If you’re a landlord, you know that collecting a security deposit from your tenants offers a wide variety of benefits for you and your rental property. The following are just some of the costs that a security deposit can cover:

  • Unpaid utility bills: During the tenancy, the utility bills will most likely be handled and paid for by the tenant. Should a tenant fail to pay these bills, a security deposit can help a landlord cover the cost.
  • Excessive cleaning costs: In most leases, it is very clear that tenants must leave the rental property in the same condition it was in upon the beginning of the tenancy. If the tenant leaves the home in an unclean and unsanitary state, the security deposit can help cover the cost of cleaning.
  • Unpaid rent: If a tenant fails to make their rent payments at any time, a security deposit can prevent you from losing income. Should the situation escalate, however, you may need to carry out an eviction process.
  • Abandoned lease: Sometimes tenants decide to abandon the property altogether and break their lease. If this happens, a security deposit can be used to ensure that you don’t lose too much money from the situation.
  • Repairs: If a tenant causes excessive damage to the property, a security deposit can cover the cost of repairs.

white kitchen with center island

However, as beneficial as collecting security deposits can be, you must be familiar with all of the landlord-tenant laws regarding them. Texas, like many other states, has its own set of rules that dictate how security deposits should be used, when they need to be returned, and more.

Your Guide To Security Deposit Laws in Texas

1. Texas Security Deposit Limits

Many states have a limit to how much a landlord may charge their tenants for a security deposit. Texas, however, does not provide landlords with a limit for these deposits. Further, Texas landlords may charge tenants an additional pet deposit if they are pet owners. This is only allowed if the pet is not a registered service animal.

2. Non Refundable Fees in Texas

Texas does not specify whether a landlord is allowed to charge non refundable fees or not. In fact, as of September 1, 2021, tenants may opt for monthly fees instead of paying for a security deposit.

If this option is chosen, then the landlord must provide tenants with written notice stating the tenants’ right to pay a security deposit instead of the monthly fee, the tenants’ right to stop paying the monthly fee and switch to a standard security deposit at any time, and the amount that each option (security deposit vs. monthly fee) would cost the tenant.

person holding money

3. Storing a Security Deposit

While many states have rules regarding how a landlord must hold the funds of a security deposit during the tenancy, Texas does not.

4. Written Notice After Receiving a Security Deposit

In Texas, a landlord is not required to provide their tenant with a written receipt for security deposits. However, landlords are required to keep accurate and detailed records of any security deposits that have been received.

5. Reasons Landlords in Texas May Withhold a Security Deposit

There are a wide variety of reasons that a landlord may choose to withhold funds from a security deposit. Texas landlords can use security deposit funds to cover the cost of the following situations:

  • The tenant fails to pay their rent.
  • The tenant fails to pay their utility bill.
  • Payment for any changes made to the property.
  • The cost of repairs for any damage caused by the tenant that goes beyond normal wear and tear.
  • Cleaning fees (this is applicable if the tenant does not leave the property in the same state of cleanliness it was in prior to the beginning of the lease).
  • Cost of charges to the security deposit as stated in the lease agreement.
  • Any lost income that occurs if the tenant decides to break the lease.

person signing lease agreement

It must be noted that a landlord may not use a security deposit to cover the cost of repairs that are done due to normal wear and tear of the property.

What is the difference between a tenant damaging the property and normal wear and tear? Damage refers to issues in the property caused by abuse or neglect from the tenant failing to uphold their end of the lease agreement.

Normal wear and tear, however, is deterioration that occurs from the property being used for its intended purpose over a long period of time. This can include things like worn out carpets, loose doorknobs, or appliances that no longer function properly.

6. Walk Through Inspections in Texas

Unlike many states, Texas landlord tenant law does not specify whether or not a landlord needs to provide their tenants with walk through inspection upon the tenant moving in or moving out. However, if deductions are made to the deposit, then the landlord must provide the tenant with an itemized list of damages and deductions.

7. Returning Security Deposits to Tenants in Texas

After a tenant has moved out, a landlord in Texas has 30 days to return the security deposit, or what is left of it, back to the tenant. However, the landlord is not obligated to return the funds to the tenant until the tenant provides a forwarding address.

mailing envelope

8. Change in Property Ownership

If the rental property changes ownership, the new owner will take on any obligations held by the previous landlord regarding the tenants’ security deposit.

The new landlord must provide the tenant with a signed written statement that states the exact amount of the security deposit and confirms that they have now acquired the rental property, therefore being now responsible for the funds of the security deposit.

Bottom Line

At the end of the day, collecting security deposits can be incredibly useful for any landlord as long as they are following all of the rules and regulations involved. If you have any further questions regarding these laws, or any other aspect of your rental property, contact Keyrenter McAllen today!

Disclaimer: This blog isn’t a substitute for legal advice from a licensed attorney. Laws frequently change, and this post might not be updated at the time you read it. Get in touch with Keyrenter McAllen for any questions regarding this content or any other aspect of your property needs.