1-1     By:  Uresti, Reyna of Bexar                           H.B. No. 2803
 1-2          (Senate Sponsor - Van de Putte)
 1-3           (In the Senate - Received from the House May 11, 2001;
 1-4     May 11, 2001, read first time and referred to Committee on Business
 1-5     and Commerce; May 11, 2001, reported favorably by the following
 1-6     vote:  Yeas 4, Nays 0; May 11, 2001, sent to printer.)
 1-7                            A BILL TO BE ENTITLED
 1-8                                   AN ACT
 1-9     relating to refund or retention by a landlord of a security deposit
1-10     under a commercial lease.
1-11           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12           SECTION 1. Chapter 93, Property Code, is amended by adding
1-13     Sections 93.004-93.011 to read as follows:
1-14           Sec. 93.004.  SECURITY DEPOSIT. A security deposit is any
1-15     advance of money, other than a rental application deposit or an
1-16     advance payment of rent, that is intended primarily to secure
1-17     performance under a lease of commercial rental property.
1-18           Sec. 93.005.  OBLIGATION TO REFUND SECURITY DEPOSIT. (a)  The
1-19     landlord shall refund the security deposit to the tenant not later
1-20     than the 60th day after the tenant surrenders the premises and
1-21     provides notice of the tenant's forwarding address under Section
1-22     93.009.
1-23           (b)  The tenant's claim to the security deposit takes
1-24     priority over the claim of any creditor of the landlord, including
1-25     a trustee in bankruptcy.
1-26           Sec. 93.006.  RETENTION OF SECURITY DEPOSIT; ACCOUNTING. (a)
1-27     Before returning a security deposit, the landlord may deduct from
1-28     the deposit damages and charges for which the tenant is legally
1-29     liable under the lease or damages and charges that result from a
1-30     breach of the lease.
1-31           (b)  The landlord may not retain any portion of a security
1-32     deposit to cover normal wear and tear.  In this subsection, "normal
1-33     wear and tear" means deterioration that results from the intended
1-34     use of the commercial premises, including breakage or malfunction
1-35     due to age or deteriorated condition, but the term does not include
1-36     deterioration that results from negligence, carelessness, accident,
1-37     or abuse of the premises, equipment, or chattels by the tenant or
1-38     by a guest or invitee of the tenant.
1-39           (c)  If the landlord retains all or part of a security
1-40     deposit under this section, the landlord shall give to the tenant
1-41     the balance of the security deposit, if any, together with a
1-42     written description and itemized list of all deductions.  The
1-43     landlord is not required to give the tenant a description and
1-44     itemized list of deductions if:
1-45                 (1)  the tenant owes rent when the tenant surrenders
1-46     possession of the premises; and
1-47                 (2)  no controversy exists concerning the amount of
1-48     rent owed.
1-49           Sec. 93.007.  CESSATION OF OWNER'S INTEREST. (a)  If the
1-50     owner's interest in the premises is terminated by sale, assignment,
1-51     death, appointment of a receiver, bankruptcy, or otherwise, the new
1-52     owner is liable for the return of the security deposit according to
1-53     this chapter from the date title to the premises is acquired,
1-54     regardless of whether an acknowledgement is given to the tenant
1-55     under Subsection (b).
1-56           (b)  The person who no longer owns an interest in the rental
1-57     premises remains liable for a security deposit received while the
1-58     person was the owner until the new owner delivers to the tenant a
1-59     signed statement acknowledging that the new owner has received and
1-60     is responsible for the tenant's security deposit and specifying the
1-61     exact dollar amount of the deposit.  The amount of the security
1-62     deposit is the greater of:
1-63                 (1)  the amount provided in the tenant's lease; or
1-64                 (2)  the amount provided in an estoppel certificate
 2-1     prepared by the owner at the time the lease was executed or
 2-2     prepared by the new owner at the time the commercial property is
 2-3     transferred.
 2-4           (c)  Subsection (a) does not apply to a real estate mortgage
 2-5     lienholder who acquires title by foreclosure.
 2-6           Sec. 93.008.  RECORDS. The landlord shall keep accurate
 2-7     records of all security deposits.
 2-8           Sec. 93.009.  TENANT'S FORWARDING ADDRESS. (a)  The landlord
 2-9     is not obligated to return a tenant's security deposit or give the
2-10     tenant a written description of damages and charges until the
2-11     tenant gives the landlord a written statement of the tenant's
2-12     forwarding address for the purpose of refunding the security
2-13     deposit.
2-14           (b)  The tenant does not forfeit the right to a refund of the
2-15     security deposit or the right to receive a description of damages
2-16     and charges for failing to give a forwarding address to the
2-17     landlord.
2-18           Sec. 93.010.  LIABILITY FOR WITHHOLDING LAST MONTH'S RENT.
2-19     (a)  The tenant may not withhold payment of any portion of the last
2-20     month's rent on grounds that the security deposit is security for
2-21     unpaid rent.
2-22           (b)  A tenant who violates this section is presumed to have
2-23     acted in bad faith.  A tenant who in bad faith violates this
2-24     section is liable to the landlord for an amount equal to three
2-25     times the rent wrongfully withheld and the landlord's reasonable
2-26     attorney's fees in a suit to recover the rent.
2-27           Sec. 93.011.  LIABILITY OF LANDLORD. (a)  A landlord who in
2-28     bad faith retains a security deposit in violation of this chapter
2-29     is liable for an amount equal to the sum of $100, three times the
2-30     portion of the deposit wrongfully withheld, and the tenant's
2-31     reasonable attorney's fees incurred in a suit to recover the
2-32     deposit after the period prescribed for returning the deposit
2-33     expires.
2-34           (b)  A landlord who in bad faith does not provide a written
2-35     description and itemized list of damages and charges in violation
2-36     of this chapter:
2-37                 (1)  forfeits the right to withhold any portion of the
2-38     security deposit or to bring suit against the tenant for damages to
2-39     the premises; and
2-40                 (2)  is liable for the tenant's reasonable attorney's
2-41     fees in a suit to recover the deposit.
2-42           (c)  In a suit brought by a tenant under this chapter, the
2-43     landlord has the burden of proving that the retention of any
2-44     portion of the security deposit was reasonable.
2-45           (d)  A landlord who fails to return a security deposit or to
2-46     provide a written description and itemized list of deductions on or
2-47     before the 30th day after the date the tenant surrenders possession
2-48     is presumed to have acted in bad faith.
2-49           SECTION 2. This Act applies only to a lease of commercial
2-50     rental property entered into or renewed on or after the effective
2-51     date of this Act.
2-52           SECTION 3. This Act takes effect September 1, 2001.
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