Handling of Security Deposits

Handling of Security Deposits

This is part of our Expanding Tenants’ Rights series, which explores options for legal changes that would benefit tenants and tenant organizers.

Lesson Objectives

01

Learners will understand the concept of improved handling of security deposits.

Learners will understand the current situation of these rights in Texas and the possible forms these rights could take.

02

03

Learners will be able to connect these rights to their organizing.

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Handling of Security Deposits

• Theoretically, security deposits serve a reasonable purpose in the renting process
• Security deposits provide assurance to the landlord that they’ll receive payment in the event of damage to their property; while tenants should feel comfortable knowing that they’ll have their money returned as long as they avoid causing loss for the landlord.
• In reality, security deposits are one of the most common sources of abuse by landlords
• There are several proven methods for the state to step in and ensure security deposits are used for their intended purpose instead of as simply another income source for landlords

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Handling of Security Deposits

The current state of this right in Texas:

• There are few regulations on security deposits in Texas:
• Tenants who fulfill the terms of their lease and leave their unit in good condition outside of “normal wear and tear” are entitled to have their deposit returned
• Landlords must return security deposits within 30 days of the tenant vacating the property
• Tenants cannot waive their right to a refund of their deposit (which protects them from being intimidated to do so by landlords)
• A landlord may deduct from the deposit for damages, but they must provide an itemized list of the deductions

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Handling of Security Deposits

The current state of this right in Texas:

• There are several ways Texas landlords can circumvent those protections:
• Landlords don’t have to provide the list of deductions if they claim the tenant owes rent and the tenant doesn’t dispute this
• They can also avoid the deduction list if the tenant doesn’t provide a forwarding address in writing
• There are no rules in Texas on how landlords should handle security deposits
• There are no specific limits on the size of a security deposit, and no legal language that even requires the deductions reasonably reflect the damage to the unit

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Handling of Security Deposits

Possible Changes Based on Example Laws:

• In New York, landlords can’t charge more than one month’s rent for security deposits and deductions must be “reasonable” and aligned with specific costs enumerated in the code
• Georgia and Michigan require landlords to store security deposits in either escrow accounts or surety bonds
• Iowa and Kansas require security deposits to be deposited in separate, named accounts that don’t serve as the landlord’s funds
• In New Jersey, security deposits are stored in interest bearing bank accounts and tenants are paid the interest accrued each year

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