Key Takeaways
- Texas does not limit the amount landlords can charge for security or pet deposits.
- Landlords must return the deposit within 30 days of the tenant moving out.
- Deductions must be reasonable and documented in good faith.
Most landlords require their tenants to pay a security deposit in addition to the first month’s rent before moving in under the Texas security deposit law. This is not a monthly fee, but rather a one-time payment.
This security deposit is intended to provide landlords with a financial cushion against potential issues during the tenancy or anything else under the Texas Property Code.
Examples of such issues under the Texas security deposit laws include:
- Tenants moving out without paying the rent owed under the lease or rental agreement. In this situation, a tenant surrenders their right to the security deposit law amount.
- Tenants vacating the property without settling outstanding utility bills.
- Tenants leaving behind damage that exceeds normal wear and tear. You also have to follow the Texas Property Code when repairing this damage.
Without this financial buffer of security deposits, landlords could face significant financial losses. However, collecting a security deposit also comes with a number of legal obligations. Learn how to navigate the security deposit law with Shannon Property Management by your side!
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Maximum Security Deposit
Unlike many other states, Texas does not impose a cap on how much landlords can charge for a security deposit. This means you can request as much or as little for a security deposit as you deem appropriate.
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However, excessive security deposit amounts can negatively impact the appeal of your rental unit. Being reasonable is key. Generally, charging a maximum of 1.5 times the monthly rent is a fair guideline. For example, if rent is $2,000 per month, a security deposit of $3,000 should be sufficient to protect against potential financial risks during the tenancy or in the case of eviction.
Additional Pet Deposit
Texas landlords are also allowed to collect additional deposits for pets since there are no restrictions on the total amount of security deposits.
However, it is important to note that service animals and emotional support animals are not considered pets under the law. As such, they are exempt from pet deposits. Both the Fair Housing Act (FHA) and the Americans with Disabilities Act (ADA) classify disabilities as a protected class, making it unlawful to charge extra for these animals.
Interest on Security Deposits
In some states, landlords must keep security deposits in interest-bearing accounts and return the interest along with the deposit. Texas does not require this for a security deposit.
Texas landlords have complete flexibility in how they store security deposits. You may:
- Keep the funds in your personal account.
- Store them in a separate account.
- Use an interest-bearing or non-interest-bearing account.
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However, you must maintain accurate records of all security deposits at all times, regardless of how the funds of the security deposits are stored.
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Sale of Rental Property
If you sell a rental property that is currently occupied with a signed lease agreement, Texas landlord-tenant law requires you to do the following:
- Transfer the security deposit (minus any lawful deductions) to the new owner.
- Provide written notice to the new landlord specifying the amount of the tenant’s deposit.
- Notify the tenant in writing that their deposit has been transferred to the new property owner.
- Once this is done, the new landlord assumes full responsibility for the security deposit and you only collect last month's rent.
Security Deposit Deductions
Texas law permits landlords to deduct from a tenant’s security deposit for the following:
- Unpaid rent still owed under the lease.
- Unpaid utility bills for which the tenant was responsible under the monthly fee.
- Costs associated with early lease termination if the tenant moves out without permission or legal justification, such as cleaning fees.
- Repairs for damage that exceeds normal wear and tear under the Texas Property Code.
There is no specific limit on the amount that may be deducted, but all deductions must be reasonable and made in good-faith. If a landlord fails to do so, a tenant can take you to Small Claims Court and you can even be charged for their attorney fees.
Normal Wear and Tear vs. Damage
Texas law defines normal wear and tear as deterioration resulting from the intended use of a property over time. Under the lease agreement, this includes:
- Lightly scratched windows or glass.
- Gently worn carpets.
- Mildly stained bathroom fixtures.
- Slightly dirty grout.
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Landlords are responsible for addressing these types of repairs.
Conversely, damage exceeding normal wear and tear is typically caused by carelessness, negligence, abuse, or accidents. Examples include:
- Broken tiles or windows.
- Missing light fixtures.
- Holes in the walls.
In these cases, tenants are responsible for the cost of repairs which is not included in their monthly fee.
Returning the Security Deposit
Texas law requires landlords to return a tenant’s security deposit to the tenant's forwarding address within 30 days after they move out. The only exception to this rule is if the tenant fails to provide a forwarding address or fails to pay last month's rent.
Even if the address is delayed, the Texas landlord must still return the deposit within 30 days of receiving it. Under Texas law, the deposit is considered returned only when it is postmarked for delivery.
If you make any deductions, you must send the tenant a written notice that includes the amount of the deposit being returned and a detailed list of deductions made. A failure to follow this could take you to the Justice Court where you'd have to pay a reasonable attorney's fees.
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Bottom Line
Understanding your rights and responsibilities as a Texas landlord is essential for ensuring legal compliance and avoiding costly disputes. Texas offers landlords flexibility regarding security deposit amounts and how they are stored and what happens when a tenant owes rent.
However, this flexibility comes with the responsibility to act in good faith, maintain accurate records, and communicate clearly with tenants, especially when deductions are involved under the security deposit laws.
For expert help with any aspect of real estate management in Houston, contact Shannon Property Management today. We are here to make your rental property experience smooth and successful.
Disclaimer: This article is intended for informational purposes only and does not constitute legal advice. Landlord-tenant laws are subject to change, and individual circumstances can vary. For legal guidance, please consult a licensed attorney or professional familiar with Texas real estate law.
About the Author
Real estate, construction, and property management have been part of Steven Shannon’s life from the very beginning. As a fifth-generation Houstonian and Owner of Shannon Property Management, Steven combines a deep understanding of the local market with hands-on experience in construction and property operations. Before founding the company, he worked in management consulting and later managed large industrial construction and real estate development projects, experiences that helped shape his practical, solutions-focused approach to property management.
Today, Steven is dedicated to helping rental property owners maximize returns while reducing the stress that often comes with managing real estate investments. Under his leadership, Shannon Property Management has built a reputation for delivering stability, peace of mind, and exceptional service to owners and residents throughout the Houston area.
Through the company blog, Steven shares insights on property management, real estate investing, maintenance best practices, and market trends to help owners make informed decisions and protect the long-term value of their investments.