Tenant Security Deposit in Colorado

The Colorado State Legislature enacted the Security Deposit Act under C.R.S. § 38-12-101, which arguably gave substantial rights to both landlords and tenants with respect to security deposits. However, in practice, residential tenants are the primary beneficiary of this statutory enactment.

The Security Deposit Act was passed as a result of the inequity that tenants suffered at the end of their residential leases. In many instances, landlords would forfeit the tenant’s security deposit without notice and/or without valid reasons. Tenants, who generally were considered not to have the financial capacity to contest these forfeitures, would walk away from the leases as well as monies to which they may have been rightfully entitled.

To address the above inequities and possibly greater financial backing that a landlord may have vis-a-vis a tenant, the Security Deposit Act imposes treble damages, costs and attorney’s fees against the Landlord on amounts of the security deposit determined by the Court to be willfully and wrongfully withheld. Interestingly enough, if the tenant is found to be liable, the Security Deposit Act does not impose treble damages or attorney’s fees against the tenant. At this juncture, it should be noted that if the lease provides for the recovery of costs and attorney’s fees, the Court shall award same to the Landlord if such costs and fees are found to be reasonable.

Under the Security Deposit Act, a Landlord shall give an itemization of damages and return the unearned amounts of the security deposit within 30 days upon termination of the lease to the tenant’s last known address. An area of much consternation as well as litigation is what constitutes damage above ordinary wear and tear. Such a determination generally is ruled on a case-by-case basis.

By statute, this 30-day period may be extended to a maximum 60-day period if so provided for in the lease. Upon expiration of the applicable period of time and no itemization has been forthcoming with the time period, such funds that are not returned are deemed to be willfully withheld. At that point in time, the tenant has an additional obligation to provide a 7-day demand letter to the Landlord requesting an itemization and return of the security deposit. If Landlord elects not respond, upon the passage of seven days, the tenant may commence legal proceedings and if he prevails, shall be entitled to treble damages on amounts wrongfully and willfully withheld, plus attorney’s fees and costs. Finally, as a caveat, it should be noted that if more than one year elapses from the date of filing suit, the prevailing tenant is NOT entitled to recover treble damages.

At Colorado Legal Counsel we accept cases concerning security deposit disputes as well as constructive eviction, and evictions (called “forcible entry and detainer” (FED) actions under the Colorado Revised Statutes). We represent owners, landlords, property management companies as well as residential and commercial tenants.