Security Deposits – Texas Law and How to Get your Money Back!

Most landlords and property management companies require a security deposit as part of a lease agreement. The purpose of the security deposit is to protect the landlord from the tenant’s failure to perform their obligations under the lease. This includes failure to pay rent, failure to give proper notice of termination, and property damage caused by tenant neglect. What happens to the security deposit once the lease is terminated can often be the cause of a major dispute between a landlord and tenant.

A tenant you should require a walk-thru with the landlord before taking possession of the property as well as after moving out. The purpose of the walk-through is to identify any obvious maintenance or repair issues with the property. In addition, both the landlord and tenant would be wise to always document the condition of the property with photos and a written property condition report before the tenant takes possession as well as when the tenant surrenders the property.

In addition to the security deposit, if you have pets a landlord may require additional funds as a “pet deposit”. Unlike security deposits, pet deposits do not have to be refundable. Many leases designate whether a pet deposit is refundable or non-refundable. Before paying a pet deposit, check your lease to see if it is refundable. If it is refundable, then the same rules apply as for security deposits.

There are very specific rules concerning security deposits in the Texas Property Code that the landlord must follow. There is no limitation on the dollar amount a landlord can require for a security deposit. A landlord in Texas has 30 days from the day the lease is terminated and the property surrendered to return and account for the tenant’s security deposit. If the landlord deducts charges from a security deposit, the landlord has an obligation to itemize the charges.   The landlord has the right to deduct the cost of repairs and cleaning that are a result of the tenant’s occupancy. However, a landlord cannot deduct for maintenance and repairs for conditions resulting from “normal wear and tear”. But what is “normal wear and tear”? This is a gray area that results in many conflicts between landlords and tenants.

A landlord who fails to return or account for the security deposit within 30 days may be liable to the tenant for damages of $100, three times the amount of the deposit wrongfully withheld, and the tenant’s attorney’s fees. However, to be liable for damages, the landlord’s failure to return or account for the security deposit must be in “bad faith”. It is the landlord’s burden to demonstrate to the court that the failure was a result of other circumstance and not in “bad faith”.

There are also specific rules for tenants in the Texas Property Code concerning security deposits. The tenant is required to provide the landlord  a forwarding mail address in writing. The landlord is not responsible for the return and accounting of the security deposit until the tenant provides a forwarding address. A simple email from the tenant to the landlord with the tenant’s new mailing address is sufficient to meet this requirement. Also, the tenant is not allowed to withhold any portion of the last month’s rent with the presumption that the security deposit will be applied to unpaid rent. A tenant who withholds the last month’s rent in lieu of the security deposit refund is presumed to have acted in “bad faith” and can held be liable to the landlord for up to three times the monthly rent and the landlord’s attorney’s fees.

If you are a tenant and your landlord failed to return or account for your security deposit, or you disagree with any deductions made to the deposit, your best course of action is to try and negotiate with the landlord for a compromise or settlement. If your attempts at negotiation fail, you have the option of filing a small claims suit in the local Justice of the Peace Court. The Justice Courts have original jurisdiction over landlord-tenant disputes. You do not need an attorney for the Justice Court and the hearings are informal. By filing a suit, you will force the landlord to appear at a hearing and justify the deductions or failure to return your deposit. It will be the Landlord’s burden to show property damages beyond “normal wear and tear”. You will have equal opportunity to present your argument and any evidence that all rents were paid, your forwarding address was provided, any damage was pre-existing, or that any damage was not a result of your neglect. You can bring photos and witnesses to testify to the property condition at move-in and move-out.

In short, by documenting property condition and communicating, landlords and tenants can usually avoid serious disputes over security deposits. If a conflict does arise, it is best to negotiate a compromise or settlement. The next recourse might be to hire an attorney to send a Demand Letter to the landlord seeking a return of the deposit.  Finally, you can file a lawsuit in the local justice court and ask the judge to decide on the resolution.

The following are the key points concerning security deposits for residential leases:

  • Tenants should require a walk-thru with the landlord before moving in and after moving out.
  • Landlords and tenants should always document the condition of the property with photos and a written property condition report before and after lease termination.
  • There is no limitation on the dollar amount a landlord can require for a security deposit.
  • Texas law requires the landlord account for or return the security deposit within 30 days from the day the lease is terminated and the property is surrendered.
  • Landlords can deduct funds from a security deposit for unpaid rent, and property damage and cleaning beyond normal wear and tear.
  • The landlord has an obligation to account for and itemize all deductions from a security deposit.
  • Tenants should check the lease to determine if a pet deposit is refundable.
  • A landlord is not responsible for the return and accounting of the security deposit until the tenant provides the landlord a forwarding address in writing.
  • A tenant is not allowed to withhold any portion of the last month’s rent with the presumption that the security deposit will cover the unpaid rent.
  • Justice of the Peace Courts have original jurisdiction over landlord-tenant disputes.

For assistance in resolving a dispute over a security deposit contact us at 512-921-5370 or email: info@BernickLegal.com