Why is learning about security deposit laws essential to a tenant or landlord?
Knowing your rights ensures that your interests are protected.
As a landlord, you want to know the legal reasons to withhold a security deposit. As a tenant, you want to know how to maintain the property so that you receive a refund of your security deposit, whether in its entirety or in partial amount.
Security deposits provide several benefits to Austin, Texas landlords. They include:
- Payment for tenant’s unpaid utilities upon exiting the rental unit. Since utility bills arrive later than the end of the tenancy at times, having a security deposit will help pay the unpaid bills.
- Coverage for cleaning costs when the tenant leaves the premises. Ideally, the rental unit’s condition when a renter moves out matches the state when he or she moved in. However, if this is not the case then having a security deposit can settle the cleaning fees.
- Protection of a landlord’s loss in rental payments. If a tenant moves out because they couldn’t pay for rent, having a security deposit will help manage the income loss.
- Buffer for the landlord’s lost rental income. If you have tenants who exit your rental property suddenly without notice or break the term early, having a security deposit mitigates the rental income losses.
- Cover for property damage expenses. If you have careless or negligent tenants who did not provide information on property damages, having a security deposit will save you from the repair or replacement costs. Note, however, that this does not give you permission to make deductions for normal wear and tear.
A Guide to Security Deposit Laws in Texas
1. Texas Security Deposit Limit
Under Texas laws, no maximum limit is set for the collection of a security deposit.
2. Nonrefundable Fees
Does the state of Texas allow non-refundable fees?
No, landlords must refund security deposits in full unless it is used to cover repair costs. The only nonrefundable fees that are allowed are those agreed upon with the tenant and stated clearly in the lease agreement.
3. Storing a Tenants Deposit in Texas
In the State of Texas, the landlord is free to decide where they want to store the tenant’s security deposit. However some municipalities or counties might hold a different stance from the state law. It’s essential to carefully review local ordinances to ensure you abide by the existing rules.
4. Written Notice after Security Deposit Receipt
In Austin, Texas, the rules regarding sending a written notice to the tenant upon receipt of their security deposit are not strict. Landlords are not required to do so. However, local ordinances could yet again differ. It’s best to always review and keep up with the local policies to ensure adherence.
5. Withholding a Tenant’s Security Deposit in Texas
In Austin, Texas, there are specific conditions where a landlord can withhold a tenant’s security deposit. Cases such as a tenant not providing adequate notice before moving out of the rental property.
Be guided however that this clause must appear in the lease agreement. It must be underlined and printed boldly. This is to make it clear to the tenant that he or she will forfeit the refund of their security deposit if they suddenly leave without providing sufficient notice to the landlord.
If a tenant has broken their lease but is able to furnish the landlord with a quality replacement, receiving the security deposit is still possible. Nevertheless, if there are damages then deductions are allowed to be made from the security deposit before a landlord returns it to the tenant.
6. Walk-Through Inspection
Under Texas laws, landlords do not need to conduct a walk-through inspection.
7. Texas Security Deposit Returns
30 days is the prescribed period under Texas laws to refund a tenant’s security deposit. The tenant is entitled to receive the entirety of the security deposit if there are no damages incurred during their stay in the property. If there are resulting damages then the security deposit refund will only be a certain percentage subject to the repair costs. No deductions will be made for normal wear and tear.
The landlord is required to provide the tenant with a written list that outlines the repair charges. If the tenant still owes a rental payment to the landlord then a list is not necessary. This will only apply if the tenant agrees with the amount he or she owes the landlord. If a landlord does not provide this list of deductions then they risk forfeiture of the security deposit claim.
If it’s been more than 30 days and the landlord has still not returned the security deposit, they can face charges. They can potentially be forced to pay $100 plus 3x the security deposit amount. Additionally, he or she will also shoulder the tenant’s attorney’s fees incurred from the lawsuit made against them.
8. Change in Property Ownership
What if the landlord decides to sell the rental unit?
The new owner must provide a signed written notice to the tenants. Information regarding the security deposit amount and change of custody must be given.
If this is not met then the responsibility will continue to exist with the previous landlord. Safekeeping will still rest on them. However, if the written notice by the new owner is released to the tenants then the previous owner is discharged from their duty to keep the tenants’ security deposits safe.
The Bottom Line
If you have specific questions, hire the services of a qualified Texas attorney. Alternatively, you can seek help from a knowledgeable property management company.
Please note that this blog should not be used as a substitute for legal advice from a licensed attorney in Texas. 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.