Co-Author: Catherine A. Hance, Esq.
Question 1: A tenant gives appropriate notice to vacate a rental unit and vacates the premises in accord with that notice. When must the landlord return the security deposit to the vacating tenant?
Answer 1: A landlord must, within “one month after the termination of a lease or surrender and acceptance of the premises, whichever occurs last,” return the security deposit to the vacating tenant. Section 38-12-103(1), C.R.S.
Question 2: Can the landlord take longer than that to return the security deposit?
Answer 2: If the lease agreement provides for a longer time, the landlord can take up to sixty days to return the security deposit. Section 38-12-103(1), C.R.S.
Question 3: Are there any conditions on which the landlord can keep part or all of the security deposit?
Answer 3: The landlord cannot retain any of the security deposit for ordinary wear and tear; the landlord can, however, retain part or all of the security deposit where “actual cause exists” to retain part or all of the deposit. Section 38-12-103(1), C.R.S.
Question 4: What does the landlord have to do to keep part or all of the security deposit?
Answer 4: The landlord must provide written notice to the tenant, sent to the tenant’s last known address, of what portion of the deposit is being retained and the “exact reasons” why that portion of the deposit is being retained. This written notice must be sent within the required 30 or 60 (if the lease agreement provides for the longer time) days for returning the deposit. Section 38-12-103(1) & (2), C.R.S. If only a portion of the deposit is being retained, the landlord must include with this written notice, payment of the remainder of the security deposit not being retained. Section 38-12-103(1), C.R.S.
Question 5: What if the landlord does not give this written notice within the requisite time period?
Answer 5: The landlord then forfeits any of the landlord’s right to keep any of the security deposit. Section 38-12-103(2), C.R.S.
Question 6: What must the tenant do if the landlord retains the security deposit beyond the thirty or sixty days and does not provide written notice within that time period stating the reasons why the deposit is being withheld?
Answer 6: The tenant must then send notice to the landlord “of his intention to file legal proceedings a minimum of seven days prior to filing said action.” Section 38-12-103(3)(a), C.R.S.
Question 7: What can the tenant recover if the tenant brings suit against the landlord for the security deposit?
Answer 7: The tenant can recover, if the tenant establishes that the landlord willfully retained the deposit in violation of Section 38-12-103, C.R.S., triple the amount of the security deposit wrongfully withheld, reasonable attorneys’ fees and court costs. Section 38-12-103(3)(a), C.R.S.
Question 8: Who bears the burden of proof in such a case?
Answer 8: The landlord bears the burden of proving “that his withholding of the security deposit or any portion of it was not wrongful.” Section 38-12-103(3)(b), C.R.S.
Question 9: Notwithstanding the landlord’s failure to timely notify tenant of landlord’s exact reasons for withholding all or a portion of the security deposit, can the landlord seek damages against the tenant?
Answer 9: Yes. Although this statute precludes the landlord from retaining any portion of the security deposit to cover damages to the rental unit unless the landlord complies with the statutory requirements outlined above, the landlord can still seek damages in a counterclaim against the tenant for any damages, other than normal wear and tear, to the rental unit. See, Turner v. Lyon, 539 P.2d 1241 (Colo. 1975).
For questions, please contact Jon Goodman.
A version of this article appeared in the Colorado REALTOR® News, the monthly publication of the Colorado Association of REALTORS®.