Security Deposit Alternatives: Texas and Maine Rules
The Texas rules for a monthly fee in lieu of a deposit, Maine’s surety-bond limits, and the Texas notice before reporting a no-deposit tenant’s damages.
By Seayora Editorial Team · Published · Facts checked · 4 min read
Short answer: Some landlords offer a monthly fee or a surety bond instead of a cash deposit. Texas allows a fee in lieu of a deposit only if the tenant can choose a regular deposit instead, at the start or at any time later, and the choice cannot affect approval; the agreement must say in writing that the fee is not refundable and does not cover the tenant. Maine lets a landlord offer a tenant-purchased surety bond, never require one, and caps the bond and any deposit together at two months’ rent.
Key takeaways
- Texas: a fee in lieu of a deposit must be optional, with a regular deposit always available, and cannot affect approval (Prop. Code § 92.111).
- Texas: the tenant may switch from the fee to a deposit at any time, and the fee must be a level amount due with the rent.
- Texas: when the fee buys insurance, the written agreement must say it is not refundable and does not insure the tenant.
- Maine: a landlord may offer, but never require, a surety bond; bond plus deposit may not exceed two months’ rent (14 M.R.S. § 6039).
- Texas: with no deposit, the landlord must notify the tenant of damages before reporting them to a credit bureau or collector (§ 92.110).
What is a security deposit alternative?
Instead of a lump-sum deposit, the tenant pays a smaller monthly fee or buys a surety bond, and the landlord is covered by an insurer or surety. The tenant still owes rent and damage beyond normal wear and tear; what changes is who fronts the money. Because the tenant gets nothing back, a few states regulate how these products are offered.
| State | Rule | Source |
|---|---|---|
| Texas | A fee in lieu of a deposit is optional; a regular deposit must be offered; the tenant may switch to a deposit at any time; written, signed agreement with set disclosures | Prop. Code § 92.111 |
| Texas | With no deposit, notify the tenant in writing of damages before reporting them to a credit bureau or debt collector, or forfeit the claim | Prop. Code § 92.110 |
| Maine | A landlord may offer a surety bond but may not require one; bond plus deposit at most two months’ rent; triple the excess if exceeded | 14 M.R.S. § 6039 |
What does Texas require for a fee in lieu of a deposit?
A landlord who offers a fee in lieu of a security deposit “shall offer the tenant the option to instead pay a security deposit” and “may not use a prospective tenant’s choice … as a criterion in the determination of whether to approve an application.” When offering it, the landlord must tell the tenant in writing that a deposit is available instead, that the tenant may end the fee agreement “at any time” and pay the deposit then offered to new tenants for similar housing, and what each option costs. The fee must be “a recurring fee of equivalent amount” payable with each rent payment, under a written agreement signed by both sides (Tex. Prop. Code § 92.111).
If the fee buys insurance for the tenant’s liability, it may not exceed “the reasonable cost of obtaining and administering the insurance,” and the agreement must state that the fee only secures occupancy without a deposit, is not refundable, does not release the tenant from rent and damage, and is not insurance covering the tenant. Used that way under a signed agreement, the fee is not a security deposit; otherwise it is treated as one. The landlord may not charge for normal wear and tear, and may not file a claim with the insurer unless it notifies the tenant, with an itemized list of the damages and of any unpaid rent and the dates it was due, “not later than the 30th day after the date the tenant surrendered possession” (Tex. Prop. Code § 92.111).
Separately, when a lease required no deposit and the tenant owes damages at move-out, the landlord must notify the tenant in writing of the claim “on or before the date the landlord reports the claim to a consumer reporting agency or third-party debt collector,” unless the tenant gave no forwarding address. Skipping the notice forfeits the right to collect (Tex. Prop. Code § 92.110).
What does Maine require for surety bonds?
“A residential landlord may offer a tenant the option of purchasing a surety bond in lieu of providing some or all of a security deposit, but a landlord may not require nor otherwise be required to consent to the purchase of a surety bond.” The surety must refund the tenant’s premium if the landlord then refuses the bond or no lease is signed. The bond may not exceed two months’ rent, and a bond plus a deposit together may not exceed two months’ rent; a landlord who demands more faces, after a seven-day notice, up to three times the excess plus fees (14 M.R.S. § 6039).
What should a landlord check before offering one?
- Offer the alternative as a choice, with a regular deposit always available, and decide applications the same way either way.
- Put the costs of each option in writing, with the disclosures your state requires.
- Keep the alternative within any state cap on deposits, counting it together with any deposit.
- Send the tenant an itemized notice before any insurance claim, credit report or collection.
Frequently asked questions
Can a Texas landlord require a monthly fee instead of a deposit?
No. The landlord must also offer a regular deposit, cannot use the tenant’s choice to decide the application, and must let the tenant switch to a deposit at any time.
Is a deposit-alternative fee refundable?
Usually not. In Texas, when the fee buys insurance, the written agreement must say it is not refundable and does not cover the tenant.
Can a Maine landlord require a surety bond?
No. A Maine landlord may offer one but may not require it, and the bond plus any deposit may not exceed two months’ rent.
State-by-state rules
- How much can a landlord charge for a security deposit? — compared across 29 states and the District of Columbia
Sources
- Texas Property Code Chapter 92 (§§ 92.110, 92.111), Texas Legislature
- 14 M.R.S. § 6039, Surety bonds, Maine Legislature
How Seayora helps
Security deposit management: Keep each deposit and every deduction as a dated, itemized record, the same itemization a damage notice needs.
This article is general information, not legal advice. Landlord-tenant law varies by state and city and changes often, so check the current rule for your property and talk to an attorney before acting on a dispute.
How we write and check these guides: editorial standards.
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