A security deposit is a sum of money, not included in the rent, that a renter has to pay a landlord before being allowed to rent a property. The deposit amount is based on the rental rate. Each state has its own laws regarding security deposits.
Many states have put limits on how much a landlord can ask. Generally speaking, it’s equivalent to 1X or 2X the monthly rent amount. So, for instance, if the monthly rent is $1,000, then most landlords will charge between $1,000 and $2,000 as a security deposit.
Why Do Landlords Ask for a Security Deposit?
The common reasons that landlords ask for a security deposit include:
- To cushion themselves against financial losses coming from premature lease terminations by tenants. Tenants break leases for all sorts of reasons. When a move isn’t legally justified, landlords have the right to deduct the appropriate costs from the tenant’s security deposit.
- To cushion themselves against financial loss resulting from excessive property damage. The lease makes any damage exceeding normal wear-and-tear the tenant’s responsibility. Such damages include broken door handles, a broken toilet seat, or a smashed bathroom mirror.
- To cover any unpaid bills that a tenant didn’t pay for before moving out. Once a tenant signs a lease agreement, they become responsible for paying some of the property’s utility bills. Examples of such utility bills include gas and electricity.
Security deposit laws vary from state to state. In this blog, you will learn everything you need to know about the Texas security deposit refund law.
What is the Security Deposit Limit?
The Texas landlord-tenant law doesn’t limit how much a landlord can ask a tenant for a security deposit amount. In other words, landlords are free to charge whatever security deposit amount they deem suitable for their property.
Generally speaking, most landlords charge the equivalent of 1X or 2X the rent amount. Charging an unreasonably high amount will only make it difficult to find tenants.
While the statewide law may not impose any limits, local ordinances may differ. So be sure to check with your country or municipality.
Security Deposit Storage Laws
Many states have security deposit laws that dictate how a landlord should store a tenant’s security deposit. In some states, for instance, landlords are required to store a tenant’s security deposit in an interest-bearing account.
In the state of Texas, however, there are no requirements as to how landlords should store tenants’ security deposits. This rule can also vary locally, so be sure to double-check with your local county or municipality laws.
Is a Written Notice Required?
Some states require landlords to notify their tenants once they receive their security deposit. In Texas, this isn’t required. But again, you should check for potential legal requirements at the local level.
Legal Reasons to Keep a Tenant’s Security Deposit
As a Texas landlord, the state law permits you to keep all or a portion of the tenant’s deposit for a couple of reasons. These reasons are:
- When your tenant attempts to “live out” their security deposit. If your tenant uses the security deposit to pay their last month’s rent, you can legally hold your tenant liable for paying up to 3X the deposit amount. What’s more, the court may also hold them liable for paying your attorney’s fees.
- When your tenant doesn’t give you an advance move-out notice. Most leases clearly specify how much notice a tenant should give their landlord when vacating. If a tenant doesn’t abide by this, the law entitles you to keep the tenant’s entire security deposit.
- When a tenant has caused damage exceeding normal wear-and-tear. You may also keep part or all of the tenant’s deposit if they cause excessive property damage. Examples of excessive property damage include missing door handles, broken bathroom tiles, and stained carpet or tiles.
- When a tenant breaks their lease early. Tenants are usually bound by the terms of the lease for the entire period it’s active. So, when a tenant breaks it, they will still be bound to continue paying rent for the remaining time the lease will be active. For example, if a tenant breaks a lease in June and their lease is due to end in August, then they will still have to pay rent for the two months remaining under the lease.
Are Walk-Through Inspections Required?
This occurs when a tenant is planning to move out. The inspection involves both the landlord and tenant walking through the property to look for any illegal alterations or damages to the unit. In Texas, walk-through inspections are not required.
Overview of the Texas Security Deposit Rules for Returning a Tenant’s Security Deposit
In the state of Texas, landlords have 30 days from the date a tenant moves out to return their security deposit. The only exception is if your tenant didn’t provide you with a forwarding address.
If there are deductions made, a landlord must send the remaining portion of the deposit, along with a written, itemized list of any damages, to the tenant’s last known address. Take note, however, that the damages must exceed normal wear-and-tear. Examples of damage exceeding normal wear-and-tear include:
- Broken refrigerator shelf or dented front panels.
- Missing or broken mini-blinds or curtains.
- Missing or bent shower rod or plumbing fixtures.
- Chipped and broken enamel in bathtubs and sinks.
- Missing or cracked bathroom tiles.
- Shower mold due to lack of regular cleaning.
- Water damage on the wall from hanging plants.
Wrongfully withholding a tenant’s deposit in Texas can and will attract penalty fees. You can be held liable for up to 3X the withheld deposit plus your tenant’s attorney fees.
What if the Rental Property is Sold?
In the event the ownership of a rental property changes hands, the landlord will be required to transfer the tenant’s security deposit to the incoming owner. The outgoing landlord will be liable for safekeeping the deposit until the incoming owner notifies the tenants that they are now the new landlord and are in possession of the security deposits.
Once that is done, the incoming owner becomes solely liable for storing the tenant’s security deposits.
Disclaimer: This blog is in no way a substitute for professional legal advice. If you have any questions or require further clarification, please consider hiring expert legal services. You can also contact a professional property management company, such as OmniKey Realty.