Security Deposit Laws in Texas: A Complete Guide for Landlords & Tenants
TL;DR
- Deposit limit: No maximum—Texas law lets landlords set the amount. Texas laws govern how security deposits are collected, handled, and returned.
- Return deadline: Must refund deposits within 30 days after the tenant vacates the unit
- Deductions: Only for unpaid rent, damages (not normal wear), and costs specified in the lease or rental agreement. Must provide a written, itemized list if deducting.
- Interest/storage: No separate or interest-bearing account required; no need to disclose deposit’s location.
- Non-compliance: Landlords forfeit right to withhold the deposit and may owe $100 plus triple damages and legal costs.
- Pro Tip: Streamlined deposit compliance means fewer disputes—see Accounting for Security Deposits: A Comprehensive Guide for Property Managers.
Introduction: Security Deposit Laws in Texas
Texas security deposit laws are designed to protect both landlords and tenants by outlining the legal requirements for handling a security deposit in Texas. For landlords, following Texas Property Code § 92.101–92.109 not only avoids costly disputes, but also guards against big penalties and legal actions. For tenants, these laws ensure a fair return of funds at move-out.
These rules are part of broader Texas rental laws that govern landlord-tenant relationships and property management.
Both landlords and tenants must follow these legal requirements to ensure compliance and avoid potential legal issues.
Security Deposit Limits & Storage Requirements
- Maximum deposit: There’s no cap on security deposit amounts in Texas—landlords can choose what’s appropriate for their market or tenant profile. It’s common for landlords to collect security deposits equal to one or two months’ rent or a month’s rent.
- Storage requirements: Landlords must safeguard tenant funds, but there’s no legal requirement for a separate or interest-bearing account. While Texas law does not require landlords to store security deposits in a separate bank account, using one is considered best practice for transparency.
- Tenant notification: There is no requirement to notify rental lease tenants about where deposits are kept.
- Law Reference:Tex. Prop. Code § 92.103
What Texas Landlords Can and Cannot Deduct
- Normal wear and tear includes minor scuffs, nail holes, faded paint, or gently worn carpets—these are expected through everyday use and cannot be deducted from a tenant’s security deposit under Texas law.
- Damage exceeding normal wear and tear—like large holes, broken fixtures, severe stains, or missing doors—justifies a landlord deducting from the security deposit if properly itemized with receipts and descriptions.
- Move-in and move-out inspections—with photos and written notes—are essential for both parties to document the property’s condition and minimize security deposit disputes.
- Landlords must provide an itemized statement for any security deposit deductions and return any balance within 30 days after move-out, or else they risk stiff financial penalties.
- Tenants can sue for their full deposit, attorneys’ fees, and damages in small claims court if a landlord withholds any remaining deposit for ordinary wear, fails to provide documentation, or violates Texas security deposit law.
- Accurate records and clear communication protect both landlords and tenants, ensuring legal compliance and fair deposit handling.
Security Deposit Returns, Deductions, and Documentation
- Return deadline: Texas law requires landlords to return security deposits within 30 days after the tenant surrenders the rental unit, pays last month’s rent and provides a tenant’s forwarding address. The clock starts when the tenant provides a forwarding address and surrenders the keys.Advance notice and the tenant’s forwarding address are crucial for returning security deposits on time. Managing security deposits in compliance with Texas law requires landlords to return security deposits within the required timeframe.
- Allowable deductions: Landlords can deduct from the tenant’s security deposit for unpaid rent, damages beyond normal wear and tear, cleaning fees, unpaid utilities, unpaid utility bills, property damage, and reasonable costs associated with securing a replacement tenant. All deductions must be clearly documented and justified according to legal obligations.
- What cannot be deducted: Laws strictly ban deductions for normal wear and tear (e.g., faded paint, gently worn carpet). The only exception is if the tenant fails to provide a forwarding address or if the tenant owes rent at the end of the tenancy. Landlords cannot require tenants to use their security deposit as last month’s rent; tenants must pay rent separately.
- Itemized statement: If any portion of the tenant’s deposit is withheld, landlords must provide a written description and itemized statement of damages and deductions, and provide written notice to the tenant, along with any balance refunded. Texas law requires landlords to maintain accurate records of all deductions and communications related to the tenant’s security deposit.
- Legal obligations: Texas law requires landlords to return the entire deposit unless deductions are justified. If a landlord wrongfully withholds a tenant’s deposit, the tenant can pursue legal remedies. If the entire deposit is withheld due to excessive property damage or unpaid rent, landlords must provide proper documentation and may pursue additional damages if necessary. If a tenant fails to provide a forwarding address or pay rent owed, it can delay or affect the process of returning the security deposit.
- Law Reference:Tex. Prop. Code § 92.104
Interest Payments, Inspection, and Documentation
- Interest: Landlords are not required to pay interest on security deposits.
- Move-in condition report: Not required by law, but it’s strongly recommended that both parties document property condition with dated photos at move-in and move-out. This documentation is often required by the rental agreement or lease agreement to clearly establish the property’s condition and help resolve any disputes about damages or deductions.
- Tenant review period: Tenants should always retain photos or written records for any future disputes.
- Law Reference:Tex. Prop. Code § 92.109
Penalties for Mishandling Security Deposits on Rental Property
- Failure to return on time: Landlords risk owing $100 plus three times the amount wrongfully withheld, and courts may also award reasonable attorney’s fees to tenants if the deposit is wrongfully withheld in violation of legal requirements.
- Failure to provide proper documentation or itemized statement: Forfeits the right to withhold any portion of the deposit, and may result in liability for attorney’s fees.
- Law Reference:Tex. Prop. Code § 92.109
How Rentable Solves Texas Deposit Pain Points
Account Setup & Deposit Handling
Rentable ensures all deposit funds are tracked, reconciled, and audit-ready—no spreadsheets, no missing records, and no commingling of tenant funds.
Law Change Compliance
Texas law is simple, but enforcement is strict. Rentable’s compliance engine is updated instantly for legislative changes, so your policies and returns never fall out of date.
Audit Trails & Documentation
Rentable stores every deposit, deduction, invoice, and refund event, helping you generate itemized statements or receipts immediately—with records always available for tenants, auditors, or legal proceedings.
Timely Returns & Dispute Reduction
Automated reminders and workflows keep every deposit return on schedule, helping you avoid penalties and long-running disputes.
Key Takeaways: Texas Security Deposit Laws
- No cap on full security deposit size in Texas.
- Return required in 30 days; itemized statement required if deductions are made.
- No interest or separate account required.
- Penalties for non-compliance: triple damages, $100 fine, and possible attorney fees.
Disclaimer
This guide is for informational purposes only and does not constitute legal advice. Always consult the current Texas Property Code and consider legal counsel for specific situations.
