Residential Lease Security Deposits - Landlord & Tenant Beware

Real Estate Law

Monday, October 30, 2006
Contributed by: Matthew J. Whitten

Landlords and tenants often get crossways with one another even after the tenant has moved out of his or her leased apartment or house. Usually the dispute centers on the return of the security deposit and whether any portion of it has been wrongfully withheld by the landlord. Landlords and tenants should take several steps to protect themselves in order to avoid costly and time-consuming litigation.

Most residential leases require the tenant to provide a written surrender notice at least thirty days before move-out. The surrender notice must provide the landlord with the tenant's forwarding address. A tenant that fails to take these steps runs the risk of becoming a "holdover" tenant-and therefore responsible for another month's rent.

By the same token, a landlord is responsible under the Texas Property Code for timely returning the security deposit, less any allowable deductions, within thirty days of the tenant's surrender of the premises. A landlord that fails to comply with the statute could be held liable for three times the security deposit, a $100 penalty, and the attorneys' fees incurred by the tenant in pursuing the security deposit refund.

Following is an outline of some of the most important statutes involved:

No later than thirty days after the tenant surrenders the premises the landlord needs to refund the deposit. TEX. PROP. CODE sec. 92.107(a).
Before returning the security deposit, the landlord may deduct from the deposit damages and charges for which the tenant is legally liable under the lease or damages and charges that result from a breach of the lease. TEX. PROP. CODE sec. 92.104(a). The landlord may not retain any portion of the security deposit for normal wear and tear. TEX. PROP. CODE sec. 92.104(b).
If the landlord retains all or part of a security deposit, the landlord must give to the tenant the balance of the security deposit, if any, together with a written description and itemized list of all the deductions. TEX. PROP. CODE sec. 92.104(c).
The landlord is not obligated to return a tenant's security deposit or give a written itemization of the damages until the tenant gives the landlord a written statement of the tenant's forwarding address. TEX. PROP. CODE sec. 92.107(a). However, as soon as the landlord gets that forwarding address, the duty to refund and provide the itemization is triggered.
If the landlord withholds the security deposit or fails to provide a written itemization of damages in bad faith, the landlord will be liable for three times the security deposit, a penalty and $100, and the tenant's attorney fees. TEX. PROP. CODE sec. 93.109(a). If the landlord fails to refund the deposit within the thirty days, he is presumed to have acted in bad faith. TEX. PROP. CODE sec. 93.109(d).

It is easy to see that law is fairly draconian toward a landlord who withholds a security deposit without providing the written itemization and who fails to return the remaining balance within thirty days of surrender. Even if a tenant fails to provide a written notice of surrender, the prudent course of action for a residential landlord is to go ahead and provide the itemization and security deposit balance as a matter of course. Not unheard of is the situation in which the tenant fabricates a phony surrender letter after the fact and then takes the security deposit to court. Despite the landlord's protestations that no surrender notice was ever received and a complete lack of evidence to support the letter having been sent, the landlord still runs the risk that a court will take the tenant at his or her word and award damages. To prevent that possibility, a landlord should always provide the itemized list and refund within thirty days.

This column is published for informational purposes only. It should not be construed as legal advice and is not intended to create an attorney client relationship. The views expressed are those of the author and do not necessarily reflect the views of the author's law firm or its individual partners.