Being a landlord, it can be a bit confusing to understand your rights and responsibilities under landlord-tenant law, including Texas’ security deposit laws. 

This article aims to help you wrap your head around these rules and regulations so that you can make sure your rental business is compliant. 

Security deposits are an important part of renting out a property, and it’s essential that both landlords and tenants understand the laws in place to protect them. 

We’ll be discussing the different types of security deposits, the maximum amount a landlord can collect, and other important details related to these laws. By the end of this article, you’ll have a better understanding of the legal requirements for security deposits in Texas. 

Texas Security Deposit Limit

In Texas, the maximum security deposit amount that can be charged is three times the monthly rent. For example, if you charge a monthly rent of $1,200, the maximum security deposit amount is $3,600. And this is determined by whether or not the stated residence is furnished. 

The amount is restricted to a maximum of three months’ worth of rent when the property is furnished and a maximum of two months’ worth of rent when the unit is unfurnished.

landlord-sitting-at-desk-typing-on-laptop-with-calculator-and-papers-calculating-security-deposit-amount 

In addition, the law allows landlords to charge an additional fifty percent of the monthly rent if the renter possesses a waterbed.

Nonrefundable Fees 

There are two types of security deposits: returnable deposits and non-refundable deposits. Returnable deposits are those a landlord must return to the tenant when they move out, minus any legitimate deductions. 

Non-refundable deposits, on the other hand, are not refunded to tenants at the end of tenancy and can be used by the landlord to cover any costs incurred during their tenancy. 

Texas rental deposit laws state that landlords can charge nonrefundable fees in addition to the security deposit. However, it is only possible for the landlord to charge non-refundable fees if the tenant agrees to it in writing. 

Storing Tenant Security Deposits in Texas 

Texas rental security deposit law states that landlords must store their tenants’ security deposit in a separate trust account. The account must be held at a bank or financial institution based in Texas and the landlord is required to inform the tenant of where the money is being kept. 

The funds can only be used for repairs or cleaning after the tenant has moved out, and any remaining funds must be returned to the tenant within 30 days of their departure.

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The tenant is required to provide the landlord with a notice of at least 30 days before moving out in the state of Texas. In the event that they do not comply, the landlord has the right to keep the full security deposit. However, in order for this to take place, it must be stated in the rental agreement or lease contract.

Written Notice After Security Deposit Receipt

Under Texas law, landlords must provide the tenant with a written notice within 30 days of collecting their security deposit. This notice should include information about where the money is being held, along with an itemization of any deductions made from the deposit.

Reasons To Withhold a Tenant’s Security Deposit in Texas

Under certain conditions, landlords can keep all or a portion of a tenant’s security deposit. In the state of Texas, common reasons include: 

Non-payment of Utility Bills by the Tenant

Renters are usually responsible for paying utilities such as gas, electricity, and water bills during their tenancy. If the tenant fails to pay their rent, the landlord has the right to deduct the appropriate amount from their security deposit, once stated in the written notice

Leaving the Rented Premises in a State of Extreme Filth

Beyond normal wear and tear, most leases require tenants to leave the premises in the same exact condition they found it. Regrettably, not all tenants follow this rule. In such cases, the landlord has the legal right to deduct the appropriate amounts from their security deposits. 

landlord-wearing-yellow-cleaning-gloves-wiping-down-bathroom-walls

Defaulting on the Lease

Breaching a lease constitutes a serious violation of the lease agreement. A lease binds a tenant for a specified period of time. 

As a result, if they vacate before the lease expires, the landlord can reduce their losses by deducting a portion or all of their security deposit. The landlord can also sue the tenant if the security deposit is insufficient to cover their losses. 

Non-payment of Rent

If a tenant does not pay the last month’s rent, the landlord has the right to deduct a portion or all of the tenant’s deposit to cushion themselves. 

Significant Property Damage

In the event of excessive property damage, a landlord can also deduct appropriate amounts from a tenant’s deposit. Any damage that exceeds normal wear and tear is considered excessive property damage. Here are a few examples of excessive property damage: 

  • Accumulated dirt in the kitchen or bathroom 
  • Infestation of pests 
  • Walls with unapproved paint 
  • Large or numerous holes in the wall 
  • Pet urine-soaked carpet 
  • Shattered toilet seat 
  • Broken bathroom mirror 
  • Broken or disabled locks 

A Walk-Through Inspection

A walk-through inspection is a common clause of the security deposit laws in Texas. This inspection is conducted by both the tenant and landlord at the end of the tenancy to identify any damages or cleaning needed. 

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During this time, any deductions from the security deposit should be explained to the tenant. If there are discrepancies between what was previously agreed upon in the lease and the walk-through inspection, both parties should keep a record of the findings to ensure all parties are in agreement. 

Security Deposit Refund in Texas

When it comes to security deposit refunds, the landlord must do so within 30 days of the tenant vacating the property. The landlord may deduct from the deposit any unpaid rent, damages to the property that were caused by the tenant, and/or cleaning costs that are not caused by normal wear and tear. 

It is important to note that the landlord may not deduct for improvements or routine maintenance on the property that were due during the tenant’s occupancy.

Change in Property Ownership

If the ownership of a rental property is transferred, any security deposits held by the previous owner must be returned to tenants or the new owner within 30 days.  This is in addition to any other return requirements outlined by the previous owner. 

If such deposits are refunded, then tenants may file a complaint with the Texas Department of Regulatory Agencies (TDRA). They will investigate the matter and if necessary, they may take enforcement action against the previous owner. 

If you are the new owner of a rental property, you must provide written notification to tenants that their security deposits have been transferred. The new owner must also provide the tenant with written notification of the transfer within 30 days.  

Conclusion

We hope this article has helped to make Texas security deposit law more clear for you. If you have specific questions or concerns, contact the experts at Keyrenter Austin! We provide detailed guidance and advice to all our clients regarding renting laws. We can also help you understand the legal obligations of tenants. 

Disclaimer: This blog should not be used as a substitute for legal advice from a licensed attorney in your state. Laws frequently change, and this post might not be updated at the time of your reading. Please contact us for any questions you have in regard to this content or any other aspect of your property management needs.