GEC H.B. 2291 75(R) BILL ANALYSIS BUSINESS & INDUSTRY H.B. 2291 By: Naishtat 4-18-97 Committee Report (Unamended) BACKGROUND Prior to a recent Texas Supreme Court decision, a landlord did not have any duty to mitigate (minimize) damages arising from a tenant's failure to complete the full term of a lease agreement. Tenants often face situations, such as job transfers, that force them to vacate their homes before the lease is up. Landlords were able to collect their rents without any obligation to attempt to locate another tenant to pay rent in their stead. In Austin Hill Country Realty v. Palisades Plaza, 40 Tex. Sup. Ct. J. 228 (Jan. 10, 1997), the Texas Supreme Court recognized the unfair results of such scheme and issued a written opinion requiring landlords to attempt to mitigate damages. This application is not a stretch of existing law because a duty to mitigate already exists for other contractual relationships. This bill would merely codify the Texas Supreme Court's ruling. PURPOSE The bill requires a landlord to attempt to lessen its damages if the tenant abandons the leased premises in violation of the lease, and would not allow a landlord to limit this duty in the lease agreement. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS Section 1. Adds Section 91.006 to Property Code: (a) Requires a landlord to mitigate damages if a tenant abandons the lease premises in violation of the lease. (b) Eliminates a landlord's ability to waive this duty in the lease agreement. Section 2. The Act applies only to leases entered into on or after the effective date of the Act. Section 3. Effective date. Section 4. Emergency clause.