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Overview of Security Deposits in Texas

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Are you a landlord looking to know more about security deposits in the Dallas-Fort Worth area?

Most landlord-tenant agreements in Texas include a security deposit. You receive this dollar amount from your tenant as proof of intent. This gives the needed assurance that your renter pays on time and incurs the costs related to damages.

However, the topic of security deposits creates hot disputes between landlords and tenants. Often, these debates stem from little knowledge about the associated laws and regulations.

When you are well-versed in the relevant legal framework, security deposits shouldn’t result in stressful negotiations. That’s because Texas state laws cover many aspects of security deposits. The respective statutes concern the use, return, and withholding of them.

The following are all the main things you should know about security deposits as a landlord in the Dallas-Fort Worth, Texas area:

 

Are the Security Deposits Capped?

Many states have upper limits for how much the landlord can ask. However, no such rules exist in Texas. As a landlord, you have free reign over the amount you demand as a security deposit.

Keep in mind that asking for a significantly higher deposit amount may hurt your chances of finding a tenant. The most reasonable plan of action is to ask a security deposit that is around the average in your area.

An important principle to follow is demanding the same security deposit amount from all your tenants. The deposit amount must not change according to the following characteristics:

  • Disability
  • Color
  • Having children or not

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  • Marital status
  • National Origin
  • Race
  • Religion
  • Sex

 

Storing the Security Deposit.

Some states have strict statutes that regulate the storage of security deposits. For example, in North Carolina, you can only store the deposit by posting a bond or opening a trust account. As a landlord in Texas, you face no legal requirements concerning the storage of your tenant’s security deposit.

 

Normal Wear and Tear in Texas.

As a landlord, you aren’t able to deduct any amount from the security deposit for normal wear and tear. However, you are able to deduct money for general damage. The difference between these terms is quite simple.

Normal wear and tear signifies damage that accumulates due to the regular and intended use of the rental unit. Also, normal aging processes may result in damages that you can’t deduct from the security deposit.

You are able to deduct money for the damage that results from accidents, destructive behavior, misuse, and negligence. For example, you could deduct money for coffee-stained rugs in the living room.

 

Texas Return of Security Deposits.

You have to return your tenant’s security deposit within a 30-day period after they have moved out.

 

Skipping Last Month’s Rent.

Tenants should never withhold the last month’s rent based on the expectation that their security deposit covers the debt.

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Texas laws state that the landlord may receive a monetary amount of three times the withheld rent. Additionally, the renter has to cover the landlord’s attorney costs.

 

Tenant’s Responsibilities to Get the Security Deposit Back.

You may include a clause in the lease agreement that requires your tenant to give advance notice before vacating the unit. This clause has to be underlined or in bold print. According to Texas laws, you could keep the deposit when your tenant fails to adhere to this clause.

Tenants have to give you a written statement that contains a forwarding address. When a renter doesn’t provide a forwarding address, you have the legal grounds to not return their deposit.

 

Deductions From the Security Deposit.

When you deduct any money from a security deposit, you need to provide the person with a written statement that describes the damages. Additionally, you are required to create an itemized list. This overview shows the exact reasons for each deduction.

You won’t have to provide your tenant with an itemized list nor a written statement when any rent is owed without a dispute. In such cases, you could deduct the rent due directly from the deposit and return the rest, if there’s any left.

 

What Happens When a Landlord Breaches the Requirements?

Failure to return the deposit within a 30-day period or provide the necessary paperwork could bring about legal consequences.

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You would be liable to your renter for an amount equal to three times the security deposit.

In the case of non-compliance, you forfeit the right to keep the security deposit. Moreover, you would need to pay your renter’s legal fees that were paid to get the deposit back.

 

What Happens If a Tenant Never Moves In?

You may sign a lease with a tenant and receive the security deposit but the person never actually moves in. The renter could get the deposit back if they adhere to certain rules.

The individual who didn’t move in has to find a replacement tenant if they want to get their deposit back. Of course, this prospective tenant needs to be a fully qualified renter according to your standards.

When you have to find a replacement tenant yourself, the security deposit situation is different. You could deduct a cancellation fee that is also called a reletting fee. However, this type of fee has to be an actual clause in your lease agreement in the first place.

Should the agreement lack a reletting fee, you could deduct the expenses of finding a new renter from the security deposit. Always remember that finding a new tenant is called a landlord’s duty to mitigate. You are required to take steps for getting the rental unit filled.

 

What If Neither Side Finds a New Tenant?

Most landlords in Texas let their renter out of the lease when they pay a full month’s rent and forfeit the right to their security deposit. However, this is definitely a gray area. You are able to negotiate particular terms with your tenant.

 

The Bottom Line: Security Deposit Laws in Dallas-Fort Worth, Texas.

Security deposit laws are in place in Texas to protect the interests of both landlords and tenants. The following are the main points you should know about security deposits as a landlord in Texas:

  • You face no demands on where to store the security deposit.
  • There is no cap on security deposit amounts.
  • The security deposit needs to be returned within a 30-day period.
  • A tenant needs to give you advance notice before vacating the unit.
  • There are legal consequences if you ignore the laws on deposits.

If you have specific questions, hire the services of a qualified attorney. Alternatively, you can seek help from a knowledgeable property management company

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.