Texas Security Deposit Laws

Key Takeaways

• Charging a security deposit in Texas helps protect landlords from financial losses such as unpaid rent, excessive cleaning costs, property damage, or tenant abandonment.
• Texas law does not limit the amount of a security deposit, allows optional monthly deposit fees with proper written notice, and permits pet deposits (excluding service and emotional support animals).
• Landlords must follow strict rules for allowable deductions and return security deposits within 30 days after move-out, making compliance essential to avoid legal and financial penalties.

If you’re not charging new residents a security deposit, you could be putting your rental investment at risk. This is because you may not be able to mitigate against certain potential issues after they occur.

Suppose, for instance, a resident, for whatever reason, abandons the unit. Without a financial cushion, you’d incur a hefty financial loss of having to re-rent the unit.

And this is where a security deposit comes in. As a landlord in Texas, requiring a security deposit can help cushion you against certain negligent actions from difficult residents. It can help cushion you against unprecedented things like:

• Unpaid rent upon the resident moving out.
• Excessive cleaning costs.
• Loss of rent payments if the resident becomes delinquent.
• Excessive cleaning costs if the resident leaves the unit in a dire state of uncleanliness.
• Lost rental income if the resident chooses to abandon the unit.
• Cover excessive property damage.

That said, the Texas security deposit law also imposes certain responsibilities on landlords.

Here’s a guide by Keyrenter Houston on the basics of the Texas security deposit law

Texas Security Deposit Law Guide

Based on Texas landlord-tenant laws, the state has clear policies in place regarding security deposits. 

Maximum Security Deposit Limit

Landlords in Texas have no limit on how much security deposit they can charge residents. This is unlike many states that impose a limit, say, the equivalent of two months’ rent.

Instead of a security deposit, the Texas security deposit law also allows landlords to charge a monthly fee payable at the same time as rent. If you choose this route, you must notify the resident of the following in writing.

• Their right to pay a lump sum security deposit instead of a recurring monthly fee.
• Their right to stop making the monthly payments and instead pay a lump sum security deposit amount.
• The amount payable if they choose either option.

Additional Pet Deposit

Yes, as a landlord in Texas, you can charge an additional pet deposit. You can use the deposit to cover pet-related damages that exceed normal wear and tear. For example, tears or holes in carpets, chewed baseboards, or scratches on wood floors.

You must not, however, charge additional pet deposits for residents having service dogs or emotional support animals. These are covered under the Federal Fair Housing Act, which prohibits discriminatory actions against emotionally or physically disabled residents.

Security Deposit Holdings

Some states have special requirements for landlords when it comes to storing residents’ security deposits. Some require landlords to store residents’ security deposits in interest-bearing accounts, while others require them to be kept separate from other funds.

This is, however, not the case for Texas landlords. You are at liberty to choose how and where to store residents’ security deposits. Just make sure the funds are available within the required timeframe after the resident has moved out.

Sale of Rental Property

After selling a rental property in Texas, you must transfer the security deposit to the new landlord, minus any allowable deductions. You must then notify the resident of the amount transferred.

Security Deposit Deductions

Only certain security deposit deductions qualify. They include the following for Texas landlords.

• Unpaid rent
• Costs incurred by the landlord as a result of a lease violation
• Costs of fixing damage exceeding normal wear and tear
• Other charges outlined under the rental agreement

But what exactly is damage exceeding normal wear and tear?

A thin line usually exists between what exactly constitutes excessive damage and normal wear and tear. And because of this, there are usually a lot of landlord-tenant conflicts in this regard.

To avoid such conflicts, familiarize yourself with what constitutes normal wear and tear versus damage. Normal wear and tear refers to deterioration that results from the intended use of a dwelling, including malfunction due to age or deteriorated condition. 

Examples include faded paint, lightly scratched glass, gently worn carpets, and stained bath fixtures.

Damage, on the other hand, refers to damage that results from carelessness, negligence, accident, or abuse of the rental premises.

Examples include missing fixtures, broken tiles, heavily stained carpets, or holes in the wall.

Security Deposit Returns

After a resident moves out in Texas, you’ll have up to thirty days to return their security deposit by mail if you have a forwarding address. If you don’t have a forwarding address, you must wait until the resident provides it. If they don’t, then you won’t be obligated under the TX security deposit law to return it.

Conclusion

When requiring security deposits in Texas, these are the rules you must adhere to. If you don’t, the legal and/or financial repercussions may be dire. Luckily for you, this blog by Keyrenter Houston has you covered in this regard.

If you have a question or need expert property management services, look no further than Keyrenter Houston. We’re a top-notch choice for property management services in Houston, TX, and its surrounding areas. Get in touch to learn more!

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 regards to this content or any other aspect of your property management needs.