Handling Security Deposit Returns | A Texas Landlords How-To Guide

A security deposit is paid by tenants to protect a property owner against damage or unpaid rent. Texas security deposit law dictates and regulates how these deposits should be collected, held, and returned.

It’s easy to make a mistake with your security deposit, so be sure you’re paying attention to all the deadlines and requirements.

Dallas and Fort Worth Security Deposit Amounts

While some states have strict deposit limits, Texas law does not restrict the amount you can collect in a security deposit. Landlords in DFW can ask tenants for any amount, but it’s a good idea to follow the industry and local market trends. Qualified tenants will be unlikely and unwilling to pay more than the equivalent of one month’s rent.

So, don’t ask for a prohibitive security deposit. It will only chase away good tenants, and you’ll be left renting your home out to people who have been denied elsewhere and are willing to pay a little more. If you do a good job with tenant screening, collecting a deposit that’s equal to one month’s rent will protect you. Larger security deposit amounts may lead to longer vacancies.

Returning a Security Deposit to your Tenant

There’s a strict deadline when it comes to returning your tenant’s security deposit. You have 30 days from the date of move-out to return the money to your tenant. If your lease requires a specific notice period before tenants move out and they don’t give the appropriate notice, you can keep the security deposit. You can also withhold money from the security deposit to pay for any damages, unpaid rent, or unpaid utility bills. Make sure you document every dollar that you keep. For example, if you’re withholding money to pay for a window that the tenant broke during the lese period, be sure to document that damage and include an invoice or a receipt.

Wear and tear issues are the landlord’s responsibility, so there’s no reason to deduct anything from the tenant’s deposit to cover things like small nail holes in the walls from where pictures were hung or scuff marks from furniture.

How to Handle Security Deposit Disputes with Your Tenants

All rental property owners should hold tenants accountable for any damage that is caused to the property. You’re entitled to get the home back in the same condition that it was when the tenants moved in minus normal wear and tear. However, we always advise property owners to be fair and flexible when it comes to making deductions from the security deposit. If you are found to make an incorrect deduction, you can find yourself being ordered to pay some serious fines. If your tenant takes you to court and the judge rules in the tenant’s favor, you could be liable for up to three times the amount of the security deposit. Arguing over a $100 charge that may or may not be damage is probably not worth that.

We work with tenants and landlords and security deposits all the time. If you have any questions about how to collect, hold, or return a security deposit in Austin, please contact us at Trend Property & Management.