. The landlord must schedule it at a convenient time, either in person or virtually. This gives you the chance to see what the landlord thinks needs fixing, so you can handle it yourself before they touch your deposit.
6. Documentation on Deductions
If the landlord withholds part of your deposit, you can request proof—like receipts, photos, inspection reports, or invoices. They’re required to provide this within 14 days of your request. No proof? They may not have the right to keep your money.
7. Penalties for Bad Behavior
Colorado has never taken the dispute over deposits lightly and the new law is cancelling further. In case a landlord retains the portion of your deposit wrongly and still does not pay you the amount within 7 days after receiving your written demand, then he/she will have to pay three times the money he/she withheld and attorney fees.
The law further provides that landlords are acting in bad faith where they retain more than 125 percent of the real damage losses or when they retain money as a result of retaliation or discrimination.
Also, it is necessary to mention that pet restrictions are significant in terms of deposits. In case your lease has some specifics to do with pets, the landlords may impose charges on actual damages made by the pets, but not the overall wear and tear. Consistent upfront clarification of pet policies should also be done by tenants to prevent deductions in future.
What Tenants Should Do to Protect Themselves
Here are a few simple steps tenants can take to avoid problems:
- Document everything at move-in. Take photos or a video of every room, every wall, every appliance. Keep a copy of any move-in checklist.
- Clean well before you leave. You don’t need to make the place brand-new, but leave it at least as clean as when you moved in.
- Ask for a walk-through. This gives you a chance to fix problems before they hit your wallet.
- Keep receipts. If you pay for repairs or cleaning, save those invoices.
- Request documentation. If your landlord withholds part of the deposit, ask for proof. They must provide it.
- Send a demand letter if needed. If your landlord doesn’t follow the rules, a short written demand can often get your money back. And if they still don’t return it, the law is on your side.
Tips for Landlords
If you’re a landlord, the new law means you need to be extra careful:
- Don’t rely on “automatic” cleaning fees in leases—they won’t hold up.
- Keep detailed records, photos, and receipts for any damage or repairs.
- Return the deposit or send an itemized statement within 30 days (or 60 if your lease allows).
- Be cautious with carpet and paint charges. You’ll need real, provable damage, not just wear.
- Always honor a tenant’s request for a walk-through or supporting documentation.
Conclusion
Security deposits should not be difficult and tense. The new rules in Colorado (2026) have given both tenants and landlords more definite instructions to adhere to- therefore, there is less speculation and no surprises. The most important thing is to be aware of your rights, keep record of everything and keep track of the deadlines. In that manner, you have things even-handed and save yourself a headache. In case you are not interested in handling the hassle yourself, see Real Estate Solutions. We deal with deposits, inspections, and all those annoying details just in case you do not want to.
