Texas Security Deposit Law: What Landlords Must Know (2026)

As a Texas landlord, you handle security deposits regularly—but many landlords operate on assumptions rather than actual legal requirements. The result is costly mistakes: withheld deposits challenged in small claims court, damage claims denied because deductions weren’t itemized, or deposits held too long and triggering liability. Texas security deposit law is clear, but it’s different from what many owners think. This guide covers what Texas law actually requires and how to stay compliant.

The Basics: What Is a Security Deposit Under Texas Law?

Under Texas Property Code Chapter 92, a security deposit is money held by a landlord as security for a tenant’s performance of their lease obligations. The law treats deposits as the tenant’s money—held in trust by the landlord, not as the landlord’s revenue. This distinction matters legally and practically.

Texas security deposit law applies to residential tenancies, including single-family homes and multi-unit apartments. The law is mandatory; landlords cannot waive or reduce a tenant’s protections by lease clause.

The 30-Day Rule: Return Timeline

The most critical requirement under Texas security deposit law is the return timeline. Landlords must return the security deposit—or an itemized accounting of deductions—within 30 days after the tenancy ends and the tenant vacates.

This 30-day clock starts when the tenant moves out, not when you inspect the unit or send an invoice to a contractor. If you miss the deadline, you’re liable—even if you’re still documenting damages or getting repair estimates.

To stay within the 30-day window, many property managers begin the deduction accounting process within the first week after move-out. This ensures you have time to gather invoices, coordinate with contractors, and mail the accounting to the tenant before day 30.

What Deductions Are Allowed Under Texas Security Deposit Law?

You can deduct from a security deposit for:

• Unpaid rent. Any rent balance owed by the tenant.
• Damages beyond normal wear and tear. Holes in walls, broken windows, stains, broken appliances, carpet damage from pets or abuse. Normal wear—light scuffs, minor paint fading, worn carpet edges—is not deductible.
• Lease violations. Costs to remedy tenant violations, such as removing unauthorized alterations or cleaning excessive filth.
• Utility charges. If the lease makes the tenant responsible and they failed to pay.

You cannot deduct for normal maintenance: replacing worn-out appliances, repainting after years of use, replacing aged carpet, or routine repairs that are the landlord’s responsibility under the lease.

The distinction between damage and wear is the biggest source of disputes. If the carpet is worn from normal use over several years, it’s wear. If it’s stained or torn from a tenant’s spilled bleach or pet accident, it’s damage. Document the condition at move-in with photos and a detailed move-in inspection; do the same at move-out. Photos are your strongest defense if a tenant challenges deductions in court.

The Itemized Accounting Requirement

Simply withholding a deposit is never legal under Texas security deposit law. You must provide an itemized accounting that details every deduction. The accounting must include:

• The reason for each deduction (e.g., “Hole in bedroom drywall, patched and painted”)
• The cost of each deduction
• The total withheld
• The refund amount (if any)

Vague descriptions like “cleaning” or “damages” won’t hold up if the tenant disputes the charges. Each deduction must be specific and tied to a documented cost—an invoice from a contractor, a receipt for materials, or your documented time and materials.

The accounting must be sent to the tenant’s last known address (usually the forwarding address they provide at move-out) within the 30-day window. Keep proof of mailing—certified mail or a tracking number—so you can prove you met the deadline if the tenant later claims you didn’t.

Interest on Deposits

Texas security deposit law does not require landlords to pay interest on deposits. However, if your lease or a written agreement specifies that the deposit accrues interest, you must pay it. Some landlords include interest terms to be competitive; others don’t. If you offer it, honor it.

Trust Account Requirements

Texas law requires that security deposits be held in a trust account or escrow account separate from the landlord’s operating funds. The deposit cannot be commingled with the landlord’s business money. Many property management companies hold deposits in a trust account and transfer funds only when legitimate deductions are documented.

If you self-manage, ensure your accounting clearly tracks which funds are deposits (held in trust) versus which are your revenue.

Tenant Rights: Inspection and Challenge

Before move-out, a tenant has the right to inspect their unit and document its condition. You cannot prevent this inspection. If the tenant finds issues they believe are landlord responsibility, they may challenge deductions later, even after move-out.

Tenants can sue in small claims court to recover a wrongfully withheld deposit. If the court finds the withholding was unjustified, the landlord may owe the full deposit plus damages and court costs. This is why documentation—move-in photos, itemized deductions, contractor invoices—is essential.

Common Mistakes Landlords Make Under Texas Security Deposit Law

Missing the 30-day deadline. Holding a deposit past 30 days without an accounting is a violation. If a contractor doesn’t send an invoice until day 35, you’ve missed the window. Start the process immediately after move-out.

Failing to itemize deductions. A check with no explanation is not an accounting. Every deduction must be listed and justified.

Confusing wear with damage. “The carpet was old” is not a valid deduction. The carpet should have been replaced before the tenancy if age was the issue.

Deducting for landlord repairs. If you hired a contractor to patch drywall, paint, or replace an appliance you’re responsible for, you cannot deduct the full cost from the deposit. Partial deductions may apply for tenant-caused damage, but not for normal maintenance.

Not providing the accounting to the tenant. If the tenant never receives the itemized accounting, they have grounds to claim you violated the law, even if the deductions were legitimate.

How Homeward Handles Security Deposits

Security deposit handling is part of the Homeward Complete Care Process™. Our team coordinates the move-out inspection, documents all conditions with photos, identifies legitimate deductions within the first week, obtains contractor invoices, prepares the itemized accounting, and sends it to the tenant with proof of mailing—all within the 30-day window.

This systematic approach protects both owner and tenant. It ensures compliance with Texas security deposit law and minimizes disputes. When deposits are handled correctly and documented thoroughly, the likelihood of a small claims challenge drops dramatically.

Frequently Asked Questions

Can I deduct for normal wear and tear?

No. Normal wear—light scuffs, paint fading, minor carpet wear from foot traffic—cannot be deducted. Only damage beyond normal use can be withheld. The key question: would this wear have occurred with any tenant? If yes, it’s normal wear.

What if a contractor doesn’t send an invoice by day 30?

You must return the deposit or send an accounting by day 30, even if you’re still waiting for invoices. You can note the deduction as “pending contractor invoice” in the accounting, but you cannot hold the full deposit. Some property managers send a first accounting on day 30, then a supplemental accounting if additional invoices arrive later—though Texas law doesn’t explicitly address this scenario, so verify with a local attorney.

Can I charge a cleaning fee from the deposit?

Only if the lease makes the tenant responsible for cleaning at move-out and the tenant leaves the unit in an uncleaned state. If the lease requires you to clean between tenancies, you cannot deduct cleaning costs. If the tenant leaves the unit excessively dirty beyond normal use, you can deduct the cost of professional cleaning from the deposit.

What if the tenant doesn’t provide a forwarding address?

Make a reasonable effort to contact the tenant—their last known address is the rental unit. Send the accounting certified mail and keep the receipt. If the mail is returned, document the return and your attempt to comply. You’ve satisfied the law’s requirement to provide the accounting if you make a good-faith effort.

Can the tenant request to inspect the damages before I deduct?

Tenants have inspection rights before move-out, not after. Once they’ve vacated, you can proceed with your move-out inspection and deduction process. However, good practice is to take photos at both move-in and move-out and offer the tenant the chance to review them or discuss discrepancies before sending the final accounting.

The Bottom Line: Texas Security Deposit Law Compliance

Texas security deposit law is designed to protect both landlords and tenants. Landlords are entitled to collect legitimate deductions for unpaid rent and damages; tenants are entitled to prompt return of their money with a clear accounting. The law is straightforward: document everything, itemize deductions, meet the 30-day deadline, and send the accounting to the tenant.

If you’re uncertain about a specific deduction or situation, consult a local attorney licensed in Texas to confirm your interpretation. This guide covers the general law, but your specific lease language or situation may have nuances.

Ready to streamline your security deposit process and stay compliant with Texas law? Learn how Homeward’s Complete Care Process™ handles move-outs, inspections, and deposit accounting. We handle the timeline, documentation, and compliance so you don’t have to worry about costly mistakes.

Frequently Asked Questions

Can I deduct for normal wear and tear?

No. Normal wear—light scuffs, paint fading, minor carpet wear from foot traffic—cannot be deducted. Only damage beyond normal use can be withheld. The key question: would this wear have occurred with any tenant? If yes, it’s normal wear.

What if a contractor doesn’t send an invoice by day 30?

You must return the deposit or send an accounting by day 30, even if you’re still waiting for invoices. You can note the deduction as pending contractor invoice in the accounting, but you cannot hold the full deposit. Consult a local attorney about supplemental accounting procedures.

Can I charge a cleaning fee from the deposit?

Only if the lease makes the tenant responsible for cleaning at move-out and the tenant leaves the unit in an uncleaned state. If you’re required to clean between tenancies, you cannot deduct cleaning costs from the deposit.

What if the tenant doesn’t provide a forwarding address?

Make a reasonable effort to contact the tenant at their last known address (the rental unit). Send the accounting certified mail and keep the receipt. You’ve satisfied the law if you make a good-faith effort to provide the accounting.