Texas Tenant Debt Placement Checklist: What to Resolve Before Collections

Use this tenant debt placement checklist before you send a Texas tenant balance to collections: the deposit accounting is closed, the lease supports every dollar, and no dispute, bankruptcy or attorney flag is open. Send an account before those three things are true and the agency spends its first weeks fixing your file instead of working the debtor.

The short version. Under Texas security deposit law, the clock is 30 days for residential leases and 60 for commercial. Texas also limits late fees and penalizes a landlord who gets the deposit accounting wrong. Close the deposit out first, then place only the balance the lease supports.

Gate 1: Who owes, and on what document

A placement fails early when the agency cannot tell who signed what. Confirm each item before anything else.

• Every obligor is named exactly as on the signed lease: all tenants, co-tenants, signing occupants and any guarantor.
• The signed lease and every addendum are in the file, not a blank template. Include renewals and any addendum that created a charge.
• Last known address, phone and email, plus the tenant’s forwarding address if one was given in writing.
• Residential or commercial is decided and written down. A residential tenant owes a consumer debt, so the FDCPA and Regulation F apply to a third-party collector. A commercial lease is a business debt and falls outside the FDCPA’s definition of “debt” (15 U.S.C. § 1692a(5)). Texas Finance Code Chapter 392 can apply to both.
• The person placing the account has authority to do so: the owner, a management company under a written agreement, or a court-appointed party.
• Move-in date, move-out (surrender) date and the date keys or possession were returned. The surrender date starts the deposit clocks below.
• Co-living or room-by-room leases: confirm whether each occupant signed an individual lease or a joint one. That answer decides who is liable and how the deposit is counted, and how the deposit clock applies to a per-bedroom lease is a question to settle before you place. Our co-living move-out balance guide covers shared housing in more detail.

Gate 2: The ledger, reconciled to the lease

Every dollar on the statement needs a lease clause behind it. An agency cannot collect a charge the lease does not support, and a padded ledger puts the whole file at risk.

• One ledger from first charge to last, with dates and a single running balance.
• Each charge type tied to a lease section: rent, utilities, damages, cleaning, re-letting or lease-break fees, pet or parking fees.
• Late fees pass the Texas test. Under Property Code § 92.019, a late fee needs notice in a written lease, must be reasonable, and cannot be charged until rent has been unpaid two full days after the due date. A fee is considered reasonable if it is no more than 12 percent of the rent for the rental period at a property with four or fewer units, or 10 percent at a larger property. A fee above those figures can still stand if it does not exceed the landlord’s uncertain damages from the late payment, including direct or indirect expenses, costs or collection overhead, so keep the support for any fee above the ceiling.
• No double counting: a charge deducted from the deposit is not also billed to the tenant.
• Payments and credits applied in the order the lease says, with every payment shown.
• Damages separated from normal wear and tear, with photos, condition forms and invoices. Section 92.104 does not allow a landlord to keep deposit money for normal wear and tear.
• Attorney’s fees and court costs only if the lease or a proper pre-eviction notice supports them (§ 24.006).
• Rent for the period after move-out on its own line, with the lease basis and any re-letting effort.

Gate 3: Residential deposit accounting

For a residential lease, close out the deposit before you place the balance. A landlord that skips this step can lose the right to deduct and can owe the tenant penalties, which turns a collection file into a counterclaim.

• 30-day clock. The landlord must refund the deposit, less lawful deductions, on or before the 30th day after the tenant surrenders the premises (§ 92.103).
• Forwarding address. The landlord is not obligated to return the deposit or send the itemization until the tenant gives a written forwarding address (§ 92.107). Keep the statement, or note that none was received.
• Itemized list. If any amount is deducted, the tenant gets a written description and itemized list of every deduction with the balance of the deposit (§ 92.104). The one exception: no list is required if the tenant owed rent at surrender and there is no controversy about the amount owed. Keep a copy and proof of delivery.
• Lawful deductions. Each is for damages or charges the tenant is legally liable for under the lease or because of a breach, and none is normal wear and tear.
• Bad-faith exposure. A landlord that retains a deposit in bad faith is liable for $100, three times the portion wrongfully withheld, and the tenant’s attorney’s fees. Missing the 30-day deadline is presumed bad faith, and a landlord that fails in bad faith to give the itemization can forfeit the right to withhold any part of the deposit or sue for damages to the premises (§ 92.109).
• Balance after the deposit. The placed amount equals total lawful charges minus the deposit and minus payments. Show that arithmetic on one page.

If the 30-day window was missed or no itemization went out, hold the account and resolve that first.

Commercial leases: the Chapter 93 version

Commercial tenant debt collection follows Property Code Chapter 93 and the lease itself, and the consumer-debt rules do not apply. The deposit clock is longer, and guarantors and lease-end charges carry most of the dollars.

• 60-day clock. The landlord must refund the deposit not later than the 60th day after the tenant surrenders the premises and gives notice of a forwarding address (§ 93.005). The landlord is not obligated to return the deposit or describe deductions until the tenant gives a written forwarding address (§ 93.009).
• Itemized deductions. Deductions must be for damages and charges the tenant is liable for under the lease, and none may be for normal wear and tear. The landlord must send a written description and itemized list unless the tenant owed rent at surrender and there is no controversy about the amount (§ 93.006).
• Bad-faith exposure. Bad-faith retention carries $100, three times the amount wrongfully withheld, and attorney’s fees. Bad-faith failure to send the itemization forfeits the right to withhold any part of the deposit or sue for damages to the premises. Missing the 60-day deadline is presumed bad faith (§ 93.011).
• Non-rent charges. A landlord may not assess a charge other than rent or physical damage unless the lease, an attachment or an amendment states the amount or the method of computing it (§ 93.012). Tie every fee line to that language.
• Last month’s rent. A tenant may not withhold last month’s rent on the theory that the deposit covers it, and a tenant that does so in bad faith is liable for three times the rent withheld plus attorney’s fees (§ 93.010).
• Guarantors. The signed guaranty is in the file, covers the charges being claimed, and the guarantor’s address and entity details are current. A guarantor is a separate obligor and needs a separate line in the placement.
• Entity status. For an LLC, corporation or partnership tenant, record the exact legal name, registered agent and current Texas Secretary of State status. A forfeited or dissolved entity changes who can be pursued.
• Holdover rent. Cite the holdover clause and the rate it sets, and show the days and the arithmetic.
• Early termination and abandonment. Separate accrued rent from accelerated future rent and from lease-break fees. Document re-letting efforts, because a landlord has a duty to mitigate damages when a tenant abandons, and a lease cannot waive it (§ 91.006).
• CAM, taxes and reconciliations. Attach the reconciliation statement and the lease clause that allows the pass-through.
• Restoration and repairs. Attach move-in and move-out evidence, invoices and the lease’s restoration clause.

Hold flags: stop and resolve before placing

Any one of these means the account waits. Placing it anyway creates compliance exposure for the owner and the agency.

• Written dispute. The tenant disputed the debt or the deposit accounting in writing. Attach the dispute and your response. On a residential balance, a collector must handle a dispute under the FDCPA and Regulation F.
• Bankruptcy. The tenant or guarantor filed, or you do not know. Check before placement, because an automatic stay bars collection of a pre-petition balance.
• Attorney representation. The tenant has a lawyer, or a legal-aid office has contacted you. Contact then goes through counsel.
• Deceased tenant. Collection runs through the estate and probate rules, not against the family. Hold and escalate.
• Active-duty service member. Check Servicemembers Civil Relief Act status before enforcement.
• Pending eviction or suit. If a case is open, find out what the judgment covers. A possession judgment does not automatically fix the money owed; see what an eviction judgment does and does not cover.
• Pending deposit complaint. A complaint, small-claims filing or demand letter about the deposit is a hold.
• Identity or fraud claim. If the tenant says someone else signed, verify the signed lease and application first.

Time limits

Check the age of the balance before placement. Old files cost the same to work and recover less.

• Limitations. A suit on a debt generally has to be filed within four years under Civil Practice and Remedies Code § 16.004(a)(3). Count from the date the claim accrued, usually the breach or the day the lease-end balance became due, not the date of the last statement.
• Judgments. A Texas judgment becomes dormant if no writ of execution is issued within 10 years of rendition, and a dormant judgment needs revival before it can be enforced (§ 34.001). If the owner already holds a judgment, put the rendition date and any writ dates in the file.
• Date of default, date of surrender, date of the last payment and date of any written acknowledgment belong on one page.

Ready or hold: the last check

One “hold” outcome stops the placement.

Situation	Residential	Commercial	Decision
Deposit accounting sent inside the deadline	30 days from surrender	60 days from surrender and forwarding-address notice	Ready
Deadline missed or no itemization sent	Bad-faith presumption, possible forfeiture of deductions (§ 92.109)	Bad-faith presumption, possible forfeiture (§ 93.011)	Hold and resolve first
No written forwarding address on file	Deposit duty not triggered (§ 92.107)	Deposit duty not triggered (§ 93.009)	Ready if the file shows the request was made
Late fees above the statutory safe harbor	Needs support (§ 92.019)	Lease governs, and the fee must be stated in it (§ 93.012)	Remove or support, then place
Charge with no lease clause behind it	Remove	Remove	Remove, then place
Written dispute, bankruptcy, attorney, deceased	Hold	Hold	Hold
Balance older than four years	Limitations risk	Limitations risk	Review before spending recovery effort
Guarantor named but no signed guaranty	Not applicable	Cannot pursue the guarantor	Place the tenant only, or get the guaranty

The placement package

Send one organized file per account, in this order, so the agency can review it without calling you back.

1. A one-page cover sheet: obligors, residential or commercial, surrender date, total claimed, deposit applied, balance placed, and any flags you cleared.
2. The signed lease, addenda and guaranty.
3. The single reconciled ledger with lease-clause references.
4. The deposit accounting: itemized list, proof of delivery, and the forwarding-address statement or a note that none was received.
5. Condition evidence and invoices for every damage line.
6. Notices and correspondence: demand letters, dispute responses and any contact with the tenant’s counsel.
7. Contact data and any skip-trace work already done.

Before you sign with an agency, confirm that it holds the surety bond Texas requires of third-party debt collectors (Finance Code § 392.101), that its contingency fee is stated in writing (Southwest Recovery Services’ fees run 10%–50% depending on age and amount of the receivable), that it tells you what it does with disputed, bankrupt or represented accounts, and that it reports and remits on a stated schedule.

Frequently asked questions

How long does a Texas landlord have to return a residential security deposit?

On or before the 30th day after the tenant surrenders the premises, less lawful deductions (Property Code § 92.103). The landlord is not obligated to return it or send the itemization until the tenant gives a written forwarding address (§ 92.107).

What happens if a Texas landlord misses the deposit deadline?

Missing the 30-day deadline is presumed bad faith. A landlord that retains a deposit in bad faith is liable for $100, three times the portion wrongfully withheld, and the tenant’s attorney’s fees, and a landlord that fails in bad faith to provide the itemization can forfeit the right to withhold any part of the deposit or sue for damages to the premises (§ 92.109).

How long does a commercial landlord have to return a deposit in Texas?

Not later than the 60th day after the tenant surrenders the premises and gives notice of a forwarding address (§ 93.005). A landlord that fails to return the deposit or provide an itemized list by the 60th day after surrender is presumed to have acted in bad faith (§ 93.011).

Can a Texas landlord charge any late fee it wants?

No. A residential late fee needs notice in a written lease, must be reasonable, and cannot be charged until rent has been unpaid two full days after the due date. A fee up to 12 percent of the rent for properties with four or fewer units, or 10 percent for larger ones, is considered reasonable, and a higher fee needs support as uncertain damages from the late payment (§ 92.019).

Do the FDCPA and Regulation F apply to tenant debt?

They apply to a third-party collector collecting a residential tenant’s balance, because it is a consumer debt. A commercial lease balance is a business debt and falls outside the FDCPA’s definition of “debt,” though Texas Finance Code Chapter 392 can still apply.

How long can a landlord wait before suing on unpaid rent in Texas?

A suit on a debt generally has to be filed within four years (Civil Practice and Remedies Code § 16.004(a)(3)), counted from when the claim accrued. Do not wait until the end of that period to place an account, because the older the balance, the harder it is to collect.

Ready to place a tenant or landlord account?

Southwest Recovery Services reviews placements for Texas property owners and managers on a contingency basis. See how we handle residential property management collections or request a quote.

This article is general information about Texas law and is not legal advice. Statutes change; confirm the current text and your own facts before relying on any point here.