By Ehrhardt, Coleman, Maxey, Naishtat, H.B. No. 3028
et al.
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to security deposits and application deposits provided by
1-3 residential tenants and prospective residential tenants and lease
1-4 obligations of certain successor landlords; providing a civil
1-5 penalty.
1-6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-7 SECTION 1. Section 92.101, Property Code, is amended to read
1-8 as follows:
1-9 Sec. 92.101. APPLICATION. This subchapter applies to all
1-10 residential leases <a lease executed or entered into after
1-11 September 1, 1973>.
1-12 SECTION 2. Section 92.102, Property Code, is amended to read
1-13 as follows:
1-14 Sec. 92.102. SECURITY DEPOSIT. A security deposit is any
1-15 advance of money, other than a rental application deposit or an
1-16 advance payment of rent, that is intended primarily to secure
1-17 performance under a lease of a dwelling that has been entered into
1-18 by a landlord and a tenant.
1-19 SECTION 3. Section 92.103, Property Code, is amended by
1-20 amending Subsection (c) and adding Subsection (d) to read as
1-21 follows:
1-22 (c) The tenant's claim to the security deposit takes
1-23 priority over the claim of any creditor of the landlord, including
1-24 <except> a trustee in bankruptcy.
2-1 (d) If a dwelling occupied by a tenant is purchased at a
2-2 foreclosure or tax sale or is purchased from a bankruptcy trustee
2-3 and if the new owner accepts rent from the tenant or honors any
2-4 landlord obligation under the lease after the purchase, the new
2-5 owner is liable for performing all landlord obligations under the
2-6 lease, including the return of any security deposit, less lawful
2-7 deductions.
2-8 SECTION 4. Subchapter C, Chapter 92, Property Code, is
2-9 amended by adding Section 92.1041 to read as follows:
2-10 Sec. 92.1041. PRESUMPTION OF REFUND OR ACCOUNTING. A
2-11 landlord is presumed to have refunded a security deposit or made an
2-12 accounting of security deposit deductions if, on or before the date
2-13 required under this subchapter, the refund or accounting is placed
2-14 in the United States mail and postmarked on or before the required
2-15 date.
2-16 SECTION 5. Chapter 92, Property Code, is amended by adding
2-17 Subchapter H to read as follows:
2-18 SUBCHAPTER H. RENTAL APPLICATION DEPOSITS
2-19 Sec. 92.331. DEFINITIONS. For purposes of this subchapter:
2-20 (1) "Application deposit" means a sum of money that is
2-21 given to the landlord in connection with a rental application and
2-22 that is refundable to the applicant if the applicant is rejected as
2-23 a tenant.
2-24 (2) "Applicant" or "rental applicant" means a person
2-25 who makes an application to a landlord for rental of a dwelling.
2-26 (3) "Co-applicant" means a person who makes an
2-27 application for rental of a dwelling with other applicants and who
3-1 plans to live in the dwelling with other applicants.
3-2 (4) "Deposited" means deposited in an account of the
3-3 landlord or the landlord's agent in a bank or other financial
3-4 institution.
3-5 (5) "Landlord" means a prospective landlord to whom a
3-6 person makes application for rental of a dwelling.
3-7 (6) "Required date" means the required date for any
3-8 acceptance of the applicant under Section 92.332.
3-9 Sec. 92.332. REJECTION OF APPLICANT. (a) The applicant is
3-10 deemed rejected by the landlord if the landlord does not give
3-11 notice of acceptance of the applicant on or before the seventh day
3-12 after the:
3-13 (1) date the applicant submits a completed rental
3-14 application to the landlord on an application form furnished by the
3-15 landlord; or
3-16 (2) date the landlord accepts an application deposit
3-17 if the landlord does not furnish the applicant an application form.
3-18 (b) A landlord's rejection of one co-applicant shall be
3-19 deemed as a rejection of all co-applicants.
3-20 Sec. 92.333. PROCEDURES FOR NOTICE OR REFUND. (a) Except
3-21 as provided in Subsection (c), a landlord is presumed to have given
3-22 notice of an applicant's acceptance or rejection if the notice is
3-23 by:
3-24 (1) telephone to the applicant, co-applicant, or a
3-25 person living with the applicant or co-applicant on or before the
3-26 required date; or
3-27 (2) United States mail, addressed to the applicant and
4-1 postmarked on or before the required date.
4-2 (b) Except as provided in Subsection (c), a landlord is
4-3 presumed to have refunded an application deposit on or before the
4-4 required date if:
4-5 (1) the landlord's refund check or refund cash is made
4-6 available to the rental applicant during the landlord's normal
4-7 office hours in the rental office where the application deposit was
4-8 given to the landlord; or
4-9 (2) the landlord's refund check is mailed to the
4-10 rental applicant.
4-11 (c) If a rental applicant requests that any acceptance of
4-12 the applicant or any refund of the applicant's application deposit
4-13 be mailed to the applicant, the landlord must mail the refund check
4-14 to the applicant at the address furnished by the applicant, on or
4-15 before the required date.
4-16 (d) If the date of required notice of acceptance or required
4-17 refund of an application deposit is a Saturday, Sunday, or state or
4-18 federal holiday, the required date shall be extended to the end of
4-19 the next day following the Saturday, Sunday, or holiday.
4-20 Sec. 92.334. LIABILITY OF LANDLORD. (a) A landlord who in
4-21 bad faith fails to refund an application deposit in violation of
4-22 this subchapter is liable for an amount equal to the sum of $100,
4-23 three times the amount of the application deposit, and the
4-24 applicant's reasonable attorney's fees in a suit to recover the
4-25 deposit.
4-26 (b) A landlord who fails to refund an application deposit on
4-27 or before the required date is presumed to have acted in bad faith.
5-1 SECTION 6. (a) This Act takes effect January 1, 1996. The
5-2 change in law made by this Act applies only to security deposit
5-3 funds and application deposit funds or other funds received from
5-4 tenants and prospective tenants on or after the effective date of
5-5 this Act.
5-6 (b) For purposes of Subchapter H, Chapter 92, Property Code,
5-7 as added by this Act, a landlord who accepts funds from a
5-8 prospective tenant and has not rejected the applicant as a tenant
5-9 before the effective date of this Act is presumed to have rejected
5-10 the applicant as a tenant if the landlord does not accept the
5-11 applicant as a tenant before the seventh day after the effective
5-12 date of this Act.
5-13 SECTION 7. The importance of this legislation and the
5-14 crowded condition of the calendars in both houses create an
5-15 emergency and an imperative public necessity that the
5-16 constitutional rule requiring bills to be read on three several
5-17 days in each house be suspended, and this rule is hereby suspended.