Texas Commercial Security Deposit Laws: Rules & Returns

Rooted in the foundational authority of the 1845 Texas Constitution, Texas commercial security deposit laws share some similarities with residential rules but differ in key areas — most notably a longer return deadline and greater flexibility in negotiating terms. Understanding these rules is essential for commercial landlords managing office, retail, or industrial properties.

Deposit Limits

Texas law imposes no statutory cap on commercial security deposits. The amount is entirely negotiable and typically depends on:

• The tenant's financial profile and creditworthiness
• The length of the lease term
• The type and condition of the property
• Market conditions in the area

Common commercial deposit amounts range from one to three months' rent, though larger amounts may be negotiated for higher-risk tenancies.

Return Deadline: 60 Days

The landlord must refund the security deposit not later than the 60th day after the tenant surrenders the premises and provides a written forwarding address (§93.005(a)). If any portion of the deposit is retained, the landlord must provide the balance of the deposit, if any, together with a written description and itemized list of all deductions (§93.006(c)).

Permissible Deductions

Landlords may deduct from a commercial security deposit for:

1. Unpaid rent — including rent owed through the end of the lease term
2. Damages beyond normal wear and tear — tenant-caused property damage
3. Lease violations — charges the tenant is liable for under the lease
4. Restoration costs — if the lease requires the tenant to restore the premises to original condition

Not Deductible

• Normal wear and tear — expected deterioration from ordinary use
• Pre-existing conditions — damage that was present before the tenant moved in

Tenant Protections

Priority Claim

A tenant's claim to the security deposit takes priority over the claim of any creditor of the landlord, including a trustee in bankruptcy (Property Code §93.005(b)).

Landlord Liability for Bad Faith

A landlord who in bad faith retains a security deposit in violation of the code is liable for:

• $100
• Three times the portion of the deposit wrongfully withheld
• The tenant's reasonable attorney's fees (§93.011(a))

A landlord who fails to return the deposit or provide an itemized list within 60 days is presumed to have acted in bad faith (§93.011(d)).

Prohibition on Withholding Last Month's Rent

A tenant may not withhold any portion of the last month's rent on the grounds that the security deposit covers it. A tenant who does so is presumed to act in bad faith and is liable for:

• Three times the rent wrongfully withheld
• The landlord's reasonable attorney's fees (§93.010)

Transfer of Ownership

When a commercial property is sold:

• The new owner assumes liability for the return of security deposits.
• The previous owner remains liable for the deposit until the new owner delivers to the tenant a signed statement acknowledging that the new owner has received and is responsible for the deposit and specifying the exact dollar amount of the deposit (§93.007(b)).

Best Practices for Commercial Landlords

1. Negotiate deposit amounts carefully — consider the tenant's risk profile and lease obligations
2. Document the property's condition — conduct a thorough pre-lease inspection with photos and video
3. Use a detailed lease addendum — specify exactly what constitutes allowable deductions
4. Track the 60-day deadline — mark return dates on your calendar immediately after lease termination
5. Provide itemized deductions — even if not strictly required for all amounts, detailed statements reduce disputes
6. Keep deposits accessible — while no separate account is required, ensure funds are available for return

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How Landager Helps

Managing Texas commercial properties requires strict adherence to the Texas Property Code Chapter 93, especially regarding the 60-day security deposit return deadline. Landager automates these timelines, ensuring your deposit itemizations are delivered on time. From tracking commercial lease stipulations to generating compliant 3-day notices to vacate, Landager helps you maintain 100% compliance across your Texas commercial portfolio.