The cost of a security deposit for a rental can range from state to state. Some states limit the amount to one or two months of rent. Others leave the fee amount up to the landlord's discretion.
Collecting security deposits before you have a tenant move into a property seems like a straightforward action. There are certain rules surrounding not only how much you can collect, but when it has to go back to the tenant and how the money is handled. Failing to follow these regulations to a tee could open you up to potential problems.
This guide will discuss what you need to know about security deposits. These tips for landlords will set you up for success.
What Is a Security Deposit?
A security deposit is extra money a tenant pays you when they move into the unit. This money is on top of whatever amount they owe you for rent. This money serves as a guarantee that your new tenant will abide by the rules included in the lease.
Other assurances the security deposit gives landlords include:
- Take care of the property
- Pay the rent on time and in full
- Not cause damage beyond average wear and tear
The rental deposit is refundable to the tenant so long as they're not in violation of the lease when they move out. Landlords typically collect a security deposit before the tenant moves in and when they sign their lease.
How Much Is a Security Deposit in Texas?
New landlords might not know how much to charge for a security deposit. In Texas, landlords can charge tenants whatever amount they feel is fair to mitigate any damage that might occur. Many consider two times the amount of monthly rent to be a fair amount.
One thing to keep in mind is that Texas sign into law a regulation that states landlords can allow their tenants to pay a monthly fee instead of a bulk security deposit. Landlords can also purchase additional insurance to protect their unit while the tenant lives there. The monthly fee can't exceed the amount of the insurance premium.
When Do I Refund the Security Deposit?
Landlords have 30 days from when their tenant surrendered their property back to them to give them back their deposit. The only exception is if you don't have their forwarding address. You're not obligated to give them their deposit back until they provide you with their mailing address.
You'll also need to send an itemized list of any deductions you withheld from the deposit. Some examples of scenarios where you can withhold all or part of the deposit include:
- Moving out with unpaid utility bills
- Leaving the unit in a state of extreme uncleanliness
- Breaking the lease
- Not paying rent
- Failing to give proper advanced notice
- Extreme damage
Get Help Navigating Rental Security Deposits
Security deposits might seem like a straightforward step when bringing in a new tenant. However, there are many things to consider with them. This applies to both when a tenant moves in and out of your property.
Terra Residential Services is the leading property management company in Texas. We can help you find tenants, collect rental payments, and more. Call us today to learn more.
