Boulder's Security Deposit Interest Requirement

Nothing in Colorado’s statewide deposit statute requires paying interest on a security deposit — the deposit rules covered in Colorado Security Deposit Rules for Landlords are silent on interest entirely. Boulder is the exception, with its own municipal requirement layered on top of state law.

The rule: Boulder requires interest on residential deposits

Under the Boulder Revised Code (Chapter 12-2, Landlord-Tenant Relations), a landlord holding a residential security deposit has to pay the tenant interest on it. This is a city ordinance, not a statewide requirement — it only applies to residential rentals within Boulder city limits, and it’s easy to miss if you’re working from a statewide checklist that doesn’t flag city-specific add-ons.

The rate changes every year

Boulder recalculates the interest rate annually, based on the average one-year certificate-of-deposit rate from the city’s top financial institutions by market share, as of mid-December of the prior year. The rate for 2026 is 2.08% — down from the prior year’s figure. Because it resets annually, a rate you used in a past year’s calculation isn’t necessarily still correct; check the current year’s published rate before calculating what’s owed.

How the amount actually gets calculated

The formula isn’t just “deposit × annual rate” — it’s monthly. Multiply the deposit amount by the year’s rate to get an annual figure, divide by 12 to get a monthly amount, then multiply that monthly amount by the number of months the deposit was actually held — including the 30 or 60 days after the lease ends, during the standard return window. A deposit held across a rate change (say, part of the tenancy in one calendar year, part in the next) needs the calculation split across both years’ rates.

Why this is easy to get wrong

Interest obligations like this tend to fall through the cracks because they’re not part of the return-timeline-and-itemization checklist most landlords are already tracking under state law. A landlord who correctly follows the statewide return deadline and itemization requirements can still be out of compliance in Boulder specifically if the interest calculation is missing entirely.

What to check if your property is in Boulder

• Does your deposit-return process include an interest calculation at all, or does it stop at the itemized-deductions statement?
• Are you using the current year’s published rate, not a rate from a prior year?
• If a tenancy spans a calendar-year boundary, is the calculation split correctly across both years’ rates?
• Does your lease language even acknowledge this obligation, or is it silent on interest entirely?

The bottom line

This is a genuinely narrow rule — it applies only inside Boulder — but it’s a real, enforceable requirement layered on top of everything else in a standard Colorado deposit return. A Deposit Compliance Check reviews the statewide cap, return timeline, and itemization requirements; Boulder-specific interest is worth confirming separately against the city’s current published rate.

LeaseCheck for Landlords is an educational lease-compliance screening tool. It is not a law firm and does not provide legal advice. Colorado rental laws change; confirm specifics for your situation with a licensed attorney.