Refunds of security deposits

by Bob Frie

This is a common issue between renters/landlords. Tenant is moving out and wants the return of his security deposit. Landlord refunds a portion of the deposit and includes an accounting for the unreturned amount. Tenant disputes the amount not returned and claims that all “damages” were normal wear and tear to the property. Landlord marks the refund check as “security deposit/account settled” in the memo line.

Before the dispute is settled, should tenant cash the refund check? If the check is cashed, is Tenant accepting the Landlord’s offer of settlement on the issue and ending his chance for a claim?

Pursuant to Colorado Revised Statute §38-12-103(7), “Any provision, whether oral or written, in or pertaining to a rental agreement whereby any provision of this section for the benefit of a tenant or members of his household is waived shall be deemed to be against public policy and shall be void.” This was confirmed in Anderson v. Rosebrook, 737 P.2d 417 which found that “a restrictive endorsement, by which a landlord attempts to create a waiver of a tenant’s right to legal recourse is void.”

The above statute and case show that in this situation a tenant could cash the check and still have legal rights to dispute the withholding of the remainder of the security deposit.