It’s important for landlords to understand Colorado’s security deposit laws in order to prevent misunderstandings and avoid a lawsuit.
Understanding Your Responsibilities and Your Tenants’ Rights
While landlords clearly need to have an understanding of their own rights and responsibilities, it’s crucial to know their renter’s rights, especially when it relates to security deposits.
If a landlord mishandles their tenant’s security deposit, Colorado law allows the renter to recover three times their initial security deposit and get their attorney’s fees paid. In this market, a landlord could stand to lose thousands of dollars on one mishandles security deposit. That’s a huge risk.
So it’s incredibly important to be aware of the law and your renter’s rights. Under Colorado law, a tenant’s security deposit belongs to them, not the landlord. Instead, the landlord is merely in possession of it until the end of your lease. C.R.S. § 38-12-102 – 104
Do Not Mislabel a Security Deposit
Be careful not to call the security deposit something else, such as prepaid rent or a fee. Lease language cannot state that deposit money is “not a security deposit.” You also cannot contractually make the security deposit nonrefundable.
When a Landlord Can Keep Some or All of a Security Deposit
While the law may seem to favor tenants, you have rights as a landlord. Your tenant cannot destroy your property or leave utility bills unpaid and expect to get back their full security deposit.
You may keep some or all of your renter’s security to cover the following expenses:
- unpaid rent
- unpaid utility bills
- cleaning bills
- repairs for damage in excess of normal wear and tear
- if the tenant abandons the property
If you deduct some or all of the security deposit, you are legally required to give the tenant an itemized statement that specifically lists how much is being deducted and why.
Timeframe to Return a Security Deposit
Generally, you have one month from the time the tenant terminates their lease to return the security deposit unless it’s stated otherwise in the lease agreement. However, security deposits must be returned within 60 days.
If you take some or all of a security deposit without sending the tenant an itemized list or you fail to return the security deposit within 60 days, then you could forfeit your right to keep any of the deposit. You also may be liable for other damages.
We Can Help With Your Security Deposit Issue
Two of the best ways to avoid security deposit issues are to know your responsibilities and make sure your lease language is crystal clear. Our real estate attorneys help you with developing a strong lease agreement as well as explain your legal duties.
If your renter is suing you for a security deposit issue, we can assist you with that, too. Call 303-688-0944 to begin a free case assessment.