What Everyone Needs to Know About Landlord & Tenant Disputes Over Security Deposits

Whether you are a landlord or a tenant, knowing the laws regarding the withholding of security deposits is crucial when you’re involved in a landlord and tenant dispute. As a landlord, you need to know the situations in which you can legally withhold a tenant’s deposit, and as a tenant, you need to know whether your rights are being violated.

Wrongful Withholding of Security Deposits Act

Colorado’s Wrongful Withholding of Security Deposits Act is in place to protect renters from having their security deposits withheld without good cause. Failure to comply with the standards set forth by this Act can result in severe consequences for the landlord, including being required to pay the tenant up to triple the amount of the original security deposit plus legal fees.

Landlord Requirements

Under the Wrongful Withholding of Security Deposits Act, a landlord is required to return a tenant’s security deposit no later than one month after the termination of the lease. If the full deposit is not returned, the landlord must provide an itemized statement listing the deductions  and any remaining balance of the deposit that is being returned. The time period may only be extended if extra time allotted for in a clause in the original lease agreement, and in no case can the period be longer than 60 days.

Reasons to Withhold a Security Deposit
The law is clear when it comes to the situations in which a landlord may keep all or a portion of a tenant’s security deposit.

  • Property damage not attributed to normal wear and tear
  • Unpaid rent
  • Abandonment of the rental property
  • Tenant’s unpaid utility, repair and cleaning bills

Tenant Requirements
Tenants who have not received their security deposit and an itemized deduction statement within the appropriate time period should pursue legal action, as should any renter who has had a security deposit withheld for inappropriate reasons, such as to repair problems caused by normal wear and tear. If the landlord does not provide an itemized deduction statement, he may be required to forfeit any amount of the deposit that was withheld, even if it could have been rightfully withheld.

If a landlord withholds a security deposit in a manner that is not compliant with the Wrongful Withholding of Security Deposits Act, he may owe the tenant up to three times the amount wrongfully withheld. To begin the process, the tenant must provide notice to that landlord that be plans to pursue legal action. The notice must be provided no less than seven days prior to filing legal proceedings. The landlord then has one week to return the full amount of the security deposit to the tenant.
If the deposit is not returned in this time period, the landlord may be required by law to pay the tenant up to triple the amount wrongfully withheld as well as the tenant’s court costs and attorney’s fees. It is important to note, though, that the landlord may still seek to recover money from the tenant for damages through district or county court even after being ordered to return the security deposit for failure to comply with the Wrongful Withholding of Security Deposits Act.

Resolving Landlord/Tenant Disputes Over Security Deposits

Whether you are a landlord or a tenant, having the help of a legal professional is the best way to ensure the best possible outcome for disputes. For help resolving landlord/tenant disputes in Colorado, give The Law Offices of Eric L. Nesbitt, P.C. a call at 303-741-2354.