Colorado § 38-12-103 - Return of security deposit.

§ 38-12-103. Return of security deposit.

(1) (a) A landlord shall, within thirty days after the termination of a lease or surrender of a premises, whichever occurs last, return to the tenant the full security deposit deposited with the landlord by the tenant, unless the lease agreement specifies a longer period of time, but not to exceed sixty days. A landlord shall not retain the security deposit to cover normal wear and tear or for any damage or defective condition that preexisted the tenancy. If a tenant terminates the lease pursuant to section 38-12-402 (2)(a) and provides the documentation required pursuant to section 38-12-402 (2)(a.5), the tenant is not liable for damage to the dwelling unit caused by the responsible party or during the course of an incident of unlawful sexual behavior, stalking, domestic violence, or domestic abuse, and any amount of money that the landlord retains from the security deposit must comply with section 38-12-402 (2)(b). In the event that actual cause exists for retaining any portion of the security deposit, the landlord shall provide the tenant with a written statement listing the exact reasons for the retention of any portion of the security deposit. When the landlord delivers the statement, the landlord shall also deliver the difference between any sum deposited and the amount retained, along with any relevant documentation required by subsection (8) of this section. A landlord is deemed to have complied with this requirement by sending the statement, any required payment, and any required documentation to the last-known address of the tenant or to any email address for the tenant that the landlord has actual notice of by sending any required payment to the tenant in accordance with subsection (10) of this section.

(b) Except as provided in subsection (3.5)(a)(IV) of this section, a landlord has actual cause to retain reasonable amounts from the security deposit only for:

(I) Nonpayment of rent;

(II) Nonpayment of utility charges;

(III) Nonpayment of other lawful charges listed in the lease; or

(IV) Necessary repair work for damage or defective conditions that exceed normal wear and tear and did not preexist the tenancy.

(1.5) Upon a landlord's or tenant's request, if reasonable and practicable, the landlord and tenant shall conduct a walk-through inspection, either in person or via a telecommunication-assisted interactive walk-through, of the dwelling unit to identify in writing any damage or defective conditions that are beyond normal wear and tear and that did not preexist the tenancy. The landlord shall provide a walk-through inspection at a tenant's request, at a time that is mutually convenient to the parties, before the termination of the lease or the surrender of the premises, and after the tenant has had the opportunity to remove furniture.

(2) If a landlord fails to comply with the requirements of this section or otherwise wrongfully withholds a security deposit or any portion of a security deposit, the landlord forfeits the landlord's rights to withhold any portion of the security deposit under this section.

(2.5) A landlord is deemed to have wrongfully withheld a security deposit or any portion of it in violation of this section if the landlord:

(a) Fails to timely provide the written statement required by subsection (1) of this section and all relevant documentation required by subsection (8) of this section;

(b) Provides a written statement that fails to list the exact reasons for the retention of any portion of the security deposit;

(c) Fails to return the difference between any sum deposited and the amount retained within the time specified in subsection (1) of this section; or

(d) Retains a security deposit or any portion of it in bad faith as described in subsection (3.5) of this section.

(3) (a) The wrongful retention of a security deposit in violation of this section renders a landlord liable for treble the amount of that portion of the security deposit wrongfully withheld from the tenant, together with reasonable attorney fees and court costs; except that the tenant shall notify the landlord of the tenant's demand for the return of the security deposit and intention to file legal proceedings at least seven days before filing the action.

(b) In a court action brought by a tenant under this section, the landlord bears the burden of proving that the landlord's withholding of the security deposit or any portion of it was not wrongful and that the landlord complied with the requirements of this section.

(c) A tenant may bring a court action for treble damages, reasonable attorney fees, and court costs only if the landlord fails to return the entire security deposit or any withheld portion to the tenant within seven days after receiving a demand and notice of the tenant's intention to file legal proceedings as described in subsection (3)(a) of this section.

(3.5) (a) A landlord retains a security deposit or any portion of it in bad faith if the amount retained by the landlord:

(I) Unreasonably exceeds the amount of actual damages the landlord incurred;

(II) Is retained without actual cause existing for the retention of the amount;

(III) Is an amount the landlord knew or should have known exceeded the actual damages the landlord incurred or would incur; or

(IV) Is retained solely or in part for an unlawful, retaliatory, or discriminatory purpose.

(b) An amount retained by a landlord is presumed to unreasonably exceed the amount of actual damages the landlord incurred if the amount retained is one hundred twenty-five percent or greater than the actual damages incurred. Nothing in this subsection (3.5)(b) prevents a court or jury from finding that a lesser amount retained by a landlord unreasonably exceeds the amount of actual damages the landlord incurred.

(c) In a court action brought by a tenant under this section, the landlord bears the burden of proving the amount of actual damages the landlord incurred.

(d) If a landlord retains a security deposit or any portion of it in good faith and otherwise complies with all requirements of this section but is found in a civil action to have reasonably retained an amount that exceeded the actual damages the landlord incurred, the landlord shall be liable to the tenant only for the excess amount retained and court costs.

(4) Upon cessation of a landlord's interest in a dwelling unit, whether by sale, assignment, death, appointment of a receiver, or otherwise, the person in possession of the tenant's security deposit, including the landlord, the landlord's agent, or the landlord's executor, shall, within sixty days:

(a) Transfer the funds, or any remainder after lawful deductions under subsection (1) of this section, to the landlord's successor in interest and notify the tenant by mail of such transfer and of the transferee's name and address; or

(b) Return the funds, or any remainder after lawful deductions under subsection (1) of this section, to the tenant.

(5) Upon compliance with subsection (4) of this section, the person in possession of the security deposit shall be relieved of further liability.

(6) Upon receipt of transferred funds under subsection (4)(a) of this section, the transferee, in relation to such funds, shall be deemed to have all of the rights and obligations of a landlord holding the funds as a security deposit.

(7) (a) Any provision, whether oral or written, in or pertaining to a rental agreement whereby a provision of this part 1 that is for the benefit of a tenant or members of the tenant's household is waived or modified is deemed to be against public policy and void.

(b) A provision, whether oral or written, in or pertaining to a rental agreement, which provision assigns a fee or charge to a tenant for repairs, cleaning, or other necessary work due to normal wear and tear or for any damage or defective condition that preexists the tenancy, is deemed to be against public policy and void.

(8) For a termination of a lease or a surrender of the premises on or after January 1, 2026, if a landlord provides a tenant with a written statement pursuant to subsection (1) of this section within fourteen days after a written request by the tenant, the landlord shall provide documentation in the landlord's possession or control, including photographs, inspection forms or reports, receipts, invoices, or estimates, that is relevant to the retention of the tenant's security deposit or any portion of the security deposit.

(9) If a landlord's payment refunding a tenant's security deposit or any portion of it as required by this section is returned to the landlord after it is sent to the tenant's last-known address, the landlord shall hold the payment for at least one year after receiving it and shall disburse the payment to the tenant within fifteen calendar days after the tenant's request.

(10) A landlord may send a payment refunding a tenant's security deposit or any portion of it as required by this section to the tenant by mailing the payment to the tenant's last-known address or, with the tenant's consent, by using a secured electronic transfer of funds.

(11) (a) A landlord does not have actual cause to retain any amount of a security deposit to pay for the replacement of carpet throughout a dwelling unit unless there is substantial and irreparable damage to the carpet that exceeds normal wear and tear and did not preexist the tenancy. Nothing in this subsection (11)(a) precludes a landlord from having actual cause to retain any amount of a security deposit to pay for the replacement of carpet in a portion or portions of the dwelling unit if there is substantial and irreparable damage to a portion or portions of the carpet that exceeds normal wear and tear and did not preexist the tenancy.

(b) A landlord does not have actual cause to retain any amount of a security deposit to pay for painting throughout the interior of a dwelling unit unless there is substantial damage to the paint of the interior walls or ceiling throughout the entire dwelling unit that exceeds normal wear and tear and did not preexist the tenancy. Nothing in this subsection (11)(b) precludes a landlord from having actual cause to retain any amount of a security deposit to pay for the replacement of paint in a portion or portions of the dwelling unit if there is substantial damage to a portion or portions of the paint on the interior walls or ceiling that exceeds normal wear and tear and did not preexist the tenancy.

(c) A landlord shall not deem carpet to be substantially and irreparably damaged if the carpet has not been replaced with new carpet within ten years preceding the termination of the lease or surrender of the premises.

(12) Notwithstanding any provision of this section to the contrary, subsections (1.5) and (11) of this section do not apply to a rental agreement concerning the occupancy of a mobile home, as defined in section 38-12-201.5 (5), in a mobile home park, as defined in section 38-12-201.5 (6).

Source: L. 71: p. 592, § 1. C.R.S. 1963: § 58-1-28. L. 76: (2) amended, p. 314, § 67, effective May 20. L. 2025: (1) amended, (HB 25-1168), ch. 229, p. 1056, § 13, effective May 22; (1), (2), (3), IP(4), and (7) amended and (1.5), (2.5), (3.5), (8), (9), (10), (11), and (12) added, (HB 25-1249), ch. 401, pp. 2273, 2277, §§ 2, 3, effective January 1, 2026.

Cross references: For the legislative declaration in HB 25-1168, see section 1 of chapter 229, Session Laws of Colorado 2025.

ANNOTATION

I. General Consideration.

II. Treble Damages and Attorneys' Fees.

I. GENERAL CONSIDERATION.

Law reviews. For comment, "Colorado's Wrongful Withholding of Security Deposits Act: Three Litigious Shares in an Untested Law", see 49 Den. L.J. 453 (1973). For article, "The Colorado Security Deposit Act", see 50 U. Colo. L. Rev. 29 (1978).

Purpose of section. From a consideration of the language of the entire section, it is evident that the legislative purpose of this section is to assure that tenants will not be wrongfully deprived of their security deposits, and that if so deprived they will be entitled to adequate judicial relief. Ball v. Weller, 39 Colo. App. 14, 563 P.2d 371 (1977).

This section is designed to assist tenants in vindicating their legal rights and to equalize the disparity in power which exists between landlord and tenant in conflicts over relatively small sums. Martin v. Allen, 193 Colo. 395, 566 P.2d 1075 (1977).

This section provides a court remedy against landlords who withhold security deposits willfully and wrongfully, and the tenant's attorney should be paid for the time necessary to prevail; absent reasonable attorneys' fees, the security deposit law would not be enforced. Mau v. E.P.H. Corp., 638 P.2d 777 (Colo. 1981).

Security deposit actually belongs to tenant; it is only security for the landlord. Turner v. Lyon, 189 Colo. 234, 539 P.2d 1241 (1975).

Landlords not absolved from notice requirement. The last sentence in subsection (1) does not absolve landlords from the notice requirement; it merely permits them, upon proper notice, to apply deposits against unpaid rent. Heatherridge Mgt. Co. v. Benson, 192 Colo. 190, 558 P.2d 435 (1976).

Justification for requiring tenants to notify landlords prior to claiming treble damages, attorneys' fees, and court costs is to give the landlord one last week to return the security deposit. Turner v. Lyon, 189 Colo. 234, 539 P.2d 1241 (1975).

"Willful" defined. The term "willful" in subsection (3)(a) means "deliberate". Turner v. Lyon, 189 Colo. 234, 539 P.2d 1241 (1975).

When retention "willful". If the landlord deliberately fails to return the security deposit during the additional seven-day period, the retention is logically "willful" under this section. Turner v. Lyon, 189 Colo. 234, 539 P.2d 1241 (1975).

Wrongful withholding of deposit determined. Failure to return the deposit, coupled with failure to provide a tenant with statutorily mandated written statement of reasons for the retention, makes the withholding of a deposit wrongful. Martinez v. Steinbaum, 623 P.2d 49 (Colo. 1981).

Deposit not "wrongfully" held. Where respondent authorized petitioner in writing to retain that portion of his deposit equal to one month's rent, petitioner did not withhold that part of the deposit "wrongfully", within the contemplation of subsection (3)(a). Heatherridge Mgt. Co. v. Benson, 192 Colo. 190, 558 P.2d 435 (1976).

Evidence of landlord's good faith. The discrepancy between the amount of a security deposit retained and the amount of actual damages proved by the landlord is important evidence of his good faith. Guzman v. McDonald, 194 Colo. 160, 570 P.2d 532 (1977).

Tenant may not accelerate statutory time requirements. McAuliffe v. Rooney, 38 Colo. App. 137, 552 P.2d 1031 (1976).

Where the statutory notice was given within the one-month period allowed by subsection (1), and only nine days after the surrender of the key to the premises, and suit was commenced prior to the expiration of the additional seven-day period contemplated by the notice requirements of subsection (3)(a), award of treble damages is improper. McAuliffe v. Rooney, 38 Colo. App. 137, 552 P.2d 1031 (1976).

A restrictive endorsement, by which a landlord attempts to create a waiver of a tenant's right to legal recourse, is void under this section. Anderson v. Rosebrook, 737 P.2d 417 (Colo. 1987).

A tenant cannot be compelled to arbitrate a claim for violation of the wrongful withholding of security deposits act. The act creates a cause of action enforceable in Colorado courts; the enforceability of the statutory cause of action in a legal proceeding cannot be limited or waived by an arbitration agreement. Thus an arbitration provision that would waive this cause of action in favor of mandatory arbitration is unenforceable to the extent that it applies to an action brought under the act. Ingold v. AIMCO/Bluffs, L.L.C. Apartments, 159 P.3d 116 (Colo. 2007).

Statute as basis for jurisdiction. Houle v. Adams State Coll., 190 Colo. 406, 547 P.2d 926 (1976).

Applied in In re Quintana, 28 B.R. 269 (Bankr. D. Colo. 1983).

II. TREBLE DAMAGES AND ATTORNEYS' FEES.

Constitutionality of attorneys' fees provision. The legitimate aims of subsection (3)(a) supply a rational basis for the distinction between prevailing tenant-plaintiffs, who are entitled to attorneys' fees, and prevailing landlord-defendants, who are not, and therefore the provision is constitutional. Torres v. Portillos, 638 P.2d 274 (Colo. 1981).

Equality of opportunity to recover attorneys' fees is not a fundamental right, and therefore the rational relationship test, not the strict scrutiny test, is the appropriate standard for equal protection review. Torres v. Portillos, 638 P.2d 274 (Colo. 1981).

Entitlement to attorneys' fees. Tenants who are successful on appeal are entitled to an award of reasonable attorneys' fees. Martin v. Allen, 193 Colo. 395, 566 P.2d 1075 (1977); Kirkland v. Allen, 678 P.2d 568 (Colo. App. 1984).

Attorneys' fees allowable include those incurred on appeal. Martinez v. Steinbaum, 623 P.2d 49 (Colo. 1981).

Attorney fees allowable include those incurred in resolving an issue as to the amount of reasonable attorney fees incurred in the underlying litigation and those incurred on appeal. Mau v. E.P.H. Corp., 638 P.2d 777 (Colo. 1981).

Rationale for award of attorney fees. The reason this section provides for an award of attorney fees is two-fold: (1) To insulate the award of damages from being substantially reduced by the fees; and (2) to encourage the private bar to enforce its provisions in actions which generally involve small amounts of money. Ball v. Weller, 39 Colo. App. 14, 563 P.2d 371 (1977); Torres v. Portillos, 638 P.2d 274 (Colo. 1981).

Successful tenants are entitled to recover attorney fees for landlord's independent actions challenging rulings and fee awards in the underlying security deposit litigation. Mishkin v. Young, 198 P.3d 1269 (Colo. App. 2008).

Hearing to determine amount of attorneys' fees. When a successful plaintiff has requested attorneys' fees in his complaint, such an award is mandatory, and it becomes incumbent upon the trial court to hold a hearing to determine the amount of reasonable attorneys' fees to be awarded. Ball v. Weller, 39 Colo. App. 14, 563 P.2d 371 (1977); Kirkland v. Allen, 678 P.2d 568 (Colo. App. 1984).

Awarding fees without hearing error. The trial court erred in awarding attorneys' fees to respondent without a hearing on their reasonableness. Heatherridge Mgt. Co. v. Benson, 192 Colo. 190, 558 P.2d 435 (1976).

Factors considered in determining of reasonable fee. If the fee requested is reasonable in light of community standards and the other criteria to be considered by the court, it is not appropriate for a court to take into consideration what a major client may pay the attorney on an hourly basis or the possible absence of overhead expenses comparable to those borne by lawyers in private practice. Mau v. E.P.H. Corp., 638 P.2d 777 (Colo. 1981).

When penalty provision attaches. If a landlord does not return a security deposit within the required time, the penalty provision of subsection (3)(a) attaches to that portion of the money wrongfully retained, plus attorneys' fees, and court costs. Turner v. Lyon, 189 Colo. 234, 539 P.2d 1241 (1975); Kirkland v. Allen, 678 P.2d 568 (Colo. App. 1984).

Where landlord deliberately fails to return security deposit within the additional seven-day period following the tenant's notice to landlord of his intention to file legal proceedings, such retention is logically "willful" under subsection (3)(a) treble damages provisions. Kirkland v. Allen, 678 P.2d 568 (Colo. App. 1984).

The purpose of the seven-day notice provision in subsection (3)(a) is to give landlords one last week to avoid treble damages by returning the security deposit. Mishkin v. Young, 107 P.3d 393 (Colo. 2005).

A landlord may not avoid treble damages by accounting for a security deposit during the seven-day period established by subsection (3)(a). The seven-day period is beyond the statutory deadline of subsection (1) and, therefore, the landlord has already forfeited all rights to retain the deposit. Mishkin v. Young, 107 P.3d 393 (Colo. 2005).

Statutory liability of subsection (3)(a) may be offset by an award, if any, made to the landlord by counterclaim for damages caused by the tenant to the property, and the landlord has the burden of proving the claim by a preponderance of the evidence. Turner v. Lyon, 189 Colo. 234, 539 P.2d 1241 (1975).

Treble damages action not "frivolous" merely because landlord wins. A treble damages action under subsection (3)(a) cannot be characterized as "frivolous" or "groundless", as used in § 13-17-101(3), merely because the landlord prevails on the merits of his defense. Torres v. Portillos, 638 P.2d 274 (Colo. 1981).

Prospective renter was not entitled to treble damages pursuant to this section since deposit paid for rental of condominium unit was not a security deposit but was instead prepayment of the entire rent for said unit. Mtn. Queen Condo. Ass'n v. Haan, 753 P.2d 1234 (Colo. 1988).

Statute of limitations. The treble damages provision of this section, being penal in nature, is governed by the one-year statute of limitations; however, the recovery of the actual security deposit and the award of attorneys' fees, being remedial in nature, are limited by the six-year statute of limitations. Carlson v. McCoy, 193 Colo. 391, 566 P.2d 1073 (1977).