Security Deposit Alternative in Colorado
Colorado caps a security deposit at two months' rent, a limit that arrived in August 2023, and gives you one month after the lease ends or you accept the keys back to return it with a written statement of exactly why any of it was kept. A lease can stretch that to 60 days but no further. Keep money willfully in breach of the section and you owe three times what was withheld, plus the resident's attorney fees, and the burden of proving the withholding was right is on you.
What Colorado law says about security deposits
Read from the Colorado statute on 2026-09-10. Deposit rules change, and this is general information rather than legal advice. Confirm the current text with your own counsel before you change a lease.
Can you require it of every Colorado resident?
Colorado has no statute written for a monthly fee charged instead of a deposit. One definition shapes how carefully the structure has to be drawn. Section 38-12-102 defines a security deposit as any advance or deposit of money, regardless of its denomination, whose primary function is to secure performance of the rental agreement. So a charge that behaves like security is treated as a deposit whatever the lease names it. The deposit rules themselves are strict. The cap of two months' rent arrived with SB 23-184 in August 2023. You have one month after the lease ends or you accept the keys back to return the deposit with a written statement of the exact reasons for keeping any of it, and a lease may extend that to 60 days but no further. Fail to send the statement and you forfeit the right to withhold anything. Keep money willfully in breach of the section and you owe three times the amount withheld, plus attorney fees and costs, and in court the burden of proving the withholding was right is yours. Any lease clause waiving these rules is void.
Rules differ by state and by city, and subsidized housing is its own question. This is general information for property managers, not legal advice. Get a written opinion before you make the fee a condition of tenancy anywhere.
How the program works in Colorado
The mechanics are the same in every state Beagle operates in. The program is designed to comply with applicable state and local regulations, and the rate is set by the deposit amount rather than by geography, so a Colorado property and one two states over are quoted the same way.
The resident chooses at signing
Instead of producing the full deposit, the resident pays a smaller non-refundable monthly fee that is billed with rent. Nothing is held, so nothing has to be returned.
The property keeps its protection
Damage beyond normal wear is reimbursed up to the deposit amount the unit would otherwise have required, so what you can recover does not shrink.
Move-out stops being a negotiation
A claim is filed against the program rather than deducted from money you are holding, which takes the itemised-deduction letter and the dispute that follows it off your team's desk.
You earn on every resident who takes it
You set an administrative fee on top of the premium, up to $5 per unit per month, and keep it.
Colorado security deposit alternative FAQs
The cap applies to security deposits, and Colorado defines those by their primary function, regardless of denomination. A recurring nonrefundable fee is structured so that nothing is held, but that argument rests on the function test rather than on a statute written for the arrangement, so the lease language is where your legal review is worth spending. Requiring the fee of every resident deserves its own opinion.
Security deposit rules in other states
See it on your Colorado units
Run the program against your own unit count, or walk through it with our team. No upfront fees, no onboarding charges, no long-term contracts.