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 * * * * *