74R12060 MJW-F
By Ehrhardt, Coleman, Maxey, Naishtat, H.B. No. 3028
et al.
Substitute the following for H.B. No. 3028:
By Giddings C.S.H.B. No. 3028
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; providing
1-4 a civil penalty.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 92.102, Property Code, is amended to read
1-7 as follows:
1-8 Sec. 92.102. SECURITY DEPOSIT. (a) A security deposit is
1-9 any advance of money, other than a rental application deposit or an
1-10 advance payment of rent, that is intended primarily to secure
1-11 performance under a lease of a dwelling that has been entered into
1-12 by a landlord and a tenant.
1-13 (b) A tenant's security deposit remains the property of the
1-14 tenant to the extent that the landlord, in good faith, has not
1-15 deducted or withdrawn all or a portion of the security deposit, as
1-16 authorized by law, during the lease term or after the date of
1-17 surrender of the dwelling by the tenant to the landlord.
1-18 (c) The landlord holds the security deposit in trust as a
1-19 fiduciary on behalf of the tenant.
1-20 SECTION 2. Subchapter C, Chapter 92, Property Code, is
1-21 amended by adding Section 92.1021 to read as follows:
1-22 Sec. 92.1021. PROTECTION OF SECURITY DEPOSIT. (a) A
1-23 landlord may not commingle a tenant's security deposit with assets
1-24 or other funds of the landlord. The landlord may commingle the
2-1 security deposits of multiple tenants.
2-2 (b) The landlord shall maintain the security deposit in a
2-3 manner that:
2-4 (1) protects the funds from the claim of a creditor of
2-5 the landlord, including a foreclosing mortgagee or a trustee in
2-6 bankruptcy; and
2-7 (2) allows the immediate transfer of the security
2-8 deposit to a subsequent owner of the dwelling.
2-9 SECTION 3. Section 92.103(c), Property Code, is amended to
2-10 read as follows:
2-11 (c) The tenant's claim to the security deposit takes
2-12 priority over the claim of any creditor of the landlord, including
2-13 <except> a trustee in bankruptcy.
2-14 SECTION 4. Subchapter C, Chapter 92, Property Code, is
2-15 amended by adding Section 92.1041 to read as follows:
2-16 Sec. 92.1041. PRESUMPTION OF REFUND OR ACCOUNTING. A
2-17 landlord is presumed to have refunded a security deposit or made an
2-18 accounting of security deposit deductions if, on or before the date
2-19 required under this subchapter, the refund or accounting is placed
2-20 in the United States mail and postmarked on or before the required
2-21 date.
2-22 SECTION 5. Section 92.109, Property Code, is amended by
2-23 adding Subsection (e) to read as follows:
2-24 (e) A landlord who violates Section 92.1021:
2-25 (1) forfeits the right to withhold any portion of the
2-26 security deposit;
2-27 (2) is liable to the tenant for actual damages, a
3-1 civil penalty in an amount equal to the amount of the security
3-2 deposit, court costs, and reasonable attorney's fees in a suit to
3-3 recover the deposit; and
3-4 (3) may be enjoined from future violations in a suit
3-5 brought by the tenant.
3-6 SECTION 6. Chapter 92, Property Code, is amended by adding
3-7 Subchapter H to read as follows:
3-8 SUBCHAPTER H. RENTAL APPLICATION DEPOSITS
3-9 Sec. 92.331. DEFINITIONS. For purposes of this subchapter:
3-10 (1) "Application deposit" means a sum of money which
3-11 is given to the landlord in connection with a rental application
3-12 and which is refundable to the applicant if the applicant is
3-13 rejected as a tenant.
3-14 (2) "Applicant" or "rental applicant" means a person
3-15 who makes an application to a landlord for rental of a dwelling.
3-16 (3) "Co-applicant" means a person who makes an
3-17 application for rental of a dwelling with other applicants and who
3-18 plans to live in the dwelling with other applicants.
3-19 (4) "Deposited" means deposited in an account of the
3-20 landlord or the landlord's agent, in a bank or other financial
3-21 institution.
3-22 (5) "Landlord" means a prospective landlord to whom a
3-23 person makes application for rental of a dwelling.
3-24 (6) "Required date" means the required date for any
3-25 acceptance of the applicant under Section 92.332 or the required
3-26 date for refund of an application deposit under Section 92.333, as
3-27 applicable.
4-1 Sec. 92.332. REJECTION OF APPLICANT. (a) The applicant is
4-2 deemed rejected by the landlord if the landlord does not give
4-3 notice of acceptance of the applicant on or before the seventh day
4-4 after the:
4-5 (1) date the applicant submits a completed rental
4-6 application to the landlord on an application form furnished by the
4-7 landlord; or
4-8 (2) date the landlord accepts an application deposit
4-9 if the landlord does not furnish the applicant an application form.
4-10 (b) A landlord's rejection of one co-applicant shall be
4-11 deemed as a rejection of all co-applicants.
4-12 Sec. 92.333. REFUND OF APPLICATION DEPOSIT. (a) A landlord
4-13 must return an applicant's application deposit to the applicant on
4-14 or before the first day after the applicant is rejected if:
4-15 (1) the landlord has not deposited the applicant's
4-16 check or money order prior to the date of rejection; and
4-17 (2) the applicant's application deposit was by regular
4-18 check, cashier's check, certified check, or money order.
4-19 (b) A landlord must refund an applicant's application
4-20 deposit to the applicant on or before the seventh day after the
4-21 applicant is rejected if the applicant's application deposit was in
4-22 cash.
4-23 (c) Unless otherwise agreed in writing by a landlord and a
4-24 rental applicant, the landlord must refund the applicant's
4-25 application deposit to the applicant on or before the 14th day
4-26 after the applicant is rejected if:
4-27 (1) the application deposit was by regular check,
5-1 cashier's check, certified check, or money order; and
5-2 (2) the application deposit was deposited prior to the
5-3 date of rejection.
5-4 (d) The time period for refunding an application deposit of
5-5 a rejected applicant under this section, as agreed to by the
5-6 landlord and the applicant, may not be for a period longer than 30
5-7 days.
5-8 Sec. 92.334. PROCEDURES FOR NOTICE OR REFUND. (a) Except
5-9 as provided in Subsection (c), a landlord is presumed to have given
5-10 notice of an applicant's acceptance or rejection if the notice is
5-11 by:
5-12 (1) telephone to the applicant, co-applicant, or a
5-13 person living with the applicant or co-applicant on or before the
5-14 required date; or
5-15 (2) United States mail, addressed to the applicant and
5-16 postmarked on or before the required date.
5-17 (b) Except as provided in Subsection (c), a landlord is
5-18 presumed to have refunded an application deposit on or before the
5-19 required date if:
5-20 (1) the landlord's refund check or refund cash is made
5-21 available to the rental applicant during the landlord's normal
5-22 office hours in the rental office where the application deposit was
5-23 given to the landlord; or
5-24 (2) the landlord's refund check is mailed to the
5-25 rental applicant.
5-26 (c) If a rental applicant requests that any acceptance of
5-27 the applicant or any refund of the applicant's application deposit
6-1 be mailed to the applicant, the landlord must mail the refund check
6-2 to the applicant at the address furnished by the applicant, on or
6-3 before the required date.
6-4 (d) If the date of required notice of acceptance or required
6-5 refund of an application deposit is a Saturday, Sunday, or state or
6-6 federal holiday, the required date shall be extended to the end of
6-7 the next day following the Saturday, Sunday, or holiday.
6-8 Sec. 92.335. LIABILITY OF LANDLORD. (a) A landlord who in
6-9 bad faith fails to refund an application deposit in violation of
6-10 this subchapter is liable for an amount equal to the sum of $100;
6-11 three times the amount of the application deposit; and the
6-12 applicant's reasonable attorney's fees in a suit to recover the
6-13 deposit.
6-14 (b) A landlord who fails to refund an application deposit on
6-15 or before the required date is presumed to have acted in bad faith.
6-16 SECTION 7. (a) This Act takes effect January 1, 1996. The
6-17 change in law made by this Act applies only to security deposit
6-18 funds and application deposit funds or other funds received from
6-19 tenants and prospective tenants on or after the effective date of
6-20 this Act.
6-21 (b) For purposes of Subchapter H, Chapter 92, Property Code,
6-22 as added by this Act, a landlord who accepts funds from a
6-23 prospective tenant and has not rejected the applicant as a tenant
6-24 before the effective date of this Act is presumed to have rejected
6-25 the applicant as a tenant if the landlord does not accept the
6-26 applicant as a tenant before the seventh day after the effective
6-27 date of this Act.
7-1 SECTION 8. The importance of this legislation and the
7-2 crowded condition of the calendars in both houses create an
7-3 emergency and an imperative public necessity that the
7-4 constitutional rule requiring bills to be read on three several
7-5 days in each house be suspended, and this rule is hereby suspended.