BILL ANALYSIS



C.S.H.B. 1474
By: Dutton
4-28-95
Committee Report (Substituted)


BACKGROUND

In Texas, if a tenant violates any provision of the lease agreement
a landlord usually has the option of terminating the lease and
evicting the tenant. Regardless of the severity of the default or
the intentions of the tenant, landlords, through their managers,
often terminate leases of good tenants.

Periodically landlords and tenants dispute the interpretation of
the lease, the amount of rent that is owed or other matters.  Most
states require landlords to provide written notice to a tenant who
is in default that the tenancy will be terminated if the tenant
fails to comply within three days (sometimes five or seven days) of
the notice.  In other words, the tenant is given the choice to
"quit the premises or cure the breach"

PURPOSE

H.B. 1474 provides Texas tenants the same opportunity to cure a
default in rent payment that tenants in other states enjoy. 
Specifically, landlords would have to give tenants written notice
of the opportunity to cure default at least three business days
before termination of the lease and the tenant's right to
possession of the premises.  If a tenant cures a default on or
before the deadline, a landlord could not terminate the lease.  If
a tenant failed to pay within three days, a landlord could file a
"forcible detainer" suit to regain lawful possession of the
premises.  If the court decides in favor of the landlord solely on
the basis of nonpayment or untimely payment, then the amount
necessary to cure the default is set at the sum of the delinquent
rent and reasonable late fees owed to the landlord, and any court
costs charged to the tenant. If a tenant cures a default before the
fifth day after the court ruling, she/he will be reinstated under
the lease, and the landlord may not repossess the premises.

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.

SECTION BY SECTION ANALYSIS

SECTION 1.  Adds, Section 24.0051 to Chapter 24, Property Code. 

     Section 24.0051.  RESIDENTIAL TENANT'S RIGHT TO CURE DEFAULT. 
     (a)  A landlord may terminate the lease of a residential
     tenant who fails to pay rent that is due if the tenant fails
     to pay the rent before the fourth business day after the date
     the notice of default required by this section is delivered.

     (b)  A landlord who intends to terminate the lease must notify
     the tenant in writing.

     (c)  Delivery of the notice must be delivered by regular mail
     or by registered or certified mail, return receipt requested;
     delivered in person to the tenant or to any person residing at
     the premises who is at least 16 years of age; or affixed to
     the inside of the main entry door to the premises.

     (d)  The notice must state the tenant is in default under the
     lease, inform the tenant of their right to cure the default,
     and specify the action required and the period available to
     cure the default.

     (d)  A tenant does not have a right to cure a default if the
     default resulted from violent criminal activity or an illegal
     drug related activity; or the tenant earlier received, during
     the previous 12-month period, at least one default notice for
     nonpayment of rent and the tenant timely cured the default.

SECTION 2. Effective date:  September 1, 1995

SECTION 3. The change in law made by this act applies only to a
tenant who defaults on or after the effective date.  A tenant who
defaults before the effective date of this Act is covered by the
Law in effect at the time of the default.

SECTION 4. Emergency clause.

COMPARISON OF ORIGINAL TO SUBSTITUTE

SECTION 1.  (a).  The original bill allowed tenants who defaulted
on their lease to avoid termination of the lease by complying with
the lease terms by the third day.  The committee substitute changes
the time requirement to before the fourth business day.

(b) and (c).  The committee substitute separates subsection (b) of
the original bill into two subsections but the content is the same.

(d).  Subsection (c) of the original bill is now subsection (d) of
the committee substitute.

     (1)  the committee substitute requires the notice to state
     that the tenant is in default due to the failure of the tenant
     to pay rent or due to rent being paid after it was due.

     (2)  has no change from (c)(2) of the original bill.

     (3)  requires the notice to specify the action required of the
     tenant and the period available to cure the default. 
     Subsection (c)(3) of the original bill required the nature of
     the default to be specified in the notice.

(e).  Prevents the landlord from terminating the lease if the
tenant cures the default as in the subsection (d)(1) of the
original bill.  Subsections (2)(3)(4) of the original bill under
subsection (e) are deleted from the committee substitute.

Section 24.0052, titled Residential Tenant's Right to cure Default
after Eviction Suit Filed, is deleted; subsection (e) in the
substitute stipulates that unless stated otherwise by the lease,
the tenant does not have the right to cure default if the default
resulted from illegal activity or if the tenant has had a prior
default notice served.

SECTION 2.  Effective date is the same as in the original bill.

SECTION 3.  Applicability provision.

SECTION 4.  Emergency clause.

SUMMARY OF COMMITTEE ACTION

The Business and Industry Committee considered H.B. 1474 in a
public hearing on April 25, 1995.  The committee considered a
complete committee substitute for H.B. 1474.  1 (one) amendment was
offered to the substitute.  The following witnesses testified in
favor of H.B. 1474:  Robert Doggett, representing Legal Services of
North Texas; Julie Wheeler, representing herself; John Henneberger,
representing Texas Low Income Housing Information Service;
Katherine Stark, representing Austin Tenants Council; Fred Fuchs,
representing himself; Jaynie Lindsay, representing herself; Dorothy
Masterson, representing Housing Crisis Center; Pamela M. Brown,
representing Texas Legal Services Center; Yasmin Thomas,
representing Texas Tenant's Union.  The following witnesses
testified against H.B. 1474:  Joe Sharp, representing Texas
Apartment Association; and Larry Niemann, representing Texas
Apartment Association.  The following witness testified on H.B.
1474:  J. Raymond Schiflett, III, representing University of Texas
at Austin Students' Attorney's Office.  Committee amendment #1, to
the committee substitute, was adopted without objection.  The
committee substitute, as amended, was adopted without objection. 
The Chair directed the staff to incorporate the amendment into the
substitute.  H.B. 1474, as substituted, was reported unfavorably by
a record vote of 4 (four) ayes, 3 (three) nays, 0 (zero) present-not-voting, 2 (two) absent.  Without objection, a motion to
reconsider the vote at a later date was granted.  The committee
amendment to the committee substitute was withdrawn without
objection.  The committee substitute was withdrawn without
objection.  H.B. 1474 was left pending before the committee.  H.B.
1474 was reconsidered in a formal meeting on April 28, 1995.  The
committee considered a complete committee substitute.  1 (one)
amendment was offered to the substitute.  Committee amendment #1
was adopted without objection.  The committee substitute, as
amended, was adopted without objection.  The Chair directed the
staff to incorporate the amendment into the substitute.  H.B. 1474,
as substituted, was reported favorably with the recommendation that
it do pass and be printed, by a record vote of 8 (eight) ayes, 1
(one) nays, 0 (zero) present-not-voting, 0 (zero) absent.