Common Deposit Mistakes

Here are six common mistakes landlords make when returning a tenant’s security deposit and how to avoid them:

1. Meet the Deadline – Colorado law allows 30 days to return deposits (or 60 if stated in the lease). Missing it can result in losing the right to withhold funds and facing penalties.
2. Differentiate Wear and Tear from Damage – Landlords can charge for tenant-caused damage but not for normal wear and tear (e.g., minor paint touch-ups).
3. Deposits Are Refundable – A deposit cannot be labeled as “non-refundable”; fees must be clearly stated as such.
4. Check Unpaid Utility Bills – Final utility bills can be deducted from the deposit if unpaid.
5. No Charging for Personal Labor – Only material costs and third-party labor fees can be deducted.
6. Consider Life Expectancy – You cannot charge tenants for replacing items that have already exceeded their lifespan. A fair formula should be used for partially depreciated items.

Following these guidelines helps landlords stay compliant and reduce risks when handling security deposits.