Security Deposit Installments: Colorado Now Requires Landlords to Offer a Payment Plan

The one-month deposit cap gets the headlines, but a second, less-discussed piece of HB25-1249 changes how that deposit actually gets collected — not just how much of it a landlord can ask for.

The rule: installments on request, over at least 6 months

For rental agreements signed or renewed on or after the law’s effective date, a landlord has to let a tenant who asks pay the security deposit in installments of substantially equal amounts, due no more than once a month, spread over a period of at least 6 months. This is a tenant-initiated right, not something a landlord has to offer proactively on every lease — but a lease or process that has no mechanism for it at all is out of step with the requirement.

What a landlord can’t do about a missed installment

If a tenant misses an installment, the landlord’s remedy is a civil action for the money owed — not eviction, and not withholding possession. The law specifically bars terminating the tenancy, initiating an eviction action, or a court entering a judgment for possession based on a missed deposit installment. The deposit balance becomes a debt to collect, not a lease-compliance trigger.

Why this matters more than it sounds

A move-in process built around “full deposit due before keys” doesn’t accommodate this right at all. And once a tenant is in the unit under an installment plan, the landlord’s leverage over the remaining balance is limited to a lawsuit — the tenant can’t be evicted or have possession denied over it, even mid-lease. That changes how much a landlord can rely on “deposit collected” as a completed step at move-in, and it’s worth having actual process (a form, a schedule template) rather than handling it ad hoc if it comes up.

What to check in your own lease and process

• Does your lease or move-in paperwork say the full deposit is due at signing with no mechanism to request installments?
• Does your lease threaten eviction or withholding possession for an unpaid deposit balance?
• Do you have a standard installment schedule (amount, due dates, 6-month minimum) ready to offer if a tenant asks, rather than negotiating terms from scratch?

The bottom line

This is a process change as much as a legal one — the lease has to allow for it, and the move-in workflow has to have an answer when a tenant asks. A Deposit Compliance Check reviews your deposit clause for this requirement alongside the cap, return timeline, and itemization rules.

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.