The Colorado legislature recently revised the requirements and regulations governing disposition of residential security deposits with HB 25-1249 (“Tenant Security Deposit Protections“). This legislation redefines the statutory definition of “normal wear and tear,” expands certain prohibited deductions from security deposits, provides additional tenant rights to request walkthroughs and documentation related to withholdings, and enacts new penalties for landlords who fail to comply. These changes become effective on January 1, 2026.
Revised Definition of “Normal Wear and Tear”
The act expanded the statutory definition of “normal wear and tear,” which is now defined as follows (new language underlined):
“Normal wear and tear” means deterioration, damage, or uncleanliness that occurs, based upon the use for which a rental unit . . . is intended or reasonably and typically used, without negligence, carelessness, accident, or abuse of the premises or equipment or private property by the tenant or home owner or members of the tenant’s or home owner’s household or their invitees or guests. “Normal wear and tear” does not include uncleanliness that renders a dwelling unit substantially less clean than the dwelling unit was when the lease began.
Landlords are not permitted to retain any portion of a tenant’s security deposit for items that are considered “normal wear and tear.”
Prohibited Security Deposit Deductions
Additionally, the act specifies that security deposits may not be retained and applied against:
- Any damage or defective condition that pre-existed the tenancy; or
- Fees or charges for cleaning due to normal wear and tear.
Any provisions in residential lease agreements to the contrary are deemed void as against public policy and are therefore unenforceable. Accordingly, residential Colorado landlords may no longer automatically deduct cleaning fees from a tenant’s security deposit. Cleaning fees may only be assessed if the cleaning was necessary to address conditions beyond normal wear and tear and to restore the premises to a substantially similar level of cleanliness that existed when the tenant took possession of the property.
Carpet and Paint Deductions
Further, the legislation strictly limits the landlord’s ability to apply the security deposit toward costs of remedying damaged carpet and paint. Specifically, landlords may no longer retain any portion of the security deposit to pay for replacement carpet, unless there is “substantial and irreparable damage” that exceeds normal wear and tear and did not pre-exist the tenancy. Accordingly, deductions due to light staining of carpets, potential matting, or cleaning made necessary due to normal wear and tear are no longer permissible deductions.
Additionally, if the carpet was not replaced in the ten years preceding the termination of tenancy, it cannot be considered “substantially and irreparably damaged.” In other words, landlords may not retain security deposits for damage to carpeting where the carpet is more than ten years old.
Deductions for repainting are also now limited. Notably, landlords are no longer permitted to retain any portion of a security deposit to pay for painting of interior walls or the ceiling of a unit unless there is substantial damage to the paint that exceeds normal wear and tear and did not pre-exist the occupancy.
Final Walkthrough
If requested by the tenant, the landlord must provide a walkthrough inspection at a mutually convenient time before termination of the lease or the surrender of the premises, after the tenant has had the opportunity to remove furniture. The walkthrough may be conducted in person or via a telecommunication-assisted interactive device (phone, computer or similar) to identify any damage or defective conditions that are beyond normal wear and tear and that did not pre-exist the tenancy. Landlords may also request joint walkthroughs for final inspection and documentation purposes.
Timing and Process for Returning the Security Deposit
The timing for reconciling and returning security deposits is largely unchanged: the default is that the deposit must be returned within 30 days after the termination of a lease or surrender of the rental unit (previously “one month”). However, the lease agreement may specify a longer period for reconciliation, up to 60 days.
If any portion of the security deposit is retained, landlords must provide tenants with a written statement listing the exact reasons for retention along with the balance of the deposit. This statement must be mailed to the last known address of the tenant or may now instead be emailed to the tenant, if the landlord has actual notice of the tenant’s email address.
The balance of the security deposit may be mailed or transferred electronically, upon the tenant’s consent. If any balance of a security deposit is returned to the landlord as undeliverable, the landlord must retain the balance for at least one year after receiving it and release it to the tenant upon request.
When tenants receive the written statement outlining any deductions from their deposit, tenants may now request documentation from the landlord supporting the amount retained. Upon receipt of any such request, landlords must, within 14 days, provide photographs, inspection forms or reports, receipts, invoices, or estimates that are in the landlord’s possession or control and that are relevant to the retention of the tenant’s security deposit.
Penalties
The penalty for wrongful retention of the security deposit is that the landlord is liable for treble damages (three times the amount) of any portion of the security deposit wrongfully withheld, together with reasonable attorney fees and court costs. A landlord is deemed to have wrongfully withheld a security deposit if the landlord:
- Fails to timely provide the written reconciliation statement and supporting documentation (if the documentation is requested by the tenant);
- Provides a statement that fails to list the exact reasons for the retention of the security deposit;
- Fails to return the difference between the sum deposited and the amount retained within the required amount of time; or
- Retains a security deposit in bad faith.
“Bad faith” is now defined as retaining an amount from the security deposit that “unreasonably exceeds” the amount of actual damages incurred by the landlord, that is retained without cause, or that is retained for an unlawful, retaliatory or discriminatory purpose. An amount retained by a landlord is presumed to “unreasonably exceed” the amount of actual damages incurred if the amount retained is 125% or more of the actual damages.
Tenants are still required to provide landlords at least seven days’ advance notice demanding return of the security deposit balance and their intent to file legal proceedings to recover allegedly wrongfully withheld amounts and associated damages.
Compliance Considerations and Practices
To comply with the new requirements of HB25-1249, landlords should carefully review and update their residential lease agreements to remove any provisions that will be void and unenforceable as of January 1, 2026, including clauses with standard or automatic cleaning fees.
During tenant changeovers, landlords should conduct a detailed walkthrough of the property to document its condition. Upon taking possession of a property, tenants should be afforded the opportunity to complete a move-in inspection report. Landlords should maintain all move-in condition documentation, records, and reports.
When a rental term ends, the landlord should again carefully document the condition of the property to ensure that any security deposit withholdings are proper. If tenants request joint walkthroughs or supporting documentation related to security deposit retention, landlords should comply within the timeframes required by the new legislation.
If landlords withhold any portion of a tenant’s security deposit, best practice is to timely provide a detailed written statement itemizing the exact reasons for retention and proactively provide clear supporting documentation for the charges. Landlords should exercise caution for any carpet or paint-related deductions and should never apply or retain any portion of a tenant’s security deposit for matters of normal wear and tear.
It is particularly important to consult with an attorney who understands the implications of these legislative changes and their impact on particular Colorado residential lease relationships. For assistance with residential lease terms and agreements, contact attorney Michael Smeenk. For lease enforcement, security deposit concerns, and eviction guidance, contact attorney Caroline Young.
