Boulder Security Deposit Interest: What a Landlord Owes

Who owes it, and on what

The deposit belongs to the tenant, and the landlord owes interest on it for the time it is held. The duty covers all refundable deposits, including a pet deposit. It does not cover last month’s rent held by the landlord, because that money is rent rather than a deposit.

Two limits are worth knowing up front. The ordinance disapplies its deposit-ownership and interest sections to a deposit paid to a mobile home park for a mobile home space (§ 12-2-6(f)), so no city interest is owed there. And the right cannot be waived: a lease provision giving up any part of the chapter is void as against public policy (§ 12-2-8).

The City’s calculation formula

Word for word, this is how the City says to compute it:

Multiply the entire amount of the security deposit by the appropriate multiplier for that year, divide that number by 12 to obtain a monthly percentage amount due, and then multiply that monthly number by the number of months the deposit was in the landlord’s possession, including the 30 or 60 days after the end of the lease. City of Boulder, Interest on Security Deposits Calculation Formula

The City’s Landlord Tenant Handbook states that this interest is calculated as simple interest, so it is figured on the deposit itself and never on interest that has already accrued. Note the last clause of the formula: the window after the lease ends, while the landlord reconciles the deposit, counts as time held.

Two things the City states in days while writing its formula in months, and never says how to convert. Our reading, which the calculator applies: a started month of possession counts as a month held, and the post-lease window is prorated at 30 days to the month, so a lease allowing 45 days does not cost the same as one allowing 60. The ordinance sets no minimum holding period, but for a tenancy shorter than a single month it is worth checking the figure against the City rather than relying on either reading.

Which year’s rate applies

This is the part that is easiest to get wrong, and the City draws the line by lease type:

• Fixed-term lease. “The rate in effect at lease signing is in effect for that lease period, until termination or renewal for another period.” That trailing clause matters: a renewal begins a new lease period that takes the rate in effect at the renewal. A lease signed in a low-rate year and renewed through higher-rate years does not stay at the original rate.
• Month-to-month. The City treats it as “renewed each month, so the interest rate due will change on the first of every calendar year.” Each month accrues at the rate for the calendar year that month begins in.
• The reconciliation window. “The final rate used in the calculation also applies to the extra 30-60 day period that the landlord holds the deposit after the lease expires.” So that tail stays at the last rate used, even when it runs past January 1 into a new rate year.

Because the City rates each lease period from the day that period began, the calculator will not guess period boundaries it has not been given. If the renewal dates were irregular, if the renewal pattern is not stated, or if the original signing date is missing, it leaves the interest line blank for you to complete from the City’s figure rather than produce a number it cannot stand behind.

Published rate history

The City sets the rate each year, describing it as the average one-year certificate-of-deposit rate at the top three financial institutions in Boulder by market share. The next year’s rate is calculated in mid-December. Every rate below comes from the City’s published table and is the same table this site’s calculator uses.

Before this table the City’s history is not annual: a flat 5.5% ran from December 5, 1985 through March 18, 2004, and no interest was required before December 5, 1985. The 2004 entry above begins March 19, 2004, not January 1. Because a year-by-year table cannot express a rate that changes mid-March, the calculator declines whenever any date that sets a rate falls before then, whether that is the date the deposit was received or the original signing date on a fixed-term lease. It will not extrapolate forward either: once a tenancy reaches a year the City has not yet published, it leaves the figure blank instead of carrying the last known rate forward.

When it has to be paid, and what happens if it is not

Accrued interest must be returned within one month after the later of the lease terminating or the landlord accepting surrender of the premises, and it goes back with the deposit refund (§ 12-2-6(a)).

The penalty is gated, and the gates matter. Willfully and wrongfully retaining accrued interest makes the holder of the deposit liable for $100 or treble the amount retained, whichever is greater, plus reasonable attorney fees and court costs. The tenant must first give at least seven days’ notice of an intention to file suit (§ 12-2-6(c)).

That gating cuts both ways for a landlord doing this by hand. A good-faith arithmetic slip is not obviously willful, and the seven-day notice is a chance to cure. But the floor means even a small shortfall can carry a $100 exposure rather than three times a few dollars, so when a figure is uncertain the cheap move is to check it against the City’s own calculation instead of estimating.

Work out a Boulder return

The free Colorado deposit tool asks for your dates and lease type, applies the right rate to each period, and shows the arithmetic. It also handles the rest of the return: the 30-day deadline, the four lawful deduction categories, the carpet and paint limits, and a statute-cited return letter. If you are checking how much you may hold in the first place, see the Colorado deposit limits, and for what the 2026 rewrite changed statewide, see Colorado security deposit law changes in 2026.

Boulder security deposit interest: common questions

Which Colorado cities require a landlord to pay security deposit interest?

Boulder is the only one. Colorado state law requires no interest on a residential security deposit, and the 2026 rewrite of the deposit statute did not add one, so the duty comes purely from Boulder’s local ordinance and applies to rentals inside the city. (Boulder Rev. Code §§ 12-2-5 to 12-2-8)

What is the Boulder security deposit interest rate for 2026?

2.08% for 2026. The City sets a new rate every year, describing it as the average one-year certificate-of-deposit rate at the top three financial institutions in Boulder by market share. The following year’s rate is calculated in mid-December, so a deposit held across several years can involve several different rates.

How is Boulder deposit interest calculated?

The City states it as: multiply the entire deposit by that year’s multiplier, divide by 12 to get a monthly amount, then multiply by the number of months the deposit was held, including the 30 or 60 days after the lease ends. The City’s Landlord Tenant Handbook says it is calculated as simple interest, so it is figured on the deposit itself and never on interest already accrued.

Which rate applies if the lease ran across several years?

It depends on the lease type, and this is the part most people get wrong. For a fixed-term lease the City says the rate in effect at lease signing applies for that lease period, "until termination or renewal for another period", so a renewal begins a new period that takes the rate in effect then. A month-to-month lease is treated as renewed every month, so its rate changes each January 1.

Does interest keep running after the tenant moves out?

Yes, through the window the landlord holds the deposit while reconciling it, which the City describes as the extra 30 to 60 days after the lease ends. That window stays at the final rate used in the calculation, so it does not switch to a new year’s rate even when it crosses January 1.

Is interest owed on a pet deposit or on last month’s rent?

On the pet deposit, yes. The City says all refundable deposits including pet deposits go into the computation. On last month’s rent, no: that money is rent rather than a deposit, and the City excludes it.

When does the interest have to be paid?

Within one month after the later of the lease terminating or the landlord accepting surrender of the premises, returned together with the deposit refund. The ordinance sets no minimum holding period. (Boulder Rev. Code § 12-2-6(a))

What happens if a landlord does not pay the interest?

Willfully and wrongfully retaining accrued interest makes the holder of the deposit liable for $100 or treble the amount retained, whichever is greater, plus reasonable attorney fees and court costs. The tenant has to give at least seven days’ notice of an intention to sue before filing. Separately, the right cannot be signed away: a lease provision waiving any part of the chapter is void as against public policy. (Boulder Rev. Code §§ 12-2-6(c), 12-2-8)

Does the Boulder interest rule apply to a mobile home park space?

No. The ordinance expressly disapplies its deposit-ownership and interest sections to a security deposit paid to a mobile home park for the lease of a mobile home space, so no city deposit interest is owed there. (Boulder Rev. Code § 12-2-6(f))

Sources

• City of Boulder: Interest on Security Deposits Calculation Formula and rate table
• City of Boulder: Landlord Tenant Handbook (simple interest, payment timing)
• Boulder Rev. Code ch. 12-2, §§ 12-2-5 (ownership and payment of interest), 12-2-6 (return of accrued interest and enforcement), 12-2-7 (rate), 12-2-8 (waiver void)
• The Colorado security deposit tool and full cited rules