Security deposits are a necessary part of leasing your property. Protecting your investment and holding your renters financially accountable for any damage they may cause is part of being a smart landlord. While the basics of security deposits are similar from state to state, Texas has some particular nuances that you need to be aware of.
For more details, you can refer to the full resources at Texas State Law Library.
No Limit on Security Deposit Amount
Texas rental security deposit law does not address the maximum amount that you can ask for a security deposit so it’s up to you to ask for a reasonable amount. Don’t forget to ask for a separate pet deposit that can be applied strictly to damage caused by any pets you may allow in the property. And make sure to provide a written receipt to the renter for the security deposit.
Texas does not require landlords to hold security deposits in a separate escrow account, although many landlords choose this option if they have multiple properties where maintaining a separate account just for security deposits is cost effective.
Returning Security Deposit: Deadlines and Rules
Perhaps the most angst-filled step in the leasing cycle is the return of the security deposit at the end of the agreement term. Texas has some specific laws to address the procedure that must be followed to return the security deposit to the renter, so let’s review those steps here.
Step 1: Get the renter's forwarding address
Texas Prop. Code § 92.107 states that the landlord is not obligated to return the tenant’s security deposit or give the tenant a written description of damages and charges until the tenant provides a written statement of his forwarding address.
Step 2: Determine any damage beyond normal wear and tear
If you have the forwarding address the next step is to determine the amount of any deductions, and create a written receipt itemizing the deductions.
Security deposits in Texas can be applied toward damage to the rental unit or any of the buildings, common areas, or parking areas; damage to furniture, fixtures, carpet, or appliances; abandonment of the Premises, and; nonpayment of rent and unpaid late charges. Note that in Texas the landlord is not required to provide an itemized receipt of deductions if the renter owes an undisputed amount of rent to the landlord.
Step 3: Return the deposit on time
Landlords in Texas have 30 days from when the tenant surrenders the property to pay the balance of the deposit rental return, along with the itemized settlement statement.
Many renters are unclear about the conditions where they can end up receiving less than the full amount of the deposit back (or anything at all), so it’s best to review these conditions with the renter at move-in. And as a landlord it is always in your best interest to understand and follow the law.
Allowable Deductions from Security Deposits
Landlords are allowed to deduct specific costs from a tenant's security deposit, as long as these expenses are justified and properly documented.
Unpaid Rent
If the tenant leaves without paying all rent due, the landlord can use the security deposit to cover this amount.
Damages Beyond Normal Wear and Tear Texas
Costs to repair damages caused by the tenant that go beyond ordinary use are deductible. Examples include:
- Broken windows or doors.
- Holes in walls or excessive stains on carpets.
- Damage to appliances or fixtures caused by negligence or misuse.
- Cleaning Fees (if specified in the lease): If the lease agreement states that the property must be returned in a clean condition and the tenant fails to meet this requirement, the landlord can deduct reasonable cleaning costs.
However, Texas law protects tenants by prohibiting deductions for normal wear and tear or maintenance that occurs naturally over time. Items like faded paint, worn-out carpets, or minor nail holes from hanging pictures are considered part of the property's regular use and cannot be deducted.
Routine cleaning after a tenant moves out is also typically the landlord's responsibility unless explicitly stated otherwise in the lease agreement.
Tenant Remedies for Non-Compliance
If a landlord fails to return the security deposit within the required 30 days or neglects to provide an itemized list of deductions, they may face serious consequences.
Tenants have the right to seek compensation for the wrongfully withheld deposit, along with potential legal penalties. Under Texas law, landlords who act in bad faith by retaining the deposit can be liable for up to three times the amount of the deposit, plus court costs and attorney fees. This serves as a deterrent against unjustified withholding of funds.
Tenants can take legal action through small claims court if their deposit is wrongfully withheld. Filing in small claims court is often straightforward and does not require a lawyer, making it an accessible option for tenants. Before taking this step, tenants should send a written demand for the deposit, keeping records of communication as evidence.
Bottom Line
Overall, compliance with Texas security deposit law benefits everyone. Landlords can avoid legal penalties by following the rules, and tenants can protect their deposit by meeting lease obligations and addressing any issues promptly.
