Landlord/Tenant Disputes – Security Deposits in Colorado: Landlords’ Rights and Obligations
By Aviv Segev, Esq.
An increasing number of inexperienced landlords put themselves at risk for wrongfully withholding their tenants’ security deposits. The wrongful withholding of a security deposit could have harsh consequences under Colorado’s Wrongful Withholding of Security Deposits Act (the “Act”). Of course, Tenants need to know their rights, too.
Requirements under the Act
Under the Act, landlords must, within one month of the termination of the lease or the surrender and acceptance of their premises, whichever occurs last, return the security deposit or an itemized statement of the deductions and balance of the security deposit, if any, to their tenant. If provided for in a lease, this time period may be extended, but in no event may this period be extended beyond 60 days (regardless of whether the lease provides for a longer period of time).
The landlord may not use the security deposit funds to remedy normal wear and tear. In cases where a landlord properly chose to keep the security deposit, or a portion thereof, the landlord must provide the tenant with a written statement listing the exact reasons for the retention of the security deposit or any portion thereof. The security deposit and/or an itemized statement of deduction must be mailed or delivered to the last known address of the tenant.
Liability under the Act
A landlord’s failure to comply with the Act could have harsh consequences on the landlord and may entitle the tenant to up to three times the amount wrongfully withheld by landlord, as well as the tenant’s attorney’s fees.
If 1) the landlord fails to provide the tenant with the security deposit and an itemized statement of deduction (if applicable) within a month of the termination of the lease (or up to 60 days, if a longer period is provided for in the lease), 2) the landlord decides to withhold the security deposit to remedy normal wear and tear, or 3) the landlord otherwise wrongfully withholds the security deposit, the landlord could be liable to the tenant for the entire security deposit amount. This means that even if the majority of the security deposit could have been properly withheld by the landlord to remedy damages caused by the tenant, the landlord’s failure to provide the tenant with an itemized statement of deduction and the remainder of the security deposit within the required time period, could cause the landlord to forfeit the entire security deposit amount.
As stated, if the landlord willfully retains the security deposit in violation of the Act, the landlord could be liable to the tenant for three times the amount wrongfully withheld, as well as the tenant’s attorney’s fees. To be entitled to these damages and attorney’s fees, the tenant must give notice to the landlord of the tenant’s intention to file legal proceedings; this notice must be given with a minimum of seven days prior to filing the action. This means that once the tenant provides the landlord with notice of intent to file a suit and a demand for the return of the security deposit, the landlord has seven days to return the entire security deposit to the tenant, or the landlord could be liable for three times the amount wrongfully withheld, as well as the tenant’s attorney’s fees.
If the landlord has not complied with the Act by not properly returning the security deposit or a portion thereof, or by failing to timely provide the itemized statement of deduction, the landlord must return the entire security deposit to the tenant. Following this return of the security deposit, the landlord may seek to recover non-wear and tear damages from the tenant, but must do so in a separate action in county or district court.
Whether you are a landlord or tenant, or if you have a question about a security deposit or other matters related to real estate, please contact Levine Segev LLC at (303) 434-8553, or www.levinesegev.com/contact.php.
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