The national median rent in 2022 climbed past $1,800. With security deposits pegged in many jurisdictions at a maximum of a month's rent, that means most tenants also come with an $1,800 security deposit to handle.
If you're new to the landlord business, you may not know when to return a security deposit. Not everyone understands which expenses can be covered by a security deposit or how fast the process has to move.
We'll do our best to clear the air. If you're looking for how the security deposit process works in Texas, we'll cover you.
This article will serve as a guide to security deposits. Keep reading for when you can keep them, how fast you need to return them, and which expenses you can use a security deposit on.
Why Collect Security Deposits?
Security deposits serve as protection for you if a renter trashes a unit. They also give your renters an incentive to keep their apartments clean, as this will lead to a refund on this type of deposit. Texas law requires they be collected separately from application fees and application deposits.
While a security deposit helps a lot in replacing things your renters have damaged, it also requires you to know how to handle it. Using a security deposit improperly can render you legally liable.
When You Can Keep Security Deposits
Under some circumstances, you can keep some or all of the money from the security deposit. Most of these circumstances involve an unpaid liability from the renter to the landlord or a third party.
If you want to keep a security deposit over damage to the unit, you can, but it needs to extend beyond normal wear and tear. A couple of pin-sized holes in the walls or loose cabinet handles won't cut it. You can take the cost of burned kitchen counters, huge stains, or severe window damage out of the security deposit, though.
If you're looking for reasons not to return a security deposit, steer clear of cleaning. While you can use it to deal with major cleaning activities, such as animal waste or deep stains, you can't charge for a normal round of vacuuming or removing a single forgotten bag of garbage.
Finally, if the renter owes money for utilities, you can use the security deposit to defray those costs.
When to Give Back Security Deposits
In Texas, the timeframe for security deposit return lasts 30 days after the tenant's departure. While you can require the tenant to provide advance notice of that departure to receive the deposit, the tenant must know this ahead of time.
Make sure to give your tenants enough time to decide on a lease renewal so that they can give you advance notice if they won't be returning.
Protect Your Investment
Security deposits give you peace of mind and your tenants incentive to treat their homes with care. If you have unplanned and unreasonable expenses cleaning up after a tenant, a security deposit can go a long way. You need to make sure to handle them in a safe and legal manner, however.
If you find handling security deposits intimidating or need help with property management, give us a call. Our group handles thousands of units nationwide.
