Texas Property Management Laws & Regulations: Everything You Need to Know [2026]

Texas property management operates under a unique regulatory framework balancing landlord rights with tenant protections. The Texas Real Estate Commission (TREC) oversees licensing, the Texas Property Code governs landlord-tenant relationships, and local ordinances add jurisdiction-specific requirements.

Property managers who misunderstand these Texas property management laws face serious consequences:

• Operating without proper TREC licensing: Criminal misdemeanor + civil penalties up to $5,000 per violation
• Trust account violations: License suspension or permanent revocation
• Fair housing discrimination: Federal penalties from $16,000 to $65,000

Recent changes include the new REALM Portal launched December 15, 2025, for license management, and Senate Bill 38, effective January 1, 2026, modernizing eviction procedures.

Do You Need a License to Manage Property in Texas?

The Texas Real Estate License Act requires licensing for nearly all property management activities performed for compensation.

Activities Requiring a License

• List or offer to list property for lease
• Negotiate lease terms
• Aid tenants in locating rentals
• Control acceptance of rent
• Hold yourself out as engaging in these activities

Sales Agent vs. Broker

Sales Agent License:

Requirements: Age 18+, 180 hours TREC-approved education, pass national and state exam at 70% minimum, secure broker sponsorship

Limitations: Cannot operate independently, maintain trust accounts, receive direct compensation, or own property management companies without broker oversight

Broker License:

Requirements: 4 years of experience as a sales agent/broker, 270 hours of core courses, pass the broker exam, $375.50 application fee

Advantages: Operate an independent property management company, sponsor sales agents, maintain trust accounts, and receive direct compensation

For student housing operations managing multiple properties, understanding these licensing distinctions becomes critical for business structure.

Common Exemptions

No license required for:

• Property owners managing their own properties (no limit on quantity)
• On-site apartment managers (working exclusively at their complex)
• Salaried employees of property owners (no commission)
• HOA/community association managers (handling common areas, not individual unit leasing)

Warning: Exemptions are narrowly construed. Operating under inapplicable exemptions carries criminal penalties and contract unenforceability.

License Renewal

Every 2 Years:

18 hours of continuing education required:

• 8 hours: Legal Update I (TREC rules, promulgated forms, fair housing)
• 8 hours: Legal Update II (agency law, TREC disclosures, enforcement)
• 2 hours: Elective courses

Complete all CE before the expiration date, even for inactive licenses before reactivation.

What Are the Essential Security Deposit and Lease Rules?

Texas Property Code Chapter 92 governs residential landlord-tenant relationships.

Security Deposit Regulations

• No Statutory Limits: Texas imposes no caps on deposit amounts (unlike California). Landlords may charge any reasonable amount agreed in the lease.
• Return Timeline (Strict): 30 days after the tenant vacates AND provides a written forwarding address
• If Withholding: Provide itemized description of deductions, amounts, specific reasons, and remaining balance within the same 30-day window
• Cannot Deduct: Normal wear and tear = “deterioration from intended use, including breakage/malfunction due to age.”
• Penalties for Bad Faith: Tenants may recover 3x the wrongfully withheld amount + attorney’s fees + court costs
• Alternative Option: Landlords may offer a monthly fee instead of a security deposit (written notice required, fee cannot exceed reasonable insurance cost)

Habitability Standards

Implied Warranty (Cannot Be Waived):

Landlords must:

• Maintain property affecting health/safety
• Make reasonable repairs when needed
• Comply with building codes

Covered Conditions: Roof leaks, plumbing failures, HVAC failures (extreme weather), electrical hazards, pest infestations, lack of water, sewage problems, structural defects

Not Covered: Cosmetic issues, minor inconveniences, tenant-caused damage

Repair Process

Step 1: Tenant gives written notice (certified mail recommended)

Step 2: Landlord has a reasonable time (7 days presumed, rebuttable based on repair complexity)

Step 3: If the landlord fails, the tenant may terminate the lease, repair and deduct (≤1 month’s rent or $500), reduce rent, file suit, or obtain a judicial repair order

Requirements: Rent must be current, the tenant cannot have caused the condition, and a second notice is required if the first is not certified/registered

Effective maintenance management systems help track repair requests and demonstrate compliance.

How Do Texas Eviction Procedures Work?

Texas eviction law under Property Code Chapter 24 governs forcible entry and detainer actions.

Legal Grounds

Nonpayment of rent, lease violations, holdover tenancy, criminal activity, property damage, nuisance, unauthorized occupants, and month-to-month termination

Notice Requirements

Current (Through December 31, 2025): Minimum 3 days’ written notice before filing

New (Effective January 1, 2026 – SB 38): “Notice to pay rent or vacate” for first-time delinquency, provides cure opportunity, concurrent notice periods allowed, video/teleconference court appearances permitted

Eviction Process

Step 1: Serve notice to vacate (count days from day after delivery)

Step 2: File eviction lawsuit in Justice of Peace Court ($50-$100 fee, hearing set 10-21 days out)

Step 3: Constable/sheriff serves citation to tenant

Step 4: Eviction hearing (15-30 minutes, judge determines possession rights)

Step 5: If the landlord wins, the tenant has 5 days to appeal; if no appeal, the Writ of Possession is issued (the constable posts a 24-hour notice, then removes the tenant)

Prohibited Self-Help Evictions

Never: Lockouts without court orders, utility shutoffs, removing property without authorization, physical removal, removing doors/windows, intimidation

Tenant Remedies: Actual damages + one month’s rent + $1,000 + attorney’s fees + court costs; landlord faces Class C misdemeanor

For industrial property managers, commercial evictions follow different procedures under contract law.

What Trust Accounting Rules Must You Follow?

TREC Rule 535.146 establishes strict trust account requirements.

Trust Account Setup

Must Have: Brokers holding others’ money (rent, security deposits, owner funds)

Location: Federally insured Texas financial institution

Account Name: “[Broker Name] Trust Account” or “[Company Name] Escrow Account”

Structure Options:

1. Single aggregate account (most common) – separate ledgers per client
2. Separate accounts per owner – clearer separation, more admin
3. Two-account system (recommended) – operating trust + security deposit trust

Commingling Prohibitions

Never Mix:

• Personal/company funds (except $100-$500 for bank fees/minimum balance)
• Business operating funds
• One client’s funds in another’s account
• Broker-owned property rents

Management Fee Handling

Process: Collect rent → Calculate fee → Transfer fee to operating account → Transfer remaining to owner

Timeline: Within 30 days or per agreement (excessive delays = commingling)

Record-Keeping Requirements

Must Maintain:

1. Trust account ledger (all transactions, dates, amounts, running balance)
2. Individual owner/tenant ledgers (receipts, disbursements, balances)
3. Monthly reconciliation (bank statement + trust ledger + individual ledgers = MUST MATCH)
4. Supporting documentation (bank statements, checks, deposits, agreements, invoices)

Retention: TREC minimum 4 years, better practice 7 years

Monthly Reconciliation: Compare bank balance, trust ledger, sum of individual ledgers – investigate discrepancies immediately

According to the Texas Real Estate Commission, trust account audits frequently uncover violations for inadequate record-keeping, commingling, and failure to reconcile. Violations carry $1,000-$5,000 fines per violation plus license suspension/revocation.

For property managers using accounting and reporting tools, integration with trust accounting ensures compliance while streamlining reconciliation.

Security Deposit Handling

Property manager duties: Deposit in trust immediately (within 2 business days), maintain separate records per tenant, coordinate with owner on returns/deductions, remit to tenant within 30 days, account to owner and tenant

Liability: Both broker and owner may face liability for improper handling, late returns, commingling, and bad faith retention

What Fair Housing and Business Practices Matter Most?

Federal and state fair housing laws establish strict requirements.

Protected Classes

Federal (7 classes): Race, color, religion, sex, national origin, familial status, disability

Texas: Mirrors federal law – no additional classes

Not Protected in Texas: Sexual orientation, gender identity, source of income (landlords may refuse Section 8)

Prohibited Practices

Advertising: No “adults only,” religious preferences, discriminatory phrases, single-race images

Screening: Apply criteria uniformly – credit, rental history, income verification, criminal background (with limitations), employment, references

Reasonable Accommodation

Must Provide: Changes to rules/policies giving persons with disabilities equal opportunity

Examples: Allow service animals (despite “no pets”), accessible parking, live-in aides, ground-floor transfers, flexible payment dates

Process: Tenant requests → landlord may ask for verification if disability/need not be obvious → must grant unless undue burden or not necessary

Cannot Charge: No fees for accommodations, no deposits for service animals

Reasonable Modifications

Physical Alterations: Grab bars, widened doorways, lowered countertops, ramps, accessible parking, and visual alarms

Who Pays: Tenant (individual units), landlord (common areas in new construction)

Restoration: Landlord may require restoration unless the modification doesn’t interfere with the next tenant

Enforcement

Agencies: HUD (1-800-669-9777), Texas Workforce Commission Civil Rights Division (888-452-4778)

Filing Deadline: Within 1 year of alleged discrimination

Penalties: $16,000 (first), $37,500 (second within 5 years), $65,000 (two+ within 7 years); federal court allows unlimited compensatory/punitive damages

Common Fee Structures

• Management fees: 8-12% of monthly rent
• Leasing fees: 50-100% of one month’s rent
• Lease renewal: $100-$500
• Maintenance coordination: 10-15% markup
• Eviction processing: $300-$800

Texas has no statutory limits. Must disclose all fees in the management agreement and any referral fees/commissions from third parties (failure = TREC violation).

Technology Requirements

Essential features: Trust account, compliant accounting, online rent payment, tenant/owner portals, maintenance tracking, lease management, automated late fees, 1099 generation, bank reconciliation

According to National Association of Residential Property Managers research, specialized software significantly reduces compliance violations.

Regional Variations

Major Texas cities add local requirements

• Austin: Rental registration, inspection programs
• Dallas: Specific tenant notice requirements
• Houston: Active habitability enforcement
• San Antonio: Proactive inspection areas

Property managers operating across multiple cities must track varying ordinances, registration requirements, and inspection schedules.

Understanding Texas property management laws and maintaining compliance with TREC licensing, Property Code provisions, trust accounting rules, and fair housing obligations requires investment in proper licensing, robust accounting systems, comprehensive training, and specialized technology.

Contact Propertese today to automate your compliance tracking and simplify property management operations.