The Colorado Security Deposits Act (the Act), C.R.S. §§ 38-12-101 through -104, provides definitions, procedures, and remedies for the retention and return of a security deposit used for the purpose of securing "the performance of a rental agreement for residential premises." C.R.S. § 38-12-102(2). Landlords are entitled to deduct from a deposit amounts owed by the tenant for rent, utility charges, repairs, cleaning contracted for by the tenant, and damages caused by abandonment. No deposit may be retained for normal wear and tear. C.R.S. § 38-12-103(1).

If a landlord decides to keep any portion of the deposit, he or she must provide the tenant a written statement listing the "exact reasons for the retention" and the remainder of the deposit. Id. This statement must be delivered to the tenant, at the tenant's last known address, "within one month after the termination of a lease or surrender and acceptance of the premises." A lease may expand this time period up to 60 days. Id. If the written statement is not provided in a timely manner, the landlord forfeits all rights to withhold any portion of the security deposit. C.R.S. § 38-12-103(2).

A tenant who disputes the landlord's statement or who has not received such a statement should respond in writing with a notice to the landlord of the tenant's intention to file legal proceedings a minimum of seven days prior to filing any action. This prior notice is a requirement for an action by the tenant against the landlord for the wrongfully withheld portion of the deposit and the penalty of treble the amount of the wrongfully withheld deposit, plus attorney fees and costs. C.R.S. § 38-12-103(3)(a).

The landlord is liable for the penalty if the deposit has been retained in "willful" violation of the Act. Id. "Willful" has been determined to mean "deliberate." Martinez v. Steinbaum, 623 P.2d 49, 54 (Colo. 1981). In a case where the landlord's failure to return the security deposit or to account for its retention within the deadline established that the retention was wrongful, the landlord's subsequent "deliberate failure to return the entire security deposit within the seven days following the tenant's demand notice satisfied the element of willfulness." Mishkin v. Young, 107 P.3d 393, 399-400 (Colo. 2005) (citing Turner v. Lyon, 539 P.2d 1241, 1243 (Colo. 1975)).

The Act specifically provides that any provision in a rental...

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