🚨 The January 1st Compliance Cliff: Are You Ready for Denver’s New Legal Landscape?
If you own rental property in the Denver Metro area, January 1, 2026, isn’t just a new year – it’s a new legal landscape for Denver rental compliance.
On New Year’s Day, two massive pieces of legislation go live that fundamentally change how you advertise your units and how you handle security deposits. For the professional investor, this is a necessary update. But for most “passive” landlords, this compliance cliff is going to catch them off guard.
We want to make sure you aren’t one of them. This is a critical moment for regulatory survival and risk management in the Denver market.
The Colorado “Junk Fee” Ban (HB25-1090): Transparency is Non-Negotiable
The “Junk Fee” Ban, part of the wider Consumer Protection Act, is designed to bring transparency to the tenant screening and leasing process.
The Change: What is Banned?
Effective January 1, 2026, you can no longer advertise a unit for, say, $2,000 and then add a mandatory $50 “admin fee” or $30 “trash valet” fee later in the lease agreement.
The Requirement: Total Price Disclosure
Your advertised price must include all mandatory fees. If the tenant is required to pay it as a condition of tenancy, it must be rolled into the headline price. The only acceptable exclusions are voluntary services (like pet insurance) or variable, usage-based utilities (like electricity).
Status | Fee Type | Action Required |
|---|---|---|
Mandatory | Admin Fee, Valet Trash, Technology Fee | Must be included in advertised rent price. |
Voluntary | Optional Pet Services, Renter’s Insurance | Can be listed separately. |
The Risk: Litigation and Significant Fines
This falls squarely under “deceptive trade practices”. The government isn’t just sending warning letters; the fines for misleading advertising are significant and can apply per violation/per advertisement. For property owners, the simple act of copy-pasting an old Zillow listing could become a major liability.
New Security Deposit Rules: The Expanded Definition of “Wear and Tear”
The second major change, also effective Jan 1, 2026, is the update to security deposit rules (HB25-1249), which dramatically expands the definition of “normal wear and tear.”
The Change: What Can No Longer Be Deducted?
Also effective January 1, 2026, the definition of “normal wear and tear” has expanded, heavily favoring the tenant. You can no longer deduct for conditions that pre-existed the tenancy, and the documentation burden on the landlord is now dramatically higher.
The Action: Documentation is Your Defense
If you do not have crystal-clear, dated move-in photos and documentation for your current tenants, you have zero defense against a deposit dispute. The burden of proof for all deductions is now definitively on the landlord.
The $5,000 Fine Reality: The Cost of Procrastination
As if the new laws weren’t enough, there is a separate, immediate increase in enforcement risk you must be aware of if your property is in the city and county of Denver.
As of November 2025, Denver has increased the maximum fine for a rental licensing violation (operating without a required license or inspection) from $999 to $5,000 per violation, per day.
If you have been dragging your feet on renewing your Denver Rental License or getting that required inspection certificate, the cost of procrastination just skyrocketed. Operating without a valid license can now rapidly turn into a five-figure fine. Compliance is no longer optional; it is essential liability protection.
✅ Actionable Advice: Your Q4 Denver Rental Compliance Checklist
To mitigate risk and ensure a smooth transition into 2026, follow these critical steps this month for your Denver rental compliance:
Beyond the Cliff: Where Opportunity Awaits
While Denver is tightening regulations, opportunity still exists for smart investors. If you are eyeing new acquisitions or trading out of Denver with a 1031 Exchange, look at neighboring areas like Wheat Ridge or Englewood.
These areas are benefiting from new “Transit Oriented Communities” (TOC) grants, where infrastructure money is flowing, potentially increasing long-term tenant demand and property values with less immediate regulatory pressure.