Texas Security Deposit Laws: Limits, Returns, and Deductions

Texas takes a relatively hands-off approach to security deposits compared to many other states — there is no statutory cap on the amount a landlord can charge. However, the Texas Property Code still imposes strict rules on how deposits must be handled and returned.

Disclaimer: This guide provides general legal information for educational purposes only and does not constitute legal advice. Always consult a licensed attorney in Texas for guidance specific to your situation. Information last verified: March 2026.

Security Deposit Limits

Residential Properties

Texas law does not set a maximum limit for residential security deposits. Landlords are free to set the deposit amount based on market conditions, property type, and tenant risk profile. In practice, most Texas landlords charge one to two months' rent.

Key Points

• No requirement to hold deposits in a separate or interest-bearing account
• No requirement to pay interest on security deposits to tenants
• No requirement to notify tenants of where the deposit is held
• Landlords may charge non-refundable application or administrative fees if clearly stated in the lease

Monthly Fee Alternative (Effective September 1, 2021)

Texas law allows landlords to offer tenants the option of paying a monthly fee in lieu of a security deposit. If this option is offered:

• The tenant must receive clear written notice of their right to pay the full security deposit upfront
• The tenant may stop monthly payments and pay the full deposit at any time
• Terms must be clearly documented in the lease agreement

What Can Be Deducted

Landlords may deduct from the security deposit for:

1. Unpaid rent — including rent owed through the end of the tenancy
2. Damage beyond normal wear and tear — tenant-caused damage to the property
3. Lease violations — charges the tenant is liable for under the lease
4. Cleaning costs — if the unit requires cleaning beyond normal wear

What is NOT Deductible

• Normal wear and tear — faded paint, worn carpet, minor scuffs, small nail holes
• Pre-existing damage — conditions present before the tenant moved in
• Landlord's own repairs — maintenance that is the landlord's responsibility

Return Deadline: 30 Days

Landlords must return the security deposit — or provide a written itemized list of deductions — within 30 days after the tenant surrenders the premises.

Important Conditions

• The tenant must provide a written forwarding address for the return
• If no forwarding address is provided, the landlord's obligation to return the deposit is suspended until one is received
• The itemized statement and any refund must be mailed to the forwarding address

Tenant Cannot Withhold Last Month's Rent

Texas law explicitly prohibits tenants from withholding the last month's rent on the grounds that the security deposit covers it. A tenant who does this in bad faith is liable for three times the rent wrongfully withheld plus reasonable attorney's fees.

Penalties for Non-Compliance

If a landlord retains a security deposit in bad faith:

• The landlord is liable for $100 plus three times the portion wrongfully withheld
• The landlord must also pay the tenant's reasonable attorney's fees
• The landlord forfeits the right to withhold any portion of the deposit or to bring a claim for damages against the tenant

Transfer of Ownership

When a rental property is sold:

• The new owner becomes liable for the return of security deposits from the date of acquisition
• The selling landlord remains liable until the new owner delivers a signed statement to the tenant acknowledging receipt and responsibility for the deposit

Best Practices for Landlords

1. Document move-in condition — Take dated photos and videos of every room
2. Use a move-in/move-out checklist — Have the tenant sign it at both stages
3. Keep detailed records — Maintain receipts and invoices for all deductions
4. Return deposits promptly — Don't wait until day 30; earlier returns reduce disputes
5. Provide clear lease terms — Spell out deposit policies, deduction criteria, and return procedures
6. Consider the monthly fee option — Offer it as an alternative but document terms clearly

How Landager Helps

Landager's property management dashboard helps you track security deposits for each lease, set automated reminders for the 30-day return deadline, and store move-in/move-out documentation — keeping you organized and compliant with Texas law.

Back to Texas Landlord-Tenant Laws Overview.