New Requirements For Colorado Security Deposits

Security deposits are an important part of every lease agreement, ensuring that landlord’s have cash available to help them with property repairs in the event of damage beyond reasonable wear and tear incurred during the tenancy. In January 2026, several changes to Colorado’s security deposit law take effect.

One significant change is the statutory language is that the security deposit may not be retained for any damage or defecting condition that preexisted the tenancy. While this has been understood by landlords since written into statute, this has the consequence of placing the burden on the Landlord to prove the condition did not exist prior to the tenant’s move-in. Move-in inspections and checklists as well as move-in photographs will become paramount to prevail in a security deposit dispute, as well as a moveout inspection and move-out photographs.

Moreover, a landlord may no longer withhold the deposit for expected future rent resulting from the early termination or abandonment of the premises.

The deposit may only be withheld for damages, past-due rent actually incurred, utilities, and other amounts actually incurred. A landlord can no longer withhold for future costs or estimates to restore the Property—instead, the landlord must incur these costs. This has the effect of requiring landlords to move quickly to make repairs and expend the costs of repair rather than obtaining mere bids and estimates for potential future costs to restore the premises to its pre-move-in condition. And those costs must still be reasonable.

Until January 2026, Landlords only needed to provide an itemized list of damages as a basis for withholding the deposit. Beginning January 1, 2026, Landlords must produce supporting documentation for the retention must accompany the letter. The tenant no longer needs to request these documents. However, because of the requirement to disclose documents, the statute now allows for email of the letter to an email address of the Tenant known by the Landlord.

If you would like your general lease reviewed for your unique circumstances and the ever-changing legislative environment or if you have a dispute with a tenant concerning a security deposit, contact Lakewood real estate lawyer at Pearson & Paris, P.C. for assistance.