The Texas Property Code governs security deposits. The landlord and tenant both have obligations and requirements under Chapter 92, Residential Tendencies, et seq., Subchapter C, Security Deposits. This chapter provides the specific requirements the landlord and the tenant must comply concerning the security deposit. First, we will discuss the landlord requirements.
The security deposit is meant, “primarily to secure performance under a lease of a dwelling that has been entered into by a landlord and a tenant.” The advance of money by the tenant to the landlord gives the landlord a means of protecting his investment.
If the landlord requires the tenant give a 30 day notice that the tenant is vacating the property “as a condition for refunding the security deposit” this section of the lease agreement must be underlined or printed in conspicuous bold print in the lease.” The Texas Association of Realtors Residential Lease usually has this in section 10 of the lease, titled — Security Deposit Refund. A typical lease will have wording similar to the following:
Refund: Tenant must give Landlord at least thirty (30) days written notice of surrender before Landlord is obligated to refund or account for the security deposit.
Section 92.109, Liability of Landlord, states a landlord who fails to comply with this section may owe the tenant three times the portion of the deposit wrongfully withheld, $100, plus reasonable attorney’s fees. For a landlord to be in compliance, the landlord must return the security deposit or within 30 days provide a written description and itemization of the deductions being withheld from the security deposit.
The Texas property code creates that a presumption a Landlord who does not provide a written itemization and description to the former tenant within 30 days has acted in bad faith. Case law does provide a Landlord with the ability to defeat the presumption of bad faith by showing the Landlord acted in good faith.
A security deposit is not meant to provide a Landlord with a 13th month of revenue from a 12-month lease. Read your contract carefully to determine what deductions a Landlord is allowed to make – BEFORE SIGNING THE LEASE. For instance, a Landlord may have a carpet cleaning deduction built into a pet agreement. The Texas Property Code and the residential lease contract will determine what is allowable.