Whenever a tenant moves into your rental property, there’s a good chance that you require a security deposit. In a perfect world, these would not need to exist! Tenants would move into your unit, take exceptional care of it and always follow the terms of the lease. However, this is not always how things happen. A security deposit is one way to give you a sense of security and money that you can use to offset property damage or outstanding rent. At the end of the lease, should you deduct from it or return it?
Colorado State Law About Security Deposits
In Colorado, you cannot make the deposit nonrefundable, and it is technically considered tenant property. There is no requirement that you put it into an interest-bearing account, and you can store it however you would like to. According to state law, you can retain some or all of the security deposit for any of these reasons:
- Cover unpaid repair, utility or cleaning bills
- Offset excessive or unreasonable property damage (beyond normal wear and tear)
- Abandonment of the property
- Unpaid rent
- Breach of the lease that leads to damage to the property
There is no limit to the amount that you can ask for as a deposit, but it is standard to ask for a maximum of one month of rent.
What Is Normal Wear and Tear?
One of the most critical parts of determining whether or not to deduct from a security deposit is understanding what normal wear and tear is. Keep in mind that this can also change depending on how long the tenant has lived there. The damage that you might expect over the course of one year is wildly different than what might occur after five. Here are some examples of normal wear and tear vs. excessive damage:
- Dusty blinds are normal wear and tear, but missing or broken blinds are excessive
- Worn or scratched enamel in old sinks or bathtubs is normal, but broken or chipped enamel is not
- Scuffed varnish on hardwood floors in high traffic areas is normal, but chipped or gouged floors are not
- Loose grout or tiles in the bathroom are normal, but cracked or missing tiles are not
If you are unsure of whether or not the problem is normal wear and tear and you should deduct from the security deposit, you can always research online or speak with your property manager at All County Denver Metro Property Management.
All County Denver Metro Property Management Is the Right Property Management Company for Your Rental Property
All County Denver Metro Property Management offers all property owners competent and honest property management services. From rental market evaluation to tenant placement, we can assist with all of your needs. Our team of real estate professionals looks forward to hearing from you about how we can make your investment a stress-free asset and keep your tenants happy. Call us at (720) 575-6100 for a free quote.