HB25-1249 Summary

HB25-1249: Tenant Security Deposit Protections

Prime Sponsors: Representative Naquetta Ricks, Representative Jennifer Bacon, Senator Tony Exum, Senator Jessie Danielson

Introduced: February 12, 2025

Signed: June 3, 2025

Effective Date: January 1, 2026

Summary:

For most adults who have rented during their lifetime, they have heard the phrase “normal wear and tear” at some point.  What might be more surprising is that Colorado law defines this phrase and, importantly, HB25-1249 has updated that definition as shown below:
_{“Normal wear and tear” means deterioration, DAMAGE, OR UNCLEANLINESS, that occurs, based upon the use for which a rental unit or mobile home space, as defined in section 38-12-201.5(6.5), 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.}

Numerous disputes occur between landlords and tenants regarding security deposits, and HB25-1249 is designed to address some of these disputes before they arise.  In addition to providing clarity on the definition of “normal wear and tear”, the new law clarifies that the default timing to return a security deposit is thirty days, rather than using the language “one month.”  The law continues to provide for an exception, allowing for a longer period of time, which shall not exceed sixty days.  

To ward off potential issues related to security deposit disputes, either the landlord or the tenant may request a walk-through before the end of the lease term, but after the tenant has had the opportunity to remove furniture.  A walk-through may take place in person or by way of a telecommunication-assisted interactive walk-through.  

Should a landlord not comply with section 38-12-103, C.R.S., or otherwise wrongfully withhold a security deposit, the landlord forfeits the landlord’s rights to withhold any portion of the security deposit.  

Wrongful retention of a security deposit by a landlord subjects the landlord to treble damages, provided the tenant has notified the landlord of its demand for the return of the security deposit and intention to file legal proceedings at least seven days before filing the action.  In any such legal action, the landlord bears the burden (1) of proving the landlord’s withholding was not wrongful, and (2) that the landlord complied with the requirements of section 38-12-103, C.R.S.

The law also defines “bad faith” if the landlord:

1. Unreasonably exceeds the amount of actual damages the landlord incurred.  “Unreasonably exceeds” is presumed to be an amount retained that is 125% or greater than the actual damages incurred.
2. Retains all or part of the security deposit without actual cause existing for the retention of the amount.
3. Knew or should have known that the amount the landlord retained exceeded the actual damages the landlord incurred or would incur.  
4. Retains all or a part of the security deposit solely or in part for an unlawful, retaliatory, or discriminatory purpose.  

Ownership of a property might be transferred during a lease term.  In such case, when a landlord’s interest is terminated, whether by sale, assignment, death, appointment, or a receiver, or otherwise, the landlord, the landlord’s agent, or the landlord’s executor shall have sixty days to:

1. Transfer the funds 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
2. Return the funds, or any remainder after lawful deductions to the tenant.

Other changes to section 38-12-103, C.R.S. include that any provision that assigns a fee or charge to a tenant for repairs, cleaning, or other necessary work due to normal wear and tear of for any damage or defective condition that preexists the tenancy, is deemed to be against public policy and void.  

Interestingly, the act included conditions regarding the effective date of the new law.  Section 2 and Section 3 of the act are conditional on the passage of HB25-1168.  HB25-1168 did become law, therefore, (1) section 38-12-103(1), C.R.S., as amended in section 2, does not take effect, and (2) section 3 of the act does.  The effective date of the new law is January 1, 2026, and applies to conduct occurring on or after that applicable date.