Colorado Security Deposit Rules: What Denver Landlords Need to Know in 2026

Security deposits are one of the most common sources of landlord-tenant disputes in Colorado — and in our experience, most of those disputes are preventable. The landlord had legitimate deductions but didn't document them properly. Or they returned the deposit on day 32 instead of day 30. Or they withheld for something Colorado law doesn't actually allow.

Here's a plain-language breakdown of how Colorado security deposit law works in 2026, and how to protect yourself.

How Much Can You Collect?

Colorado does not set a statewide limit on the security deposit amount. You can collect whatever amount you and the tenant agree to in the lease. In practice, most Denver landlords collect one month's rent — sometimes one and a half months for pets or furnished units. Whatever you collect, document it clearly in the lease and provide a receipt.

If you also collect a non-refundable pet fee or cleaning fee, those must be explicitly labeled as non-refundable in the lease. A fee described only as a "deposit" may be treated as refundable under Colorado law regardless of your intent. The Colorado Attorney General's landlord-tenant guide is a useful plain-language reference for both sides.

The 30-Day Return Requirement

This is where landlords get into trouble most often. Under C.R.S. § 38-12-103, you have 30 days after the tenant vacates to return the security deposit — or send a written itemized statement of deductions with any remaining balance.

If the lease specifies a shorter timeframe, that shorter period controls. If you need more time due to the complexity of the repairs, you may be able to extend to 60 days, but only if you notify the tenant in writing within the initial 30-day window and the lease allows for it.

Miss the deadline without proper notice? Colorado law presumes you forfeited your right to make deductions, and you may owe the tenant the full deposit plus damages. We are not making that up — we've seen it happen. The Colorado Judicial Branch self-help center has current guidance on landlord-tenant procedures.

What Can You Actually Deduct?

Legitimate security deposit deductions in Colorado include:

• Unpaid rent — straightforward.
• Damages beyond normal wear and tear — the key phrase. A carpet that's worn down from three years of normal use is wear and tear. A carpet with pet stains or burns is damage. Painted walls with minor scuffs are wear and tear. Walls with large holes or unauthorized paint colors are damage.
• Cleaning costs — if the unit was left in significantly worse condition than it was received. The baseline is the condition at move-in, which is why your move-in inspection report matters enormously.
• Unpaid utilities or HOA fees the tenant was responsible for

What you cannot deduct:

• Normal wear and tear (this is non-negotiable under Colorado law)
• Pre-existing damage that was present at move-in
• Cosmetic upgrades you wanted to make anyway
• General cleaning if the unit was returned in reasonably clean condition

The Move-In / Move-Out Report: Your Best Protection

We'll be direct: a detailed move-in inspection report with photos is the single most important thing you can do to protect your security deposit deductions. Without it, you have no documented baseline — and if a tenant disputes your deductions, you're arguing from memory.

At every property My Haven manages, we conduct a thorough move-in inspection with timestamped photos of every room, all appliances, and any existing damage. The tenant signs off on the report. At move-out, we do the same walk-through and compare the two sets of photos side by side.

This documentation makes the deduction process transparent for everyone and dramatically reduces disputes.

Itemizing Deductions Correctly

When you do make deductions, the written itemization sent to the tenant must:

• List each specific deduction with a dollar amount
• Include receipts or invoices for work performed (or a written estimate if work hasn't been done yet — but you'll need to follow up)
• Be sent to the tenant's last known address or forwarding address within the 30-day window

A vague letter that says "deducting $400 for cleaning and repairs" won't hold up. "$175 — carpet cleaning per attached invoice, $225 — patching and repainting bedroom wall per attached contractor invoice" will.

One More Thing: Interest on Security Deposits

Colorado does not require landlords to hold security deposits in a separate interest-bearing account or pay interest to the tenant — unlike some states. You can hold the deposit in a general account. That said, it's worth keeping it separate from your operating funds simply as a practical matter, so you're not in a bind at move-out.

If you'd like a second opinion on your security deposit process — or want someone else to handle move-in and move-out documentation entirely — reach out at 303-228-7800 or visit rentmyhaven.com. You can learn more about how My Haven handles tenant placement and move-in documentation on our services page.

My Haven is a full-service property management company proudly serving the Denver metro area.