BILL ANALYSIS

C.S.H.B. 1756

By: Vo

Business & Industry

Committee Report (Substituted)

BACKGROUND AND PURPOSE

A number of property law attorneys have expressed concerns over current law regarding security deposits, which leaves open a loophole for landlords to impose fees or charges that serve the same purpose as a security deposit but are not treated as such. Landlords are under no obligation to refund these fees or charges or to provide transparency on how the funds were used, as is required with a security deposit. Therefore, the landlord is able to keep the amount of the fee or charge, and bad actors can essentially "double dip" by charging a security deposit and the additional amount. C.S.H.B. 1756 seeks to address these concerns by revising statutory language regarding security deposits to ensure that a fee or charge imposed for the purposes of a security deposit is treated as such.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 1756 amends the Property Code to expand the definition of a security deposit for a residential tenancy to include any advance of money, other than a rental application deposit or an advance payment of rent, that is intended primarily to secure payment for damage to the leased premises. Additionally, the bill establishes that the following deposits are presumed to be security deposits:

· any deposit that a landlord requires a prospective tenant to provide to the landlord to lease a dwelling or that the lease requires a tenant to provide to the landlord or maintain in effect for all or part of the lease term; and

· any refundable or nonrefundable fee or charge required by a landlord for damages, no matter how designated.

The bill applies only to a lease entered into or renewed on or after the bill's effective date.

EFFECTIVE DATE

On passage, or, if the bill does not receive the necessary vote, September 1, 2023.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 1756 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

The substitute revises the expanded definition of a security deposit established in the introduced by omitting from that definition a payment to secure payment for cleaning of the leased premises. The substitute specifies that a fee or charge required by a landlord for damages that is presumed to be a security deposit is any such refundable or nonrefundable fee or charge, whereas the introduced did not include that specification, and omits from that presumption such a fee or charge for cleaning, which the introduced included.