HBA-MPM H.B. 2911 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2911
By: Reyna, Arthur
Business & Industry
4/8/2001
Introduced



BACKGROUND AND PURPOSE 

Current law contains provisions which create a liability for a landlord who
fails to return a security deposit to a tenant under a residential lease.
However, there are no similar provisions for a commercial tenancy. House
Bill 2911 requires a landlord to return a security deposit to a tenant
under a commercial lease within a certain time frame after the tenant no
longer occupies the property. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

House Bill 2911 amends the Property Code to require a landlord to refund a
security deposit under a commercial lease to a tenant on or before the 30th
day after the tenant surrenders the premises, unless the tenant fails to
provide a forwarding address.  A requirement that a tenant give advance
notice of surrender as a condition for the refund of a security deposit is
effective only if the requirement is underlined or printed in conspicuous
bold print in the lease.  The bill specifies that a tenant's claim to the
security deposit takes priority over the claim of any creditor of the
landlord, including a trustee in bankruptcy. 

The bill authorizes a landlord before returning the deposit to deduct
damages and charges for which the tenant is legally liable under the lease
or that result from a breach of the lease.  The landlord is required to
provide the tenant with a written description and itemized list of all
deductions.  The landlord is not required to supply this information if the
tenant still owes rent when the premises are surrendered and no controversy
exists concerning the amount of rent owed. 
 
H.B. 2911 provides that if the owner's interest in the premises is
terminated, the new owner is liable for the return of a security deposit to
a tenant unless the property was acquired by a real estate mortgage
lienholder by foreclosure.  The person who no longer owns an interest in
the premises remains liable for a security deposit received while still in
ownership of the property until the new owner delivers to the tenant a
statement acknowledging that the new owner has received and is responsible
for the security deposit. The bill provides a method for calculating the
amount of the security deposit and requires a landlord to keep accurate
records of all security deposits. 

H.B. 2911 prohibits a tenant from withholding payment of any portion of the
last month's rent on grounds that the security deposit is security for
unpaid rent.  The bill provides that a tenant who violates this provision
is liable to the landlord for an amount equal to three times the amount of
rent withheld and the landlord's reasonable attorney's fees in a suit to
recover the rent.  The bill specifies that a landlord who wrongfully
withholds a security deposit is liable for an amount equal to the sum of
$100, three times the portion of the deposit withheld, and the tenant's
reasonable attorney's fees incurred in a suit to recover the deposit.  The
bill specifies that a landlord who in bad faith does not provide a written
description of damages and charges forfeits the right to withhold any
portion of a security deposit or to bring suit against a tenant for damages
to the premises and is liable for the tenant's reasonable attorney's fees.
The bill  specifies that the landlord has the burden of proof in a suit
brought by a tenant regarding the wrongful retention of a security deposit.

EFFECTIVE DATE

September 1, 2001.