H.B. No. 3028
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) to read as follows:
1-21 (c) The tenant's claim to the security deposit takes
1-22 priority over the claim of any creditor of the landlord, including
1-23 <except> a trustee in bankruptcy.
1-24 SECTION 4. Subchapter C, Chapter 92, Property Code, is
2-1 amended by adding Section 92.1041 to read as follows:
2-2 Sec. 92.1041. PRESUMPTION OF REFUND OR ACCOUNTING. A
2-3 landlord is presumed to have refunded a security deposit or made an
2-4 accounting of security deposit deductions if, on or before the date
2-5 required under this subchapter, the refund or accounting is placed
2-6 in the United States mail and postmarked on or before the required
2-7 date.
2-8 SECTION 5. Chapter 92, Property Code, is amended by adding
2-9 Subchapter H to read as follows:
2-10 SUBCHAPTER H. RENTAL APPLICATION DEPOSITS
2-11 Sec. 92.331. DEFINITIONS. For purposes of this subchapter:
2-12 (1) "Application deposit" means a sum of money that is
2-13 given to the landlord in connection with a rental application and
2-14 that is refundable to the applicant if the applicant is rejected as
2-15 a tenant.
2-16 (2) "Applicant" or "rental applicant" means a person
2-17 who makes an application to a landlord for rental of a dwelling.
2-18 (3) "Co-applicant" means a person who makes an
2-19 application for rental of a dwelling with other applicants and who
2-20 plans to live in the dwelling with other applicants.
2-21 (4) "Deposited" means deposited in an account of the
2-22 landlord or the landlord's agent in a bank or other financial
2-23 institution.
2-24 (5) "Landlord" means a prospective landlord to whom a
2-25 person makes application for rental of a dwelling.
2-26 (6) "Required date" means the required date for any
2-27 acceptance of the applicant under Section 92.332.
3-1 Sec. 92.332. REJECTION OF APPLICANT. (a) The applicant is
3-2 deemed rejected by the landlord if the landlord does not give
3-3 notice of acceptance of the applicant on or before the seventh day
3-4 after the:
3-5 (1) date the applicant submits a completed rental
3-6 application to the landlord on an application form furnished by the
3-7 landlord; or
3-8 (2) date the landlord accepts an application deposit
3-9 if the landlord does not furnish the applicant an application form.
3-10 (b) A landlord's rejection of one co-applicant shall be
3-11 deemed as a rejection of all co-applicants.
3-12 Sec. 92.333. PROCEDURES FOR NOTICE OR REFUND. (a) Except
3-13 as provided in Subsection (b), a landlord is presumed to have given
3-14 notice of an applicant's acceptance or rejection if the notice is
3-15 by:
3-16 (1) telephone to the applicant, co-applicant, or a
3-17 person living with the applicant or co-applicant on or before the
3-18 required date; or
3-19 (2) United States mail, addressed to the applicant and
3-20 postmarked on or before the required date.
3-21 (b) If a rental applicant requests that any acceptance of
3-22 the applicant or any refund of the applicant's application deposit
3-23 be mailed to the applicant, the landlord must mail the refund check
3-24 to the applicant at the address furnished by the applicant.
3-25 (c) If the date of required notice of acceptance or required
3-26 refund of an application deposit is a Saturday, Sunday, or state or
3-27 federal holiday, the required date shall be extended to the end of
4-1 the next day following the Saturday, Sunday, or holiday.
4-2 Sec. 92.334. LIABILITY OF LANDLORD. A landlord who in bad
4-3 faith fails to refund an application deposit in violation of this
4-4 subchapter is liable for an amount equal to the sum of $100, three
4-5 times the amount of the application deposit, and the applicant's
4-6 reasonable attorney's fees in a suit to recover the deposit.
4-7 SECTION 6. (a) This Act takes effect January 1, 1996. The
4-8 change in law made by this Act applies only to security deposit
4-9 funds and application deposit funds or other funds received from
4-10 tenants and prospective tenants on or after the effective date of
4-11 this Act.
4-12 (b) For purposes of Subchapter H, Chapter 92, Property Code,
4-13 as added by this Act, a landlord who accepts funds from a
4-14 prospective tenant and has not rejected the applicant as a tenant
4-15 before the effective date of this Act is presumed to have rejected
4-16 the applicant as a tenant if the landlord does not accept the
4-17 applicant as a tenant before the seventh day after the effective
4-18 date of this Act.
4-19 SECTION 7. The importance of this legislation and the
4-20 crowded condition of the calendars in both houses create an
4-21 emergency and an imperative public necessity that the
4-22 constitutional rule requiring bills to be read on three several
4-23 days in each house be suspended, and this rule is hereby suspended.