Starting January 1, 2026, Colorado landlords and property managers will face some important changes regarding security deposits, thanks to the passage of HB25-1249. Think of it as a little “housekeeping upgrade” for landlords. The goal is to make expectations clearer and help everyone play by the same rules. Here’s what you need to know.

Redefining Normal Wear and Tear

One of the biggest changes is a new, clearer definition of “normal wear and tear.” Under HB25-1249, this refers to the natural deterioration, minor damage, or everyday uncleanliness that happens with typical use without negligence, abuse, or carelessness.

This means landlords can no longer automatically deduct for things like minor scuffs, fading paint, or the everyday flattening of carpet fibers. Picture it like walking across a brand-new carpet in socks. Some wear is inevitable and expected. However, if a unit is left substantially dirtier than at move-in, landlords can still account for cleaning costs.

This clarification benefits both tenants and landlords, setting reasonable expectations. It also highlights the importance of accurate move-in inspections. Documenting the initial condition of the property is like creating a “snapshot in time” that protects landlords if disputes arise over what counts as excessive damage.

Carpet and Paint Rules

HB25-1249 also sets limits on charging for carpet and paint. Landlords can’t charge for full replacement or repainting if damage is confined to just part of a unit. Carpets older than ten years can’t be charged for at all, regardless of damage. Paint charges are allowed only for substantial damage.

For Denver rental properties, this makes documenting carpet age, paint condition, and any localized damage essential. Think of it as keeping a little visual diary of the property. It’s much easier to prove the facts later than rely on memory alone. Detailed move-in inspections and photos provide a solid foundation for any necessary deductions.

Security Deposit Documentation and Returns

The law also expands documentation requirements and timelines for returning security deposits. Landlords must provide a written statement detailing exactly why any portion of a deposit is being withheld. Supporting evidence such as photos, receipts, invoices, or inspection reports should accompany the statement or be provided within 14 days if requested.

If landlords fail to meet these requirements, or act in bad faith, they risk losing the right to keep any portion of the deposit. “Bad faith” includes things like overcharging more than 125% of actual damages, billing for preexisting issues, or withholding deposits for discriminatory or retaliatory reasons.

For Denver landlords, organized records are no longer optional. They’re a must. Clear, timely documentation can prevent disputes from spiraling into costly headaches and ensures deposits are returned fairly.

Pre-Move-Out Inspections

Another big change is that tenants can now request a pre-move-out inspection. Landlords must offer the inspection at a mutually convenient time, either in person or via a virtual walkthrough, after tenants have removed furnishings.

These inspections are like a sneak peek at the house before the final curtain call. They give landlords a chance to spot damages beyond normal wear and tear, and they give tenants a chance to fix minor issues before move-out. Agents representing investors can highlight the value of this process: it reduces surprises and strengthens tenant relationships.

Security Deposits and Special Circumstances

The law also considers unique situations. For example, tenants who are survivors of domestic violence may terminate a lease early without being held responsible for damage caused by the perpetrator. Any economic impact to the landlord is capped at one month’s rent, provided proper documentation is shared.

Additionally, if a refund check is returned after being sent to the tenant’s last-known address, the landlord must hold it for at least one year and disburse it within fifteen days upon request. These rules emphasize fairness and transparency. 

Preparing for Compliance in 2026

For real estate investors and landlords in Denver, preparing for these changes now is crucial. Here are some proactive steps:

• Conduct thorough move-in inspections with detailed reports and photos.
• Schedule pre-move-out inspections when requested by tenants.
• Keep organized documentation of repairs, receipts, and invoices.
• Update lease agreements to reflect allowable deductions and inspection procedures.

Taking these steps does more than ensure compliance with HB25-1249. It can reduce disputes, safeguard investment properties, and keep tenants and landlords on the same page. Agents can use this information to educate clients and help make transitions smoother, all while keeping the process as painless as possible. 

Unless you have been ignoring the everyday news cycle, you’ve probably heard the story of Zillow’s great rise and recent fall in the iBuyer real estate world. Zillow announced at the end of October that it would be completely closing its “Zillow Offers” division and would immediately stop buying homes. This included a layoff of 25% of their staff and left over 7000 homes on Zillow’s balance sheet that needed to be sold.

This appears to be an abrupt rethink for the recent iBuying business model and also a big win for agents who offer a much more personal approach to selling a home.

If you aren’t aware of what Zillow Offers was, here is a quick recap: If you were looking to sell your home over the last year, you could go the standard route and use an agent, or you could contact Zillow Offers which would give you a cash sum for your home without you having to physically find a buyer. The home would be sold directly to Zillow, who may make modest improvements and list the home themselves in the future. This model was not used by Zillow alone, but Zillow appears to have made some mistakes in its approach.

This is a popular prospect for sellers, who enjoyed less stress, no showings, and an easily scheduled closing date. The catch of course was that the offer that Zillow would send was intended to be “below market rate” for the cost of the convenience.

However, reports stated that the proprietary algorithm based on artificial intelligence used internally by Zillow was overvaluing homes and making move out offers that far exceeded what the market rate of the home was.

Naturally, if you are a seller and you are offered the benefits of an iBuyer program paired with an above-market offer for your home, you are likely to take that deal. Stats over the 2021 summer proved this to be true.

While Zillow Offers was not available nationwide, it covered many large housing markets in the county including the Colorado Front Range. Most of the markets in which the program was available saw massive price increases in 2021, resulting in a very competitive market for buyers.

However, many other markets without major iBuyer players were experiencing a similar situation. So was Zillow the real cause of this?

While we are not data analysts or deeply studying this issue, we can give you our opinion on what we are seeing every day in the Colorado market. As a large home inspection company, our internal numbers can be an indicator, and we can analyze these numbers to draw some opinions.

First, let’s talk about what we believe some of the takeaways from this story are.

House Selling Is Complex – Agents Are Still the Gold Standard

While it seems like everything in our lives is going digital, a story like this really makes you appreciate having a real person guiding you through some of life’s biggest events, one of which is moving and selling a home. The home selling process is complex with many moving parts, and the average homeowner rarely goes through the process in their lifetime.

The average homeowner only owns 2-3 houses throughout their life meaning they only go through this process 1 or 2 times if they do sell. This means the average homeowner likely doesn’t have a lot of experience in this transaction.

Zillow’s meltdown showed us that proper pricing, knowing the area, and finding buyers is no small task, and even a company with billions of dollars and all the technology in the world can struggle to do this correctly. Pricing of homes can change from street to street and these anomalies can lead to the need for personalization.

A great listing agent can help make the process just as easy as an iBuyer program could, and get you top dollar for your home, all while supporting the local economy and maintaining a healthy housing market.

Zestimates Are Not Appraisals

While we all love to log into Zillow or Redfin and see our estimated home value, Zillow has shown us that the appraisal business may not be ready to go fully digital.

While a Zestimate uses many of the same strategies as traditional appraisals, including comps and recent sales, Zestimates can still be pretty far from reality as Zillow is probably seeing now.

At the end of the day, your house is worth what someone is willing to pay for it, and the best way to understand this is to have an agent run detailed comps or have a professional appraisal completed.

Home Inspections Are More Important Than Ever

If the Zillow Offer’s collapse showed us anything, it’s that, as a buyer, you NEED to have a home inspection completed before the purchase of a home. Their program showed us a whole new side of home buying where you can’t always be sure who the seller is.

With an iBuyer program, the home you are buying isn’t always someone’s longtime family home that they took great care of. It could be a home bought by a company or investor that was quickly turned with minimal care. A house is just a number on their spreadsheets. Some buyers even reported difficulties in post-inspection negotiations with Zillow.

An impersonal transaction such as this can lead to a bigger chance of expensive issues being overlooked before listing. A good seller’s agent can help the seller fix or disclose known issues with a home before it’s time to sell. This may not be the case with a buy it and flip it mentality.

Not only that, but thousands of houses are set to hit the market from Zillow for under-market value prices, and reports state that Zillow has low or no budget for rehabs and repairs before listing. This leaves a lot to be dug up during a professional home inspection.

What Have We Seen Happen In The Colorado Market

The 2021 summer in Colorado was one of the craziest housing markets we can remember. Prices rapidly rising, bidding wars, and low inventory were all reports we kept hearing.

Zillow Offer’s was available in Colorado and many homes were sold through their program. However, the program was not as popular in the state as it was in others. This insulates us from the fallout as fewer of the thousands of houses Zillow still owns will be dumped for cheap prices in our state. It is reported that less than 2% of all houses sold were sold to Zillow in Colorado.

However, the market in Colorado has seen a steeper drop off this fall and year over year the number of home sales in Denver County in October was down over 20%. While this likely has less to do with Zillow and more to do with less affordability and a buying spree over the summer, Zillow’s meltdown may play a part.

Housing prices appear to be leveling off even though supply is dropping – reported by one of our regular agents. While regular seasonality is normal, it appears this fall has slowed down faster than prior years. This is reflected in our company with a mild dip in the number of overall inspections while serving the same areas.

The equalizer in Colorado, which has been present for years is the strong population growth. A growing population typically leads to a strong housing market, regardless of large news stories around the nation. We saw this in 2008 as Colorado came out of the recession faster than many states and again this year as Colorado’s economy boomed as COVID restrictions loosened.

Different counties in the state may be more insulated from issues like Zillow, but overall we believe that the Colorado housing market will continue to stay strong for the foreseeable future. If anything, the leveling off of price growth will pull buyers back into the market.