Landlords have it rough. One mistake and you could have a tenant discrimination lawsuit on your hands. Staying up to date with housing laws and security deposit laws can help you avoid hefty fines and other complications.
What should you know about security deposits in Fort Collins, Colorado? Keep reading to find out how to stay compliant.
Security Deposit Limit
The laws in Colorado say that there is no limit to what landlords can charge for a security deposit. Landlords can charge what they wish, but shouldn't overcharge tenants.
In the real estate industry, it's common to charge no more than two months' rent as a security deposit. The best landlord advice is to base the security deposit amount on the tenant's credit history.
Landlords who allow pets in a rental property can charge an additional deposit for pets. You can't impose a pet deposit for renters with service or emotional support animals.
Storing Security Deposits
Some states require landlords to store tenant security deposits in a specific type of bank account. Colorado is not one of those states.
A landlord can store a security deposit any way they like. This could be either a normal account, an interest-bearing account, or posting it as a surety bond.
To keep your rental property accounting records in order, keep security deposits in a separate account if banking is the route you choose.
Landlords don't have to provide renters with a written notice that they've received a tenant's security deposit. It's good practice to do so to keep tenants in the loop.
Security Deposit Deductions
Tenants' rights protect residents from being charged a non-refundable security deposit. However, under Colorado security deposit laws, landlords have a right to make security deposit deductions.
A landlord can keep all or part of the security deposit if the tenant:
- Fails to pay rent or utilities
- Abandons the rental premises
- Moves out without cleaning or repairing the unit
- Causes damage exceeding normal wear and tear
Evicted tenants cannot try to recover security deposits until the lease is up.
If there is no reason to keep the security deposit, landlords have one month after the tenant moves out to return the security deposit.
Transfer of Ownership
A landlord who decides to sell their rental property must do one of two things.
You have the option to transfer the deposit to the incoming landlord. The new landlord becomes liable for the deposit and must abide by the laws.
You must notify the tenant of the transfer through a Notice of Change of Ownership or Management.
The second option is to return the security deposit to the tenant.
Handling Security Deposits With Ease
One of the best landlord tips we can provide is to hire a rental property management company. Professional property managers know how to handle security deposits in Fort Collins, Colorado with ease.
PMI Northern Colorado has been in the property management industry for over 20 years. We have gained worldwide experience but offer services on the local level.
Our team of quality property managers knows the laws in Colorado and can help landlords like you stay compliant. Contact us today for a customized property management plan.