1-1 AN ACT
1-2 relating to refund or retention by a landlord of a security deposit
1-3 under a commercial lease.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 93, Property Code, is amended by adding
1-6 Sections 93.004-93.011 to read as follows:
1-7 Sec. 93.004. SECURITY DEPOSIT. A security deposit is any
1-8 advance of money, other than a rental application deposit or an
1-9 advance payment of rent, that is intended primarily to secure
1-10 performance under a lease of commercial rental property.
1-11 Sec. 93.005. OBLIGATION TO REFUND SECURITY DEPOSIT. (a) The
1-12 landlord shall refund the security deposit to the tenant not later
1-13 than the 60th day after the tenant surrenders the premises and
1-14 provides notice of the tenant's forwarding address under Section
1-15 93.009.
1-16 (b) The tenant's claim to the security deposit takes
1-17 priority over the claim of any creditor of the landlord, including
1-18 a trustee in bankruptcy.
1-19 Sec. 93.006. RETENTION OF SECURITY DEPOSIT; ACCOUNTING. (a)
1-20 Before returning a security deposit, the landlord may deduct from
1-21 the deposit damages and charges for which the tenant is legally
1-22 liable under the lease or damages and charges that result from a
1-23 breach of the lease.
1-24 (b) The landlord may not retain any portion of a security
2-1 deposit to cover normal wear and tear. In this subsection, "normal
2-2 wear and tear" means deterioration that results from the intended
2-3 use of the commercial premises, including breakage or malfunction
2-4 due to age or deteriorated condition, but the term does not include
2-5 deterioration that results from negligence, carelessness, accident,
2-6 or abuse of the premises, equipment, or chattels by the tenant or
2-7 by a guest or invitee of the tenant.
2-8 (c) If the landlord retains all or part of a security
2-9 deposit under this section, the landlord shall give to the tenant
2-10 the balance of the security deposit, if any, together with a
2-11 written description and itemized list of all deductions. The
2-12 landlord is not required to give the tenant a description and
2-13 itemized list of deductions if:
2-14 (1) the tenant owes rent when the tenant surrenders
2-15 possession of the premises; and
2-16 (2) no controversy exists concerning the amount of
2-17 rent owed.
2-18 Sec. 93.007. CESSATION OF OWNER'S INTEREST. (a) If the
2-19 owner's interest in the premises is terminated by sale, assignment,
2-20 death, appointment of a receiver, bankruptcy, or otherwise, the new
2-21 owner is liable for the return of the security deposit according to
2-22 this chapter from the date title to the premises is acquired,
2-23 regardless of whether an acknowledgement is given to the tenant
2-24 under Subsection (b).
2-25 (b) The person who no longer owns an interest in the rental
2-26 premises remains liable for a security deposit received while the
2-27 person was the owner until the new owner delivers to the tenant a
3-1 signed statement acknowledging that the new owner has received and
3-2 is responsible for the tenant's security deposit and specifying the
3-3 exact dollar amount of the deposit. The amount of the security
3-4 deposit is the greater of:
3-5 (1) the amount provided in the tenant's lease; or
3-6 (2) the amount provided in an estoppel certificate
3-7 prepared by the owner at the time the lease was executed or
3-8 prepared by the new owner at the time the commercial property is
3-9 transferred.
3-10 (c) Subsection (a) does not apply to a real estate mortgage
3-11 lienholder who acquires title by foreclosure.
3-12 Sec. 93.008. RECORDS. The landlord shall keep accurate
3-13 records of all security deposits.
3-14 Sec. 93.009. TENANT'S FORWARDING ADDRESS. (a) The landlord
3-15 is not obligated to return a tenant's security deposit or give the
3-16 tenant a written description of damages and charges until the
3-17 tenant gives the landlord a written statement of the tenant's
3-18 forwarding address for the purpose of refunding the security
3-19 deposit.
3-20 (b) The tenant does not forfeit the right to a refund of the
3-21 security deposit or the right to receive a description of damages
3-22 and charges for failing to give a forwarding address to the
3-23 landlord.
3-24 Sec. 93.010. LIABILITY FOR WITHHOLDING LAST MONTH'S RENT.
3-25 (a) The tenant may not withhold payment of any portion of the last
3-26 month's rent on grounds that the security deposit is security for
3-27 unpaid rent.
4-1 (b) A tenant who violates this section is presumed to have
4-2 acted in bad faith. A tenant who in bad faith violates this
4-3 section is liable to the landlord for an amount equal to three
4-4 times the rent wrongfully withheld and the landlord's reasonable
4-5 attorney's fees in a suit to recover the rent.
4-6 Sec. 93.011. LIABILITY OF LANDLORD. (a) A landlord who in
4-7 bad faith retains a security deposit in violation of this chapter
4-8 is liable for an amount equal to the sum of $100, three times the
4-9 portion of the deposit wrongfully withheld, and the tenant's
4-10 reasonable attorney's fees incurred in a suit to recover the
4-11 deposit after the period prescribed for returning the deposit
4-12 expires.
4-13 (b) A landlord who in bad faith does not provide a written
4-14 description and itemized list of damages and charges in violation
4-15 of this chapter:
4-16 (1) forfeits the right to withhold any portion of the
4-17 security deposit or to bring suit against the tenant for damages to
4-18 the premises; and
4-19 (2) is liable for the tenant's reasonable attorney's
4-20 fees in a suit to recover the deposit.
4-21 (c) In a suit brought by a tenant under this chapter, the
4-22 landlord has the burden of proving that the retention of any
4-23 portion of the security deposit was reasonable.
4-24 (d) A landlord who fails to return a security deposit or to
4-25 provide a written description and itemized list of deductions on or
4-26 before the 30th day after the date the tenant surrenders possession
4-27 is presumed to have acted in bad faith.
5-1 SECTION 2. This Act applies only to a lease of commercial
5-2 rental property entered into or renewed on or after the effective
5-3 date of this Act.
5-4 SECTION 3. This Act takes effect September 1, 2001.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 2803 was passed by the House on
May 11, 2001, by a non-record vote.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 2803 was passed by the Senate on
May 22, 2001, by the following vote: Yeas 30, Nays 0, 1 present,
not voting.
_______________________________
Secretary of the Senate
APPROVED: __________________________
Date
__________________________
Governor