1-1  By:  Erhardt, et al. (Senate Sponsor - Gallegos)      H.B. No. 3028
    1-2        (In the Senate - Received from the House May 15, 1995;
    1-3  May 17, 1995, read first time and referred to Committee on State
    1-4  Affairs; May 22, 1995, reported favorably by the following vote:
    1-5  Yeas 10, Nays 0; May 22, 1995, sent to printer.)
    1-6                         A BILL TO BE ENTITLED
    1-7                                AN ACT
    1-8  relating to security deposits and application deposits provided by
    1-9  residential tenants and prospective residential tenants and lease
   1-10  obligations of certain successor landlords; providing a civil
   1-11  penalty.
   1-12        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
   1-13        SECTION 1.  Section 92.101, Property Code, is amended to read
   1-14  as follows:
   1-15        Sec. 92.101.  APPLICATION.  This subchapter applies to all
   1-16  residential leases <a lease executed or entered into after
   1-17  September 1, 1973>.
   1-18        SECTION 2.  Section 92.102, Property Code, is amended to read
   1-19  as follows:
   1-20        Sec. 92.102.  SECURITY DEPOSIT.  A security deposit is any
   1-21  advance of money, other than a rental application deposit or an
   1-22  advance payment of rent, that is intended primarily to secure
   1-23  performance under a lease of a dwelling that has been entered into
   1-24  by a landlord and a tenant.
   1-25        SECTION 3.  Section 92.103, Property Code, is amended by
   1-26  amending Subsection (c) and adding Subsection (d) to read as
   1-27  follows:
   1-28        (c)  The tenant's claim to the security deposit takes
   1-29  priority over the claim of any creditor of the landlord, including
   1-30  <except> a trustee in bankruptcy.
   1-31        (d)  If a dwelling occupied by a tenant is purchased at a
   1-32  foreclosure or tax sale or is purchased from a bankruptcy trustee
   1-33  and if the new owner accepts rent from the tenant or honors any
   1-34  landlord obligation under the lease after the purchase, the new
   1-35  owner is liable for performing all landlord obligations under the
   1-36  lease, including the return of any security deposit, less lawful
   1-37  deductions.
   1-38        SECTION 4.  Subchapter C, Chapter 92, Property Code, is
   1-39  amended by adding Section 92.1041 to read as follows:
   1-40        Sec. 92.1041.  PRESUMPTION OF REFUND OR ACCOUNTING.  A
   1-41  landlord is presumed to have refunded a security deposit or made an
   1-42  accounting of security deposit deductions if, on or before the date
   1-43  required under this subchapter, the refund or accounting is placed
   1-44  in the United States mail and postmarked on or before the required
   1-45  date.
   1-46        SECTION 5.  Chapter 92, Property Code, is amended by adding
   1-47  Subchapter H to read as follows:
   1-48              SUBCHAPTER H.  RENTAL APPLICATION DEPOSITS
   1-49        Sec. 92.331.  DEFINITIONS.  For purposes of this subchapter:
   1-50              (1)  "Application deposit" means a sum of money that is
   1-51  given to the landlord in connection with a rental application and
   1-52  that is refundable to the applicant if the applicant is rejected as
   1-53  a tenant.
   1-54              (2)  "Applicant" or "rental applicant" means a person
   1-55  who makes an application to a landlord for rental of a dwelling.
   1-56              (3)  "Co-applicant" means a person who makes an
   1-57  application for rental of a dwelling with other applicants and who
   1-58  plans to live in the dwelling with other applicants.
   1-59              (4)  "Deposited" means deposited in an account of the
   1-60  landlord or the landlord's agent in a bank or other financial
   1-61  institution.
   1-62              (5)  "Landlord" means a prospective landlord to whom a
   1-63  person makes application for rental of a dwelling.
   1-64              (6)  "Required date" means the required date for any
   1-65  acceptance of the applicant under Section 92.332.
   1-66        Sec. 92.332.  REJECTION OF APPLICANT.  (a)  The applicant is
   1-67  deemed rejected by the landlord if the landlord does not give
   1-68  notice of acceptance of the applicant on or before the seventh day
    2-1  after the:
    2-2              (1)  date the applicant submits a completed rental
    2-3  application to the landlord on an application form furnished by the
    2-4  landlord; or
    2-5              (2)  date the landlord accepts an application deposit
    2-6  if the landlord does not furnish the applicant an application form.
    2-7        (b)  A landlord's rejection of one co-applicant shall be
    2-8  deemed as a rejection of all co-applicants.
    2-9        Sec. 92.333.  PROCEDURES FOR NOTICE OR REFUND.  (a)  Except
   2-10  as provided in Subsection (c), a landlord is presumed to have given
   2-11  notice of an applicant's acceptance or rejection if the notice is
   2-12  by:
   2-13              (1)  telephone to the applicant, co-applicant, or a
   2-14  person living with the applicant or co-applicant on or before the
   2-15  required date; or
   2-16              (2)  United States mail, addressed to the applicant and
   2-17  postmarked on or before the required date.
   2-18        (b)  Except as provided in Subsection (c), a landlord is
   2-19  presumed to have refunded an application deposit on or before the
   2-20  required date if:
   2-21              (1)  the landlord's refund check or refund cash is made
   2-22  available to the rental applicant during the landlord's normal
   2-23  office hours in the rental office where the application deposit was
   2-24  given to the landlord; or
   2-25              (2)  the landlord's refund check is mailed to the
   2-26  rental applicant.
   2-27        (c)  If a rental applicant requests that any acceptance of
   2-28  the applicant or any refund of the applicant's application deposit
   2-29  be mailed to the applicant, the landlord must mail the refund check
   2-30  to the applicant at the address furnished by the applicant, on or
   2-31  before the required date.
   2-32        (d)  If the date of required notice of acceptance or required
   2-33  refund of an application deposit is a Saturday, Sunday, or state or
   2-34  federal holiday, the required date shall be extended to the end of
   2-35  the next day following the Saturday, Sunday, or holiday.
   2-36        Sec. 92.334.  LIABILITY OF LANDLORD.  (a)  A landlord who in
   2-37  bad faith fails to refund an application deposit in violation of
   2-38  this subchapter is liable for an amount equal to the sum of $100,
   2-39  three times the amount of the application deposit, and the
   2-40  applicant's reasonable attorney's fees in a suit to recover the
   2-41  deposit.
   2-42        (b)  A landlord who fails to refund an application deposit on
   2-43  or before the required date is presumed to have acted in bad faith.
   2-44        SECTION 6.  (a)  This Act takes effect January 1, 1996.  The
   2-45  change in law made by this Act applies only to security deposit
   2-46  funds and application deposit funds or other funds received from
   2-47  tenants and prospective tenants on or after the effective date of
   2-48  this Act.
   2-49        (b)  For purposes of Subchapter H, Chapter 92, Property Code,
   2-50  as added by this Act, a landlord who accepts funds from a
   2-51  prospective tenant and has not rejected the applicant as a tenant
   2-52  before the effective date of this Act is presumed to have rejected
   2-53  the applicant as a tenant if the landlord does not accept the
   2-54  applicant as a tenant before the seventh day after the effective
   2-55  date of this Act.
   2-56        SECTION 7.  The importance of this legislation and the
   2-57  crowded condition of the calendars in both houses create an
   2-58  emergency and an imperative public necessity that the
   2-59  constitutional rule requiring bills to be read on three several
   2-60  days in each house be suspended, and this rule is hereby suspended.
   2-61                               * * * * *