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Security-deposit disputes are common in Texas residential leases. What begins as a disagreement over cleaning, repairs, or property condition can become significantly more serious when a landlord fails to comply with the Texas Property Code.

Texas law permits a landlord to make legitimate deductions from a security deposit. But when a deposit is wrongfully retained in bad faith, the potential consequences can substantially exceed the amount of the original deposit.

The 30-Day Rule

As a general rule, a Texas landlord must refund a residential tenant’s security deposit on or before the 30th day after the tenant surrenders the premises, subject to lawful deductions. When a landlord retains all or part of the deposit, the landlord generally must also provide the balance of the deposit, if any, together with a written description and itemized list of the deductions.

There is an important qualification: under Texas Property Code § 92.107, the landlord is not obligated to return the deposit or provide the written description of damages and charges until the tenant gives the landlord a written statement of the tenant’s forwarding address for that purpose. The tenant does not forfeit the right to the deposit merely by failing to provide the address; the statutory obligation is delayed until the address is provided.

Texas law also contains a limited exception to the itemization requirement when the tenant owes rent at surrender and there is no controversy concerning the amount of rent owed.

Timing matters. Under Texas Property Code § 92.109(d), a landlord who fails either to return the security deposit or to provide the required written description and itemization on or before the applicable 30th day is presumed to have acted in bad faith.

A Landlord May Make Legitimate Deductions

Texas law does not require a landlord to return a security deposit regardless of the condition of the property. A landlord may deduct damages and charges for which the tenant is legally liable under the lease or as a result of breaching the lease.

A landlord may not, however, retain a security deposit to cover normal wear and tear. The distinction between compensable damage and ordinary wear and tear can therefore become a central issue.
Equally important is the landlord’s ability to prove the deduction. Photographs, invoices, receipts, inspection reports, contractor records, communications with the tenant, and consistent accounting records can become critical evidence if the deductions are challenged.

What Happens When a Deposit Is Retained in Bad Faith?

Texas Property Code § 92.109 provides potentially significant remedies when a landlord retains a security deposit in bad faith. A landlord who wrongfully retains a security deposit in bad faith may be liable for:
• $100;
• three times the portion of the security deposit wrongfully withheld; and
• the tenant’s reasonable attorney’s fees in a suit to recover the deposit.

The statute separately addresses a landlord who, in bad faith, fails to provide the required written description and itemized list. In that circumstance, the landlord may forfeit the right to withhold any portion of the security deposit or to sue the tenant for damages to the premises and may also be liable for the tenant’s reasonable attorney’s fees in a suit to recover the deposit.

In an action brought by a tenant under this statutory scheme, the landlord has the burden of proving that retention of any portion of the security deposit was reasonable.

“Bad Faith” Is More Than a Disagreement Over Damages

Not every disputed deduction automatically establishes bad faith. A tenant and landlord may legitimately disagree about whether damage occurred, whether an item required replacement, or what a reasonable repair should cost. The evidence surrounding the landlord’s decision therefore matters.

Questions that may become important include:
• Was the deduction supported by an actual invoice, receipt, estimate, or other reliable documentation?
• Was the work actually performed, and was the amount charged reasonably related to the claimed damage?
• Do photographs or inspection records support the claimed condition?
• Are the amounts consistent with the landlord’s earlier communications and accounting records?
• Was the tenant charged for normal wear and tear?
• Was the required itemization timely and sufficiently specific?
• Are the landlord’s records internally consistent?
• Was the claimed expense actually incurred or otherwise a charge for which the tenant was legally liable?

A security-deposit case can therefore turn less on the amount written on an itemized statement and more on the evidence supporting the deduction and the circumstances surrounding the landlord’s decision.

Documentation Protects Both Sides

Tenants should document the condition of the property when moving in and when moving out. Photographs and videos should be retained, along with cleaning receipts, repair communications, the lease, notices, evidence showing when possession was surrendered, and proof that a written forwarding address was provided.

Landlords should likewise document the condition of the premises and maintain the records supporting each deduction. A landlord should be able to explain not simply what was deducted, but why it was deducted and the factual basis for the amount.

Tenants Should Not Simply Use the Deposit as Last Month’s Rent

The security-deposit statutes protect tenants, but they also impose obligations on tenants. Texas Property Code § 92.108 generally prohibits a tenant from withholding any portion of the last month’s rent on the ground that the security deposit will cover the unpaid rent.

A tenant who violates that provision is presumed to have acted in bad faith, and a tenant who does so in bad faith may be liable for three times the rent wrongfully withheld plus the landlord’s reasonable attorney’s fees in a suit to recover the rent.

Security deposits and rent should therefore be treated as separate obligations unless the parties have reached an enforceable agreement providing otherwise.

The Practical Lesson
For landlords, the safest approach is straightforward: inspect carefully, document thoroughly, make only supportable deductions, comply with the applicable timing and itemization requirements, and preserve the records supporting every charge.

For tenants, photographs, correspondence, receipts, a clear record of surrender, and written proof of the forwarding address can be extremely important if a deposit is withheld.

A security-deposit dispute may involve only a few thousand dollars initially, but Texas law can substantially increase the financial consequences when bad faith is established.

Noskin Law Firm, PLLC represents landlords and tenants in selected Texas landlord-tenant disputes, including security-deposit litigation.

This article is for general informational purposes only and does not constitute legal advice. Every matter depends upon its particular facts and applicable law.

Legal review note: statutory references were checked against the current Texas Property Code, including §§ 92.103, 92.104, 92.107, 92.108, and 92.109, before preparation of this publication draft.