What Landlords and Tenants Need to Know About HB25-1249
Effective Date: January 1, 2026
House Bill 25-1249, signed into law on June 3, 2025, introduces stronger protections for renters while establishing more straightforward guidelines for landlords. The law makes clear that security deposits are tenant money held in trust by landlords. Here is what you need to know. Click here to review the bill.
Key Timeline Changes
Landlords now have 30 days (previously one month) after a lease ends to return security deposits and provide an itemized statement explaining any deductions. Now no one has to remember whether the month has 30 or 31 days.
Major New Requirements for Landlords
One of the most significant changes is the new walk-through inspection requirement. Upon tenants’ request, landlords must conduct a joint inspection of the property at a mutually convenient time to document damage beyond normal wear and tear. The inspections should occur before the lease ends, and after the tenants have removed their furniture. These inspections can be conducted either in person or via video call, making the process more accessible for all parties involved.
If property management companies withhold any portion of a security deposit, they must provide a written statement with exact reasons for the deductions. Within 14 days of a written tenant request, landlords must also provide supporting documentation, including photographs, inspection notes, receipts and invoices, and repair estimates. At DenCO Property Management (DenCO), managing the documents associated with each rental property is standard practice. Good document management helps reduce misunderstandings about security deposit deductions. The law has also modernized how landlords can return deposits and statements. In addition to traditional mail, landlords can now use email and electronic money transfer with the tenant’s consent. These options provide faster, more efficient ways to return deposits while maintaining proper documentation trails.
New Restrictions on Deposit Deductions
The most controversial aspect of the new law involves restrictions on carpet and painting deductions. Landlords can no longer automatically deduct the cost of carpet replacement unless there is substantial and irreparable damage beyond normal wear and tear. Landlords can no longer deduct for damage if carpets are older than 10 years at lease end. DenCO recommends that owners remove most carpeting to avoid this issue altogether. Hardwood and laminate floors are more resistant to damage.
Similarly, landlords cannot deduct the cost of repainting entire rooms unless there is substantial damage to interior walls or ceilings throughout the space that exceeds normal wear and tear. DenCO takes pictures of the walls and ceilings before move-in. In older units, it is challenging to match color and shine due to paint shelf life, forcing landlords to repaint walls and ceilings to prepare for the next tenant.
Penalties for Non-Compliance
The law establishes serious consequences for landlords who wrongfully withhold deposits. Tenants can sue for three times the amount wrongfully withheld, plus reasonable attorney’s fees and court costs. Tenants must give landlords at least seven days’ notice before filing such a lawsuit. The law also creates a presumption that landlords have unreasonably exceeded actual damages if they retain 125% of the security deposit. Property managers can prove their case in court.
Special Tenant Protections
Another controversial aspect of the new law provides protections for vulnerable tenants. If a tenant terminates because they are a victim of sexual or domestic violence or abuse, they are not liable for damages caused by the perpetrator during an incident. Any deposit retention in these circumstances must comply with specific statutory requirements that protect victims from financial penalties for crimes committed against them. Special protections in House Bill 25-1249 amendments are pending on the passage of House Bill 25-1168 Housing Protections for Victim-Survivors in the 2026 legislative session. So, stay tuned.
Returned Payment Procedures
Property managers must hold the payment for at least 1 year if security deposit payments are returned for any reason. They must disburse payments within 15 calendar days of receiving tenant requests.
The Benefit of a Strong Lease
The security deposit law does clarify property managers’ duties at lease end. Many of these provisions are in the leases of most professional property management companies, such as DenCO. But the new paint, carpet, uncleanliness, and deposit-holding requirements will increase the cost of doing business, and these costs will eventually be passed on to tenants. We train all our property managers on the new timeline and documentation requirements to help avoid costly mistakes. Click here to find out more about the benefits of a strong lease.
Tenants also have responsibilities under the new law. They should request walk-through inspections before moving out and document the condition of their rental with photos and video. Tenants can then compare their documentation to the landlord’s when deposits are withheld.
Owners who struggle to keep up with the tenant rights laws of the last two years should consider putting their rentals under professional management. DenCO’s leases are up to date and compliant with Colorado and Denver rental property regulations. We have been in business since 1999 and manage 175 rentals in the DU, Washington Park, and other Denver neighborhoods. Please call 303-722-9688 or fill out this form.
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