By Ehrhardt, Coleman, Maxey, Naishtat H.B. No. 3028
74R6570 PAM-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to security deposits provided by residential tenants and
1-3 prospective residential tenants.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subchapter C, Chapter 92, Property Code, is
1-6 amended by adding Sections 92.1021 and 92.1022 to read as follows:
1-7 Sec. 92.1021. PLACEMENT IN ESCROW. (a) Except as provided
1-8 by Subsection (f), a landlord may not commingle a tenant's security
1-9 deposit with assets of the landlord. The landlord may commingle
1-10 the security deposits of multiple tenants.
1-11 (b) The landlord shall promptly deposit a tenant's security
1-12 deposit in an interest bearing trust account in a bank or with a
1-13 licensed escrow agent.
1-14 (c) The bank or escrow agent shall promptly transfer accrued
1-15 interest from the security deposit account directly to the housing
1-16 trust fund administered by the Texas Department of Housing and
1-17 Community Affairs.
1-18 (d) The landlord shall maintain the security deposit account
1-19 in a manner that:
1-20 (1) protects the funds from the claim of a creditor of
1-21 the landlord, including a foreclosing mortgagee or a trustee in
1-22 bankruptcy;
1-23 (2) allows the immediate transfer of title to the
1-24 account to a subsequent owner of the premises; and
2-1 (3) requires the bank or escrow agent to transfer
2-2 accrued interest from the account as provided by Subsection (c).
2-3 (e) The landlord shall notify the tenant and the Texas
2-4 Department of Housing and Community Affairs in writing of the
2-5 location, terms, and account number of the security deposit account
2-6 or any change in the location, terms, or account number of the
2-7 security deposit account not later than the fifth business day
2-8 after the date the security deposit funds are received by the
2-9 landlord or the location, terms, or account number is changed.
2-10 (f) This section does not apply to a landlord who owns no
2-11 more than two rental properties and does not use a management
2-12 company or managing agent to manage the landlord's rental
2-13 properties.
2-14 Sec. 92.1022. DEPOSITS OF APPLICANTS. (a) Except as
2-15 provided by this subsection, a landlord who accepts a security
2-16 deposit or other funds from a prospective tenant and subsequently
2-17 rejects the applicant as a tenant shall return the funds paid by
2-18 the applicant not later than the fifth business day after the date
2-19 the landlord notifies the applicant of the rejection. The landlord
2-20 may retain a reasonable sum, not to exceed $25, to cover
2-21 administrative costs of making a credit determination.
2-22 (b) Unless the landlord and the applicant agree otherwise in
2-23 writing, a landlord is presumed to have rejected an applicant as a
2-24 tenant if the landlord does not accept the applicant as a tenant
2-25 before the sixth business day after the date the applicant submits
2-26 a completed application to the landlord.
2-27 (c) Funds shall be returned to an applicant in the same
3-1 manner provided by Subsection (a) if the applicant cancels the
3-2 application before the sixth business day after the date the
3-3 applicant submits the application to the landlord.
3-4 SECTION 2. Section 92.109, Property Code, is amended by
3-5 adding Subsections (e) and (f) to read as follows:
3-6 (e) A landlord who violates Section 92.1021:
3-7 (1) forfeits the right to withhold any portion of the
3-8 security deposit or to bring suit against the tenant for damages to
3-9 the premises;
3-10 (2) is liable to the tenant or a governmental entity
3-11 or civic organization acting on behalf of the tenant for actual
3-12 damages, a civil penalty in an amount equal to the amount of the
3-13 security deposit, court costs, and reasonable attorney's fees in a
3-14 suit to recover the deposit; and
3-15 (3) may be enjoined from future violations in a suit
3-16 brought by the tenant or a governmental entity or civic
3-17 organization acting on behalf of the tenant.
3-18 (f) A landlord who violates Section 92.1022:
3-19 (1) forfeits the right to retain any portion of the
3-20 security deposit or other funds advanced by the applicant to the
3-21 landlord; and
3-22 (2) is liable to the applicant for actual damages, a
3-23 civil penalty of $500, court costs, and reasonable attorney's fees
3-24 in a suit to recover the funds.
3-25 SECTION 3. (a) This Act takes effect September 1, 1995.
3-26 The change in law made by this Act applies to security deposit
3-27 funds or other funds received from tenants and prospective tenants
4-1 before, on, or after the effective date of this Act.
4-2 (b) For purposes of Section 92.1021, Property Code, as added
4-3 by this Act, a landlord shall deposit security deposit funds
4-4 received before the effective date of this Act and notify a tenant
4-5 in writing of the location, terms, and account number of the
4-6 security deposit account not later than the fifth business day
4-7 after the effective date of this Act.
4-8 (c) For purposes of Section 92.1022, Property Code, as added
4-9 by this Act, a landlord who accepts funds from a prospective tenant
4-10 and has not rejected the applicant as a tenant before the effective
4-11 date of this Act is presumed to have rejected the applicant as a
4-12 tenant if the landlord does not accept the applicant as a tenant
4-13 before the sixth day after the effective date of this Act.
4-14 SECTION 4. The importance of this legislation and the
4-15 crowded condition of the calendars in both houses create an
4-16 emergency and an imperative public necessity that the
4-17 constitutional rule requiring bills to be read on three several
4-18 days in each house be suspended, and this rule is hereby suspended.