Do you want to charge your Texas tenants a security deposit? If so, there are certain Texas law and regulations that the landlord must follow. Security deposit rules are regulated under the TX Prop § 92.102.
This piece of legislation defines things like the allowable deductions a landlord can make from a tenant’s security fee, when the landlord must return their renter’s deposit, it is seen as bad faith if the landlord fails to return the deposit on time, or a landlord wrongfully withholds security deposit funds at the end of their renter’s tenancy.
According to the landlord-tenant laws in Texas, there are penalties associated with failing to abide by the security deposit regulations laid out by the state. The following article will provide a basic overview of Texas security deposit law that will assist the landlord in making sure they remain compliant with all relevant legislation.
Security Deposit Limits
In the state of Texas, there is no limit to the amount a landlord can make a tenant pay a security deposit. Ultimately, the landlord can charge a tenant as much as they want. However, it is in the best interest of your rental investment to charge a reasonable amount. This can be anywhere between months’ rent and double of it.
For instance, let’s say that the landlord charge $1,200 for a month's rent. In this case, the ideal down payment will be anywhere between $1,200 and $2,400.
Charging a lower security fee than $1,200 would leave the landlord financially vulnerable should a tenant violate the terms of the lease agreement by fail to paying months' rent or causing negligent property damage.
On the other hand, asking for a down payment exceeding $2,400 would make your rental investment less desirable to prospective tenants.
Pet Deposits
Landlords who allow pets on their rental properties are permitted under Texas law to ask a tenanat to pay a pet deposit in addition to their standard security deposit. As a landlord, you can use this deposit towards any costs incurred by repairing pet-related damages.
However, it’s important to note that the landlord cannot required a pet fee from people living with a disability who use service animals. This is because the Fair Housing Act requires landlords to give all tenants a fair and equal opportunity to live in and enjoy their homes.
Security Deposit Storage
Some states require landlords to store their tenant’s deposits in a particular way. In Florida, for instance, landlords are required to store their tenant’s security deposit in either a non-interest bearing account, an interest-bearing account, or to post it as a surety bond.
Texas law doesn’t require landlords to store their tenant’s deposits in any particular way. However, it’s important to look into any municipal laws that may be in place regarding security deposits storage.
Security Deposit Receipt
A landlord in Texas is under no obligation to provide your tenant with a written notice that you’ve received their security deposit. Be that as it may, it’s always a good idea to provide a receipt for record-keeping purposes.
Withholding a Tenant’s Security Deposit
In Texas, the landlord can withhold your tenant’s security deposit with notice, in any of the following circumstances.
If your tenant:
- Breaches the terms of the rental or lease agreement such that it causes a loss of income for you.
- Causes damage exceeding normal wear and tear. Examples of damage beyond normal wear and tear include holes in interior or exterior doors, torn carpets, smashed mirrors, and missing or broken floor or wall tiles.
- Attempts to use it as last month’s rent. In this case, Texas landlords are able to recoup up to 3X the security deposit amount, as well as any associated court and attorney fees.
- Fails to provide the landlord advance notice before moving out of the premises. In this case, you’d be able to keep the entire security deposit. However, the landlord must include this provision in the lease agreement by stating that the tenant must provide written notice prior to moving out and failure to do so will result in them losing their right to claim any portion of the deposit.
- Fails to clear utility charges before moving out can create reason for deductions.
- Fails to adequately clean the premises before moving out.
A landlord may also be entitled to part or all of a tenant’s deposit if they try to break their lease early. However, if they find a satisfactory replacement tenant, the landlord must return their deposit, less any relevant charges. Normal wear and tear are not deductible.
Wrongfully Withholding a Renter’s Security Deposit
If a landlord wrongfully withholds a renter’s security deposit, they may be responsible for paying the tenant any court and attorney fees in addition to up to 3X the wrongfully withheld rent deposit amount.
Security Deposit Returns
Landlords in Texas must return their tenant’s security deposits within 30 days of the date that the tenant surrenders the property, under the texas property code. The only exception to this requirement is if the tenant fails to provide a forwarding rent address. In this case, you must wait to return the security deposits until you receive the tenant’s forwarding address.
According to the Texas Property Code, if you’ve made any deductions to the deposit, you must send the remaining portion alongside an itemized list of any damages you paid to repair. However, you aren’t required to include an itemized list if you made a deduction to cover what the tenant owes rent.
.
Nonrefundable Deposits
Any security deposit paid by a tenant when first moving in is always refundable, minus any deductions.
As for other fees and charges, such as redecorating fees, you may be able to label them as nonrefundable. However, you must clearly indicate this in the lease agreement as being nonrefundable.
Changes in Property Ownership
If you sell your rental property, you are responsible for transferring the deposit, less any deductions, to the incoming landlord. The incoming landlord is then responsible for handling the tenant’s deposit.
After a successful transfer, you must provide the tenant with a signed statement. This statement must state the exact amount transferred and a confirmation indicating who the deposit was transferred to.
Bottom Line
If you need assistance navigating any aspect of Texas security deposit law or Texas landlord-tenant law as a whole, Legacy Realty & Management can help.
We’re a professional family-owned property management company based in the Dallas area. Our goal is to help property owners achieve peace of mind through providing a wide-range of quality property management services.
Disclaimer: This blog isn’t a substitute for professional legal advice from a qualified attorney. Also, laws are subject to change and this information may not be fully up to date at the time you read it.
