If you manage rental property in Colorado, the rules changed on January 1, 2026. House Bill 25-1249 rewrites the state's security deposit statute with stricter documentation requirements, a narrower list of allowable deductions, and penalties that can reach three times the amount wrongfully withheld.
The law doesn't just raise the stakes for bad actors. It changes what every Colorado landlord needs to prove, how they need to prove it, and what happens when they can't.
Colorado already had a security deposit statute on the books. HB25-1249 amends it in several ways that directly affect how landlords handle every tenant turnover.
The law redefines security deposits as tenant money held in trust. This isn't just a philosophical shift. It changes the legal framing of every deduction dispute. You're not deciding how much of your money to return. You're deciding how much of their money you have cause to keep, and you need to justify every dollar.
This is the provision that matters most. Under HB25-1249, landlords may not retain any portion of a deposit for damage or defective conditions that preexisted the tenancy. If you can't prove the damage happened during the tenant's occupancy, you can't charge for it.
HB25-1249 expands what qualifies as normal wear and tear to include minor damage from ordinary use, typical deterioration, and general uncleanliness. Deductions that many landlords previously considered standard are now explicitly prohibited. You can no longer charge tenants for routine cleaning, minor scuffs, nail holes, or touch-up painting. Carpet replacement is only allowed if the carpet is less than ten years old and the damage is substantial and beyond normal use.
The maximum security deposit has dropped from two months' rent to one month. With less money at stake per unit, the cost of getting a single deduction wrong matters more. A wrongful deduction that triggers treble damages can quickly exceed the deposit itself.
Under the new law, tenants have the right to request a walkthrough inspection and can request documentation supporting any deductions within 14 days. Landlords must comply. If your documentation doesn't exist or doesn't hold up to scrutiny, you're exposed.
Colorado already allowed courts to award up to three times the amount wrongfully withheld in cases of willful retention. HB25-1249 goes further. The Colorado Attorney General now has the power to prosecute violations, and municipalities can enforce the statute independently.
The law also makes clear that missing the 30-day return deadline can result in forfeiture of the right to retain any portion of the deposit, regardless of whether legitimate deductions existed.
The burden of proof has shifted decisively onto the landlord. Colorado landlords now need to demonstrate three things for every deduction:
First, that the condition did not preexist the tenancy. Second, that the condition goes beyond the expanded definition of normal wear and tear. Third, that the repair cost is reasonable and specifically attributable to the damage.
Without photographic documentation from move-in, the first requirement is essentially impossible to meet. A written checklist noting "walls in good condition" is not evidence. A timestamped photograph of the walls on the day the tenant took possession is.
The attorneys and property management firms advising on HB25-1249 compliance are all saying the same thing: document everything, photographically, at move-in and move-out.
A thorough photographic inspection at the start of every tenancy creates the baseline you need to justify deductions or defend against claims. At the end of the tenancy, the same process documents what changed. The comparison between the two is your evidence.
This is especially important for landlords managing multiple units. The documentation requirement applies to every unit, every turnover. A standardized, repeatable process is the only way to stay compliant at scale without spending hours per unit on paperwork.
Amavera generates AI-verified, timestamped inspection reports from your phone's camera. Walk the unit, take photos room by room, and get a defensible report with findings, photo evidence, and a cryptographic seal. One report, $30. Bulk pricing available for property managers.
Learn moreHB25-1249 has been in effect since January 2026. Every tenancy that began this year is already governed by the new rules. If you're still using paper checklists, verbal walkthroughs, or no documentation at all, you're operating without the evidence the law now requires you to have.
The cost of a single disputed deduction, once attorney's fees and treble damages are factored in, far exceeds the cost of documenting the unit properly at the start. Colorado has joined the growing list of states where photographic move-in documentation isn't optional. It's the standard of care.
Colo. Rev. Stat. § 38-12-103, as amended by HB25-1249 (effective January 1, 2026).