You must follow certain rules if you're a landlord in Texas and you decide that you want to collect a security deposit from your tenants in Texas. You could lose your right to keep any portion of your tenant’s security deposit if you don't follow these rules, even if you have a right to make deductions from the deposit.
Luckily, the laws in Texas are much more relaxed than in many other states.
Is There a Security Deposit Limit in Texas?
Texas law doesn't impose any limits as to the maximum amount that a landlord can charge a tenant for a security deposit. That's at the state level, however. Local ordinances might differ, so always check with your municipality or county to be sure that what you're asking is within the law there.
Where Should the Deposit Be Held?
There are no requirements for how a landlord must store a tenant's security deposit in Texas. But again, check for requirements at the local level.
Is Written Notice Required After Receipt?
A landlord does not have to provide written notice to the tenant after receiving a security deposit. But this rule can also vary locally.
When Can You Keep a Tenant’s Security Deposit?
A Texas landlord is permitted to keep all or a portion of a tenant’s security deposit if the tenant breaches the lease or damages the property in excess of normal wear and tear.
A tenant can be held liable to pay the landlord three times the amount and the landlord’s attorney's fees if she attempts to “live out” her security deposit, using it as her last month’s rent by simply not paying the rent because the landlord has the deposit.
A landlord might be entitled to keep the tenant’s security deposit in its entirety if the tenant does not give advance notice before vacating the unit, but this provision must be clearly spelled out in the lease, either underlined or in bold print. The lease must state that failure to give advance notice will result in the tenant forfeiting her right to the security deposit.
The tenant will still be entitled to the return of his security deposit, less any additional charges, if he has breached the lease but finds a “satisfactory” replacement tenant who will move in and take his place on or before the lease ends.
The landlord can still deduct expenses incurred from finding a replacement tenant, however, including time spent to do so, if he finds a “satisfactory” replacement tenant who will move in on or before the lease ends. The landlord is allowed to charge the tenant this fee if the lease agreement included a lease cancellation fee.
Texas does not require a walk-through inspection before a tenant moves out.
Returning a Tenant’s Security Deposit
A landlord has 30 days from the date the tenant moves out to return her security deposit to her. An exception to this rule exists if the tenant does not provide a forwarding address. In this case, the landlord does not have to make any effort to return the deposit until the tenant provides him with a forwarding address.
The landlord must send the tenant the balance of her security deposit, along with a written, itemized list of any damages and the approximate cost of repair, if the landlord has made any deductions from the tenant’s security deposit. But the landlord is not required to include this list if the tenant owes the landlord rent at lease termination and if there is no disagreement as to the amount of rent owed.
Is the Deposit Ever Nonrefundable?
The security deposit itself is always refundable after for deductions made for repairs. Other nonrefundable fees can be added, however, such as redecorating fees. These added fees must be clearly spelled out in the lease and tagged as nonrefundable.
A landlord can be responsible for up to three times the amount of a withheld deposit plus attorney's fees if she attempts to wrongfully withhold a tenant’s security deposit. The landlord gives up the right to withhold any of the security deposit and might have to pay attorney fees the tenant incurs trying to recover his deposit if the landlord does not provide written a notice of any damages for the portion of security withheld.
What Happens If You Sell Your Property?
In the event that you sell your property, or if the property otherwise changes ownership, the landlord is responsible for transferring the security deposits to the new owner. He'll be liable for safekeeping of these deposits until the new owner issues a signed, written notice to the tenants informing them that he is now in possession of the money and the exact amount of the security deposit received.
The new owner is solely liable for the security deposits after this notice is given.