- Texas landlords have flexibility but must follow rules – Chapter 92 of the Texas Property Code allows landlords to request security deposits from first-time residents and set the amount with no state-imposed limits, but deductions must be justified for unpaid rent, excessive damage, lease breaches, or professional cleaning, and failure to comply can lead to disputes or eviction.
- Pet deposits and assistance animal exemptions matter – Landlords can charge additional deposits for pets to protect their property, but assistance animals cannot be charged a deposit under federal and state law, as they provide necessary support for disabled residents.
- Security deposit handling and transfers require care – Texas law does not require special accounts for holding deposits, but landlords must return deposits within 30 days with an itemized statement and transfer deposits properly if the rental property is sold, ensuring compliance with state landlord-tenant laws.
Chapter 92 of the Texas Property Code gives landlords the right to request a security deposit from first-time residents before move-in, but it also requires landlords to follow specific rules when handling those funds.
Deductions from a security deposit must be justified, such as for unpaid rent, excessive property damage, costs from a lease breach, or professional cleaning services. Failing to understand these obligations can lead to conflicts or misunderstandings with residents.
Fortunately, Excellence Property Management is here to help. This guide provides a clear and comprehensive overview of the basics of Texas security deposit law.
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Maximum Security Deposit Limit
Different states have varying requirements regarding the amount of security deposits landlords can charge residents. In the neighboring state of Arkansas, for example, landlords can charge up to 2X the monthly rent. New Mexico, which borders Texas to the west, requires landlords to charge 1 month’s rent as a security deposit.
No such security deposit limits apply to Texas, though. Here, landlords can charge as much or as little as they wish. Don’t overcharge residents, as this can make your rental property less desirable in their eyes, and you may struggle to fill the unit.
Alternatively, the Texas security deposit law permits landlords to charge a monthly fee instead of a one-time security deposit payment. If you choose this option, you must notify the resident of certain things, including their right to pay a lump sum amount as a security deposit rather than a monthly fee.
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Additional Pet Deposit
In addition to the security deposit, landlords in Texas can also charge residents with pets another deposit. This helps protect against potential damage the pet may cause to the rental unit.
You must provide an exemption for assistance animals, though. This is required under both the Federal Fair Housing Act (FHA) and the Americans with Disabilities Act (ADA).
Both laws recognize assistance animals not as pets, but as necessary support for disabled individuals.
Security Deposit Holdings
Some states have special requirements regarding how and where landlords must store residents’ security deposits. In neighboring Oklahoma, for example, landlords must store residents’ security deposits in an escrow account.
Under the Texas security deposit law, landlords have no such requirements. Unlike in Oklahoma, you don’t have to store it in an escrow account or in an interest-bearing account as required in New Mexico.
Sale of Rental Property
If you sell an occupied rental property in Texas, you must transfer the deposit to the new owner. You must also provide written notice to the resident informing them of the transferred amount.
Once the transfer is complete, the new landlord assumes all responsibilities under the state’s security deposit laws and landlord-tenant laws.
Security Deposit Deductions
The justifiable reasons for security deposit deductions in Texas include the following:
- Unpaid rent due under the lease. Residents must pay rent on time. If a resident moves out without completing all rent payments, you can make appropriate deductions from their security deposit , and in some cases, unpaid rent or repeated lease violations may lead to eviction.
- Costs incurred due to a breach of lease terms, such as abandoning the unit or breaking the lease early without a justified reason.
- Costs of repairing excessive property damage.
When it comes to property damage, what qualifies as excessive versus ordinary wear is often a source of conflict.
Texas formally defines damage as deterioration resulting from carelessness, negligence, or abuse of the premises, equipment, or chattels by the resident, a household member, or their guest.
Common examples include broken tiles, a missing window stay, torn carpets, and a smashed bathroom mirror. Residents are fully responsible for such damage.
Ordinary wear results from intended use of the dwelling or malfunction due to age or deterioration. Common examples include faded paint, lightly scratched glass, gently worn carpets, and stained bath fixtures.
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Security Deposit Returns
After the resident moves out, you must return their portion of the deposit within 30 days. You must return it by mail and include an itemized statement if any deductions were made.
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Conclusion
Legal compliance is a key landlord responsibility. The Texas security deposit law is part of the broader statewide landlord-tenant laws that you must follow to be successful. Now you know what you need to do when collecting residents’ security deposits.
Excellence Property Management is an expert property management company with over 35 years of experience. We serve El Paso, TX, and surrounding areas. Get in touch to get started.
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 about this content or any other aspect of your property management needs.
