security deposit law changes coming

HB25-1249 Tenant Security Deposit Law Amendments impose burdensome restrictions on security deposits, making it harder for landlords, property management companies, and rental real estate investors to manage risk. The bill requires deposits to be paid in six-month installments, limits them to one month of the tenant’s portion of the rent, bans eviction for nonpayment, and prohibits deducting carpet cleaning from security deposits. Click here to review the bill.

Democrat Representative Naquetta Ricks, Chair of the Business Affairs & Labor, is the sole sponsor of the Tenant Security Deposit Protections, which is unusual for a bill that makes significant changes to existing laws and increases the cost of doing business for housing providers. There is no Democrat Senate sponsor for the bill. Also, there is no mention of HB25-1249 on any of these websites: Denver Metro Fair Housing Center, Habitat For Humanity, Yes In My Backyard (YIMBY) Denver, Colorado Center on Law and Policy, or Community Economic Defense Project, which is unusual.

Representative Ricks was born in Libera and moved to the United States with her parents amid the First Liberian Civil War. She grew up in Aurora, Colorado, where she graduated from Aurora Central High School. Ricks earned a BS in Accounting from the Metropolitan State University of Denver and an MBA from the University of Colorado Denver. She owns and operates a successful small mortgage brokerage business and is the founder and President of the African Chamber of Commerce in Colorado. In November 2020, Ricks was elected to the Colorado House of Representatives, defeating Republican nominee Richard Allen Bassett. State House District 40, Colorado district, includes Aurora and Centennial. As of early October 2024, Colorado Representative Naquetta Ricks reported approximately $40,000 in campaign contributions. However, the information regarding her campaign’s top donors is unavailable.

Below is a summary of the key provisions of HB25-1249:

Maximum Security Deposit: The bill reduces the maximum amount a landlord can require for a security deposit to one monthly rent payment, down from the previous limit of two months’ rent.

Security Deposit Installments: Landlords must allow tenants to pay security deposits in equal monthly installments over at least six months. Landlords cannot terminate the tenancy or initiate eviction based on nonpayment.

Preexisting Damage: Landlords cannot retain a security deposit to cover any damage or defective condition that preexisted the tenancy. Upon a tenant’s request, landlords must provide a walk-through inspection to identify and document in writing any damage beyond normal wear and tear that did not preexist the tenancy. If a walk-through occurs, the landlord cannot retain any amount for undocumented damage.

Withholding Requirements: Landlords must provide a written statement listing the exact reasons for retaining any portion of the security deposit and any relevant documentation. Failure to do so promptly constitutes wrongful withholding.

Walk-Through Inspection: Upon a tenant’s request, landlords must provide a walk-through inspection to identify and document in writing any damage beyond normal wear and tear that did not preexist the tenancy. If a walk-through occurs, the landlord cannot retain any amount for undocumented damage. Tenants can request an inspection at any time of the day ten days before they vacate. 

Limitations on Carpet and Painting Deductions: Landlords cannot retain security deposits for carpet replacement or painting unless there is substantial and irreparable damage beyond normal wear and tear that did not preexist the tenancy. If installed five years ago, carpets cannot be substantially and irreparably damaged.

To summarize, HB 25-1249 mandates that rental housing providers accept security deposits in six monthly installments, require security deposits of no more than one month of the tenant’s portion of the rent, and not evict the tenant over the nonpayment of the security deposit. The bill further prohibits billing a tenant for cleaning and requires the production of receipts itemizing all security deposit withholdings. The House Business Affairs and Labor Committee discussed the bill on Thursday at 1:30 pm. Six witnesses supported the bill, and 50 opposed it. The Committee voted 8-5 to refer HB25-1249, as amended, to the Committee of the Whole.

  • Many women witnesses who own or manage property said that the tenant’s requested walk-through inspection creates significant personal safety concerns because the inspections can become contentious when damage is present. 
  • The tenant requested walk-through inspection ten days before end of tenancy exposes property owners to substantial financial risks for damage missed or occurring after the inspection.
  • Security deposits are essential in structuring a reasonable residential lease, protecting the rental housing provider from intentional and negligent property damage. Many witnesses stated that one month’s rent was insufficient for damages and repairs. Most use 1.5 to 2 times a month rent.
  • One and a half or two times a month’s rent allows rental housing providers to extend credit and provide housing to those with poor credit history. Limiting the use of security deposits hurts low-income applicants’ access to housing.
  • Paying a security deposit in monthly installments is not actually a security deposit because the housing providers have no remedy for collecting those installments if they are not made. 
  • It is not unreasonable for housing providers to require that the premises be returned clean at the end of the lease. This bill unfairly burdens housing providers to maintain sanitary and habitable conditions for future tenants by classifying all cleaning as ordinary wear and tear.

DenCO tries to inform our owners about upcoming legislation and regulations that might affect the management and the value of their rental property investments. The Democrats in the Colorado General Assembly over the last two legislative sessions and this one are trying to decrease housing providers’ ability to assess risks. The Colorado Apartment Association, National Association of Housing and Redevelopment Officials, Colorado Association of Realtors, Commercial Real Estate Development Association, and Rocky Mountain Home Association all oppose HB25-1249. We need your help opposing this bill. Please contact your state representative or senator. They are listed below. 

Front Range Representatives

NAME
DISTRICT PARTY
CAPITOL PHONE # EMAIL

Armagost, Ryan
64 Republican
303-866-2906 ryan.armagost.house@coleg.gov

Bird, Shannon
29 Democrat
303-866-2843
shannon.bird.house@coleg.gov

Boesenecker, Andrew
53 Democrat
303-866-2917
andrew.boesenecker.house@coleg.gov

Brown, Kyle
12 Democrat
303-866-2920
kyle.brown.house@coleg.gov

Daugherty, Lindsey
24 Democrat
303-866-2950
lindsey.daugherty.house@coleg.gov

DeGraaf, Ken
22 Republican
303-866-2927
ken.degraaf.house@coleg.gov

deGruy Kennedy, Chris
30 Democrat
303-866-2951
chris.kennedy.house@coleg.gov

English, Regina
17 Democrat
303-866-3069
regina.english.house@coleg.gov

Frizell, Lisa
45 Republican
303-866-2948
lisa.frizell.house@coleg.gov

Froelich, Meg
3 Democrat
303-866-2921
meg.froelich.house@coleg.gov

Hartsook, Anthony
44 Republican
303-866-2933
anthony.hartsook.house@coleg.gov

Herod, Leslie
8 Democrat
303-866-2959
leslie.herod.house@coleg.gov

Joseph, Junie
10 Democrat
303-866-2915
junie.joseph.house@coleg.gov

Lindsay, Mandy
42 Democrat
303-866-3911
mandy.lindsay.house@coleg.gov

Lynch, Mike
65 Republican
303-866-2907
mike.lynch.house@coleg.gov

Marshall, Bob
43 Democrat
303-866-2936
bob.marshall.house@coleg.gov

McCormick, Karen
11 Democrat
303-866-2780
karen.mccormick.house@coleg.gov

Parenti, Jennifer
19 Democrat
303-866-2924
jennifer.parenti.house@coleg.gov

Pugliese, Rose
14 Republican
303-866-2965
rose.pugliese.house@coleg.gov

Ricks, Naquetta
40 Democrat
303-866-2944
Naquetta.Ricks.house@coleg.gov

Rutinel, Manny
32 Democrat
303-866-2945
manny.rutinel.house@coleg.gov

Sirota, Emily
9 Democrat
303-866-2910
emily.sirota.house@coleg.gov

Snyder, Marc
18 Democrat
303-866-2932
marc.snyder.house@coleg.gov

Valdez, Alex
5 Democrat
303-866-2925
alex.valdez.house@coleg.gov

Weinberg, Ron
51 Republican
303-866-2947
ron.weinberg.house@coleg.gov

Weissman, Mike
36 Democrat
303-866-2942
mike.weissman.house@coleg.gov

Wilson, Don
20 Republican
303-866-2191
don.wilson.house@coleg.gov

Young, Mary
50 Democrat
303-866-2929
mary.young.house@coleg.gov

Front Range Senators

NAME
DISTRICT PARTY
CAPITOL PHONE # EMAIL

Buckner, Janet
29 Democrat
303-866-3432
janet.buckner.senate@coleg.gov

Coleman, James
33 Democrat
303-866-4864
james.coleman.senate@coleg.gov

Danielson, Jessie
22 Democrat
303-866-4856
jessie.danielson.senate@coleg.gov

Exum, Tony
11 Democrat
303-866-6364
tony.exum.senate@coleg.gov

Fenberg, Steve
18 Democrat
303-866-4872
stephen.fenberg.senate@coleg.gov

Fields, Rhonda
28 Democrat
303-866-4879
rhonda.fields.senate@coleg.gov

Ginal, Joann
14 Democrat
303-866-4841
joann.ginal.senate@coleg.gov

Jaquez Lewis, Sonya
17 Democrat
303-866-5291
sonya.jaquez.lewis.senate@coleg.gov

Kolker, Chris
16 Democrat
303-866-4883
chris.kolker.senate@coleg.gov

Liston, Larry
10 Republican
303-866-2737
larry.liston.senate@coleg.gov

Smallwood, Jim
2 Republican
303-866-4869
Smallwood@gmail.com

Van Winkle, Kevin
30 Republican
303-866-4881
kevin.vanwinkle.senate@coleg.gov

Zenzinger, Rachel
19 Democrat
303-866-4840
rachelz@gmail.com

Rodriguez, Robert
32 Democrat
303-866-4852
robert.rodriguez.senate@coleg.gov

Kirkmeyer, Barbara
23 Republican
303-866-4876
barbara.kirkmeyer.senate@coleg.gov