Deposit limits, return deadlines, allowable deductions, and penalties under Texas law. Updated April 2026.
Texas does not impose a statutory maximum on security deposit amounts. Under Tex. Prop. Code § 92.102, a security deposit is defined as any advance of money, other than a rental application deposit or an advance payment of rent, that is intended primarily to secure performance under a lease of a dwelling. There is no cap tied to monthly rent or any other measure.
Market practice in Texas typically places security deposits at one to two months' rent. In competitive markets like Austin and Dallas, some landlords charge higher deposits for tenants with lower credit scores or higher-risk profiles. There is no distinction between furnished and unfurnished units regarding deposit limits.
Non-refundable fees (such as pet fees or cleaning fees) should be clearly labeled as non-refundable in the lease and are generally not considered security deposits under Texas law. However, any payment that functions as a security deposit—regardless of what it is called—is subject to the return and itemization requirements of Tex. Prop. Code § 92.103-109.
Texas does not require landlords to hold security deposits in separate escrow accounts, trust accounts, or interest-bearing accounts. There are no statutory requirements regarding where or how the deposit must be held. Landlords may commingle deposits with other funds and are not required to earn or pay interest on security deposits.
There are no disclosure requirements regarding the bank or account where the deposit is held. The landlord's primary obligation is to return the deposit within 30 days of move-out with an itemized statement of any deductions. Texas law focuses on the return process rather than the holding method.
Despite the absence of formal holding requirements, landlords should maintain clear records of all deposits collected, including tenant name, property address, deposit amount, and date received. Good record-keeping is essential for compliance with the return requirements and for defending against any claims of wrongful withholding.
Under Tex. Prop. Code § 92.103, the landlord must refund the security deposit to the tenant on or before the 30th day after the date the tenant surrenders the premises. The deposit may be refunded by personal delivery or by mailing to the tenant's forwarding address. If deductions are made, the landlord must provide a written description and itemized list of all deductions along with the remaining balance.
Importantly, under Tex. Prop. Code § 92.107, the landlord is not obligated to return the deposit or provide the itemized statement until the tenant gives the landlord a written statement of the tenant's forwarding address. The 30-day clock effectively starts from the later of (a) the date the tenant surrenders the premises and (b) the date the tenant provides a forwarding address. This provision protects landlords from claims when tenants fail to provide forwarding information.
If the tenant's forwarding address is provided in the lease or at any time during the tenancy, the landlord should send the refund and statement to that address. If the tenant does not provide a forwarding address, the landlord should make a good-faith effort to reach the tenant. Landlords should use certified mail or another traceable method to document timely compliance.
Under Tex. Prop. Code § 92.104, landlords may deduct from the security deposit for damages and charges for which the tenant is legally liable under the lease or resulting from a breach of the lease. This includes unpaid rent, property damage beyond normal wear and tear, cleaning costs necessary to return the unit to its condition at move-in, unpaid utility bills assigned to the tenant, and early termination fees if provided for in the lease.
Normal wear and tear cannot be deducted. This includes minor nail holes, light carpet wear, faded paint, minor scuffs on walls and floors, and routine cleaning that would be performed between any tenancy. Texas courts apply a reasonableness standard and expect deductions to be supported by evidence of actual damage and actual or estimated repair costs.
To support deductions, landlords should conduct detailed move-in and move-out inspections with photographs, video, and written condition reports. Obtaining actual repair invoices or contractor estimates strengthens the landlord's position in any dispute. The itemized deduction list must clearly describe each charge and the amount, and must be provided to the tenant within the 30-day return period.
Texas has strong penalties for security deposit noncompliance. Under Tex. Prop. Code § 92.109, a landlord who in bad faith retains a security deposit in violation of the statute is liable to the tenant for $100, plus three times the portion of the deposit wrongfully withheld, plus reasonable attorney fees. This treble damages provision makes bad faith retention very costly.
The bad faith standard means the landlord must have retained the deposit knowing that the retention was wrongful or without a reasonable basis for the deductions claimed. Simple negligence or a good-faith dispute over the amount of deductions may not trigger the treble damages penalty, though the landlord may still be liable for the amount wrongfully withheld plus attorney fees.
The $100 statutory damage is automatic in bad faith cases and is in addition to the treble damages and attorney fees. This creates a minimum penalty floor. The attorney fee provision makes it economically viable for tenants to pursue even relatively small deposit claims. Landlords should document all deductions thoroughly, return the deposit and statement within 30 days, and err on the side of conservative deductions to avoid bad faith claims.
For Section 8 tenants in Texas, the security deposit is the tenant's responsibility—the PHA does not pay it. Since Texas has no statutory cap, landlords may charge any amount. However, charging disproportionately higher deposits to Section 8 tenants could raise fair housing concerns, particularly if it disproportionately affects protected classes.
All return and itemization requirements under Tex. Prop. Code § 92.103-109 apply equally to Section 8 tenancies. The deposit and itemized statement must be sent to the tenant's forwarding address within 30 days. Landlords should apply the same deduction standards to all tenants regardless of voucher status.
Texas landlords in the Section 8 program should note that the forwarding address provision (§ 92.107) applies to voucher holders as well—the landlord's obligation to return the deposit is not triggered until the tenant provides a forwarding address. The PHA's HQS inspection provides documentation of the unit's condition that can be useful in deposit disputes. The treble damages penalty applies equally to Section 8 tenancies, making careful compliance essential.
Under Tex. Prop. Code § 92.103, 30 days after the tenant surrenders the premises. However, the landlord's obligation is not triggered until the tenant provides a written forwarding address (§ 92.107). Once both conditions are met, the 30-day clock runs.
Bad faith retention results in liability for $100 plus three times the amount wrongfully withheld plus reasonable attorney fees (Tex. Prop. Code § 92.109). This treble damages provision is one of the strongest penalties in the country.
No. Texas does not require landlords to pay interest on security deposits, hold them in separate accounts, or use interest-bearing accounts. There are no escrow or trust requirements.
The landlord may deduct damages resulting from the breach, including unpaid rent and re-leasing costs, if the lease provides for such charges. However, the landlord has a duty to mitigate damages by making a reasonable effort to re-rent the unit. Remaining deposit must be returned with an itemized statement.
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