Are you a landlord looking to know more about Texas security deposit law in the Dallas-Fort Worth area?
Most landlord-tenant agreements in Texas include a security deposit for a property lease to protect the landlord. A landlord will collect security deposits from their tenant as proof of intent to respect fthe lease. This gives the needed assurance that your tenants pay in a timely manner and incur the costs related to excessive property damage during the lease, or you may have the right to sue.
However, the topic of deposits creates hot disputes between Texas landlords and tenants. Often, these debates stem from little knowledge about security deposit laws and regulations.
It’s important for a Texas landlord to include these specific laws in the rental agreement to avoid confusion. For example, a landlord should state in the lease that one cannot use the security deposit to cover unpaid rent.
When Texas landlords are well-versed in the relevant legal framework, deposits shouldn’t result in stressful negotiations. That’s because laws cover many aspects of property deposits. The respective statutes concern the use, refund, 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 as a deposit for their rental property. However, in Texas, there is no security deposit limit. As a landlord in Texas, there is no maximum to how much a security deposit can cost.
Keep in mind that asking for significantly higher fees for a security deposit may hurt your chances of finding a tenant. The most beneficial plan of action is to request a security deposit that is a reasonable amount around the average in your area.
An important principle to follow is demanding the same security deposit amount from all your Texas tenants. The reasonable cost of the deposit must not change according to the following characteristics of the tenant:
- Disability
- Color
- Having children or not
- 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, a landlord can only store the deposit by posting a bond or opening a separate bank account. A landlord will face no legal requirements concerning the storage of their tenant’s security deposit in Texas, however. There is also no requirement in Texas for a landlord to provide a written notice or a receipt.
Normal Wear and Tear in Texas
As a landlord, you aren’t able to make deductions to the money from the security deposit for cleaning fees that resolve normal wear and tear. However, you are able to make deductions for general damage to your property. The difference between normal wear and tear and excessive property damage is quite simple.
Normal wear and tear signifies damage that accumulates due to the regular and intended use of the rental unit and property. Also, normal aging processes may result in normal wear and tear. This is normal wear and tear that a landlord cannot take from the security deposit.
A landlord is able to make deductions for the damage that results from accidents, destructive behavior, misuse, and negligence on the premises. For example, the landlord could make deductions for coffee-stained rugs in the living room, or numerous holes in the walls, as these would not be a part of normal wear and tear.
Texas Return of Security Deposits
Each landlord has to refund their tenant’s full security deposit in Texas within a 30-day period after the tenant surrenders the rental property back to the landlord and there are no damages beyond wear and tear.
Skipping Last Month’s Rent
Under Texas security deposit laws, tenants should never withhold the last month’s rent based on the expectation that their security deposit covers the required fees. If there is any unpaid rent or unpaid utility bills owed by the tenant, a security deposit cannot cover this rent.
Texas law state that the landlord may receive a monetary amount of three times the portion of the rent wrongfully withheld. On top of covering for withheld rent, the tenant has to cover attorney fees for the landlord, as long as the fees are reasonable.
Tenant’s Responsibilities to Get the Security Deposit Back
You may include a clause in the lease agreement that requires your tenant to give their landlord advance written notice before vacating the premises. This clause has to be underlined or in bold print. According to Texas law, you could keep the tenant’s security deposit when your tenant fails to adhere to this clause.
Tenants have to give their landlord a security deposit demand letter; a written statement that contains the tenant’s forwarding address. When a tenant doesn’t provide a forwarding address, the landlord has the legal grounds to not return the tenant’s deposit.
Deductions From the Security Deposit
Under Texas law, when you deduct any money from a security deposit and send the remainder to the tenant’s forwarding address, you are liable for providing the person with a statement that describes the damages. Additionally, state laws require landlords to create an itemized list of deductions. This overview shows the exact reasons for each deduction.
Under law, you won’t have to provide your tenant with a written itemized receipt nor a statement of costs when any monthly rent is owed without a dispute. In such cases, you could deduct the monthly rent due directly from the deposit and refund the rest, if there’s any rent left.
What Happens When a Texas Landlord Breaches the Requirements?
If a landlord fails to return the deposit within a 30-day period or provide the necessary paperwork, it could bring about legal consequences. The tenant may sue in Justice Court (small claims court).
When taken to court, under Texas law, a landlord would be legally liable to their tenant for an amount equal to three times the security deposit.
In the case of non-compliance, the court will order the landlord to forfeit the right under law to keep the security deposit. Moreover, they would need to pay their 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. Under Texas security deposit law, the tenant could get the deposit back without going through with the tenancy if they adhere to certain rules.
The individual who backed out of the tenancy has to find a replacement tenant if they want to recover their deposit. Of course, this prospective tenant needs to be a fully qualified renter according to your standards to recover the money.
When you have to find a new tenant yourself, the security deposit situation is different. You could deduct cancellation fees, also called reletting fees. 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 fees 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 by law to take steps for getting the rental unit filled, inlcuding incurring the costs.
What If Neither Side Finds a New Tenant?
Most landlords let their renter out of the lease when they pay rent for the month, the tenant surrenders possession of the dwelling, and they forfeit the right to their security deposit. However, this is definitely a gray area. Every landlord is able to negotiate particular rent terms with their tenant when creating the lease.
The Bottom Line: Security Deposit Laws in Dallas-Fort Worth, Texas
Security deposit laws in Texas are in place 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:
- A landlord faces no demands on where to store the tenant’s deposit.
- There is no cap on the price to pay security deposit amounts.
- The landlord must refund the security deposit within a 30-day period of the tenant vacating the rented premises.
- A tenant needs to give you advance written notice before vacating the unit.
- The tenant can sue and you may pay fines if you ignore the Texas laws on deposits.
If you have specific questions about laws regarding being a landlord, hire the services of a qualified attorney. Alternatively, you can seek help from a knowledgeable 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 rental property ownership needs.