Applying for an apartment in Texas can become expensive surprisingly quickly.
A prospective tenant may find a promising apartment, complete an application, pay an application fee, provide income and rental-history information, and then learn that the application has been rejected.
That raises an obvious question:
Can the landlord simply keep the application fee?
Sometimes yes.
Sometimes no.
Texas Property Code §§ 92.351–92.355 contain specific rules governing residential rental applications, including application fees, application deposits, tenant-selection criteria, rejection, refunds, and landlord liability.
For both landlords and prospective tenants, understanding these rules can prevent a relatively small application fee from turning into a much larger legal dispute.
An Application Fee and an Application Deposit Are Not the Same Thing
Texas law makes an important distinction between an application fee and an application deposit.
Texas Property Code § 92.351 defines an application feeas:
“a nonrefundable sum of money”
given to the landlord to offset the costs of screening an applicant.
An application deposit, by contrast, is money given in connection with the rental application that is refundable if the applicant is rejected.
This distinction matters.
An applicant should not assume that every payment made while applying for an apartment is automatically refundable. Likewise, a landlord should not assume that simply calling money a “fee” eliminates every statutory obligation to return it.
The circumstances surrounding the application and the landlord's compliance with Texas law can determine whether money must be refunded.
Texas Landlords Must Make Their Tenant-Selection Criteria Available
One of the most important protections appears in Texas Property Code § 92.3515.
When a landlord provides an applicant with a rental application, the landlord must make available printed notice of the landlord's tenant-selection criteria and the grounds upon which the application may be denied.
The statute specifically identifies criteria involving an applicant's:
- criminal history;
- previous rental history;
- current income;
- credit history; and
- failure to provide accurate or complete information on the application.
This requirement serves an important practical purpose.
A person considering paying an application fee should have an opportunity to understand the landlord's basic screening standards before paying money to be screened.
For example, suppose an apartment complex requires income equal to three times the monthly rent. An applicant whose income falls substantially below that amount may decide not to spend money applying once the applicant knows the requirement.
The Applicant Is Supposed to Acknowledge the Selection Criteria
Texas Property Code § 92.3515 also requires an acknowledgment that the tenant-selection criteria were made available.
If the landlord makes the required notice available, the applicant is supposed to sign an acknowledgment.
The statute creates an important evidentiary rule if that does not happen:
“If the acknowledgment is not signed, there is a rebuttable presumption that the notice was not made available to the applicant.”
That can become significant if the parties later disagree about whether the landlord actually disclosed the criteria.
The acknowledgment may be included directly in the rental application if the required notice is underlined or printed in bold.
What Must the Acknowledgment Tell the Applicant?
Texas law goes even further by prescribing the substance of the acknowledgment.
Among other things, the acknowledgment must inform the applicant that the landlord's selection criteria may include matters such as criminal history, credit history, income, and rental history.
It must also make clear that an application can be rejected if the applicant fails to satisfy those criteria or provides inaccurate or incomplete information.
Most importantly for application fees, the acknowledgment explains that if the applicant fails to meet the disclosed criteria:
the application fee will not be refunded.
That is why the paperwork provided at the beginning of the application process matters.
When Must a Texas Landlord Refund the Application Fee?
Texas Property Code § 92.3515(e) provides an important exception to the normal rule that an application fee is nonrefundable.
If the landlord rejects an applicant without having made the required notice of tenant-selection criteria available, the statute requires the landlord to return:
- the application fee; and
- any application deposit.
In other words, a landlord generally cannot take a nonrefundable screening fee, fail to disclose the criteria used to screen the applicant, reject the applicant, and automatically assume the fee can still be retained.
Compliance with the statutory disclosure requirement matters.
What If the Applicant Simply Fails the Disclosed Criteria?
The result may be very different when the landlord properly disclosed the selection criteria.
Suppose an apartment complex properly informs an applicant that approval requires specified income, rental-history, and credit standards.
The applicant acknowledges those criteria, pays a $75 application fee, and applies.
The landlord performs the screening and discovers that the applicant does not satisfy the disclosed credit requirement.
In that situation, the fact that the application was denied does not by itself make the application fee refundable.
Texas law expressly defines an application fee as a nonrefundable payment intended to offset the landlord's screening costs.
The important question is therefore not simply:
“Was my application rejected?”
It is also:
“Did the landlord comply with the statutory rules governing the application?”
Application Deposits Work Differently
An application deposit should not be confused with the screening fee.
Under § 92.351, an application deposit is specifically defined as money that is refundable if the applicant is rejected.
That means applicants should pay attention to exactly what they are being charged.
A landlord might collect both an application fee and an application deposit, but the two payments have different legal functions.
The label used on the application, receipt, or payment portal can therefore become important evidence if a dispute develops.
Texas Law Has a Seven-Day Rejection Rule
Texas Property Code § 92.352 also establishes a rule for determining when an applicant is considered rejected.
An applicant is deemed rejected if the landlord does not give notice of acceptance by the seventh day after either:
- the applicant submits a completed rental application on the landlord's application form; or
- the landlord accepts an application deposit when no application form was furnished.
The statute also provides that rejection of one co-applicant constitutes rejection of all co-applicants.
This prevents an application from remaining indefinitely in legal limbo while the landlord holds an application deposit.
How Can a Landlord Give Notice?
Texas Property Code § 92.353 contains rules governing notice and refunds.
Depending upon the circumstances, notice of acceptance or rejection may be communicated by telephone or mail.
The statute also addresses when an application deposit is considered returned and provides additional timing rules when the relevant deadline falls on a Saturday, Sunday, or state or federal holiday.
These technical rules can become important when the dispute is not really about whether an applicant was rejected, but when the rejection occurred and when money should have been returned.
Bad-Faith Retention Can Become Expensive
The amount initially disputed may be small.
The statutory consequences may not be.
Texas Property Code § 92.354 provides that a landlord who in bad faith fails to refund an application fee or deposit in violation of the rental-application subchapter can be liable for:
“$100, three times the amount wrongfully retained, and the applicant's reasonable attorney's fees.”
Consider a landlord who wrongfully retains a $200 application deposit in bad faith.
The statutory calculation could potentially include:
- $100;
- three times the $200 wrongfully retained, or $600; and
- reasonable attorney's fees.
That creates potential liability substantially greater than the original $200 dispute.
The availability of attorney's fees is especially important because small-dollar disputes are otherwise often economically impractical to litigate.
Can a Rental Application Waive These Rights?
No.
Texas Property Code § 92.355 provides:
“A provision of a rental application that purports to waive a right or exempt a party from a liability or duty under this subchapter is void.”
That is unusually straightforward statutory language.
A landlord therefore cannot necessarily avoid these requirements by inserting language into the application stating that the applicant waives the protections of the rental-application statutes.
The Legislature has expressly made such attempted waivers void.
What Should Texas Rental Applicants Look For?
Before paying an application fee or deposit, an applicant should carefully review the application documents.
Important questions include:
- Is the payment described as an application fee or an application deposit?
- Were the landlord's tenant-selection criteria made available?
- Did the applicant sign an acknowledgment concerning those criteria?
- What credit, income, criminal-history, or rental-history requirements were disclosed?
- Was the applicant accepted or rejected?
- When was notice given?
- If money was supposed to be refunded, when was it returned?
Applicants should also keep copies of the application, screening criteria, acknowledgment, receipts, emails, text messages, and payment records.
A $75 application fee may not initially seem worth documenting carefully. But those records can become extremely important if a dispute arises over whether the landlord complied with Chapter 92.
Landlords Should Treat Rental Applications as Legal Documents
These rules matter just as much to landlords and property managers.
A residential rental application is not merely an informal screening questionnaire.
Texas law imposes specific requirements concerning disclosures, acknowledgments, fees, deposits, rejection, refunds, and waiver.
A landlord using an old application form—or simply accepting application money without following a consistent written process—can create unnecessary exposure.
A good rental-application procedure should clearly distinguish fees from deposits, provide the applicable tenant-selection criteria, obtain the required acknowledgment, document acceptance or rejection, and promptly return any money that Texas law requires to be refunded.
The Bottom Line
A Texas landlord can generally charge a nonrefundable rental application fee.
But “nonrefundable” does not mean that the landlord can keep the money under every circumstance.
Texas Property Code Chapter 92 requires landlords to make tenant-selection criteria available to applicants and creates refund obligations when an applicant is rejected without receiving the required notice.
Texas law also distinguishes nonrefundable application fees from refundable application deposits, establishes rules governing rejection and notice, creates enhanced liability for certain bad-faith failures to refund money, and prevents rental applications from waiving these statutory protections.
For prospective tenants, the lesson is simple:
Read the screening criteria before paying the application fee, and keep the paperwork.
For landlords, the lesson is equally simple:
A small application fee is not worth creating a large legal problem.
At David C. Barsalou, Attorney at Law, PLLC, we help clients navigate business, family, tax, estate planning, and real estate matters ranging from document drafting to litigation with clarity and confidence. If you’d like guidance on your situation, schedule a consultation today. Call us at (713) 397-4678, email barsalou.law@gmail.com, or reach us through our Contact Page. We’re here to help you take the next step.
