How to Sell a Trashed Rental Property in Texas (Without Fixing It)

Landlord Exit Guide

The tenant is gone, the house is wrecked, and the deposit will not cover a tenth of it. You do not have to rebuild the place before you can sell it.

This guide covers the step most Texas landlords get wrong in the first 30 days, what you can realistically recover, and four ways to sell. If the tenant is still living there, start with selling a rental property with tenants in Texas instead.

Protect Your Claim: The 30-Day Deposit Rule

When you walk into a wrecked rental, the instinct is to start hauling trash. Stop. The most valuable job in the first month is paperwork, because Texas puts a hard deadline on it and the penalty for missing it lands on you.

Read that last card twice. As an example, a landlord facing $18,000 of damage against a $1,500 deposit can put the claim for the whole $18,000 at risk by being late with a one-page letter. And in any dispute over the deposit, the burden of proving that a deduction was reasonable is on the landlord (§92.109(c)).

So the itemization goes out first: dated, each deduction with an amount, sent in a way you can prove.

Wear and Tear vs. Real Damage

You cannot charge a tenant for a house that simply got older. The Property Code bars keeping any part of a deposit for normal wear and tear (§92.104(b)), and it defines the term: deterioration that comes from the intended use of the home, including breakage or malfunction due to age. It expressly excludes deterioration caused by negligence, carelessness, accident or abuse (§92.001).

• Wear and tear: traffic paths in carpet, faded or scuffed paint, small nail holes, a loose door handle, sun-bleached blinds, an appliance that died of old age.
• Damage: holes punched or kicked through drywall, burns, broken windows and doors, pet urine soaked into the subfloor, missing appliances, pulled-out fixtures, rooms left full of trash.

A trashed rental is almost always a mix of both. Separate them in your itemization, because one inflated line item makes a judge doubt the rest of the list.

What You Can Realistically Recover

The money can come from three places. None is quick, so do not plan the sale around a recovery that may never arrive.

• The deposit. Yours to apply against documented damage and unpaid rent, provided the itemization goes out on time.
• The tenant. The deposit is not a cap. Texas justice courts hear civil claims of up to $20,000, not counting interest (Government Code §27.031). But a judgment is an order to pay, not a payment, and a tenant with nothing to collect from leaves you holding paper.
• Your insurer. Whether deliberate tenant damage is covered depends on the wording of your landlord policy, so ask your agent in writing. The Texas Department of Insurance advises taking photos or video before any repairs, making only temporary repairs such as boarding up broken windows, keeping receipts, and telling the company as soon as possible. Once you file, Texas law gives the company 15 days to acknowledge the claim, 15 business days to accept or deny it after it has what it needs, and five business days to pay once it agrees.

If the damage was deliberate, file a police report as well. Intentionally damaging someone else’s property is criminal mischief under Texas Penal Code §28.03, and a report gives your insurer and any court an independent, dated record.

One caution on insurance: check your vacancy clause now. TDI’s home insurance guide notes that most companies stop coverage for a house that has been vacant for 60 days or more, and landlord policies carry their own versions of that clause. Our guide to selling a vacant house in Texas covers what else changes when a house sits empty.

Four Ways Out, Compared

Once the paperwork is moving, decide what happens to the house. There are four active choices and one passive one, and the passive one costs the most.

Two honest notes. First, a cash offer on a damaged house will be lower than the same house would fetch repaired, because the buyer takes on the repair bill and the risk. Compare net against net, not price against price: what you keep after repairs, holding costs, commissions and closing costs, against what you keep from an as-is sale. Our breakdown of what it costs to sell a house in Texas walks through that arithmetic.

Second, repairing first only pays when each dollar comes back at closing, which is rare on a rental that needs a full interior. See what not to fix when selling a house in Texas and selling a house that needs repairs.

Listing also takes longer than most landlords expect. Our Texas selling timeline guide puts a typical listed sale at three to four months, and an empty house pays taxes and insurance for every one of them.

What You Must Disclose in an As-Is Sale

“As-is” describes the condition you are selling in. It does not switch off disclosure.

• Seller’s Disclosure Notice. Texas Property Code §5.008 requires the seller of residential property with not more than one dwelling unit to give the buyer a written disclosure, completed to the best of the seller’s belief and knowledge. The statute has no exemption for as-is sales or for selling to an investor.
• You are allowed not to know. Where you genuinely do not know an answer, the statute lets you say so. What you cannot do is leave out damage you have seen.
• Timing. The notice is due on or before the effective date of the contract. If the buyer gets it later, the buyer can terminate for any reason within seven days of receiving it.
• Lead paint. For a house built before 1978, federal law requires you to disclose known lead-based paint information, hand over the EPA pamphlet, and give the buyer a 10-day window to test, which the buyer may waive.

Disclosure protects you too. Damage you put in writing before closing is damage nobody can claim you hid.

Seven Steps, in Order

1. Confirm you have legal possession Keys returned or a written surrender is clean. If the tenant has not actually left, do not change the locks or shut off utilities on your own. Property Code §92.008 and §92.0081 tightly restrict both, and removing a tenant takes an eviction suit in justice court. The eviction rules were rewritten effective January 1, 2026, so do not rely on an older timeline.
2. Photograph and video everything before you touch it Every room, inside cabinets and appliances, the yard. Wide shots and close-ups, date-stamped.
3. Secure the house Board broken windows, change locks once possession is yours, shut off water if pipes are damaged. Temporary fixes only, and keep every receipt.
4. Call your insurer and, for deliberate damage, the police Before the cleanup crew, not after.
5. Send the deposit itemization by day 30 Even if the deposit is tiny next to the damage. This letter keeps your right to pursue the rest.
6. Get one written repair scope Not to hire the contractor, but to know the real number for the insurer, the court and any offer.
7. Run the net on each exit and pick one Then act. Every month of indecision is another month of taxes, insurance and risk.

The Tax Side in Two Minutes

Three points from IRS Publication 527 before you spend money on the house or bank the deposit.

• The deposit you keep is income. If you keep part or all of a security deposit because the tenant broke the lease, it counts as rental income in the year you keep it.
• Repairs and improvements are taxed differently. Repairs and maintenance are generally deductible. Work that restores the property or makes it better is an improvement, which has to be capitalized and depreciated. A full interior rebuild can easily fall on the improvement side.
• Holding costs can still count. If you sell a property you held as a rental, the IRS allows the ordinary and necessary costs of managing and maintaining it until it is sold.

The sale itself brings depreciation recapture and capital gains into play, covered in how to sell a rental property in Texas without overpaying taxes. Run your own numbers past a CPA.

Statute, insurance and tax references were checked against the Texas codes, the Texas Department of Insurance, the EPA and IRS Publication 527 in October 2026. General information, not legal advice.

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Also worth reading: how to sell a rental property with tenants in Texas and how to sell a house that needs repairs. Browse the rest of our blog, or reach us at info@moneyfast4houses.com.