TEXAS REAL ESTATE LAW 11E Charles J. Jacobus Chapter 18 Landlord and Tenant Relationships For a copy of Landlord – Tenant statutes in Texas go to: www.capitol.state.tx.us Download the following chapters from the Texas Property Code: • • • • • Chapter 24 – Forcible Entry and Detainer (Eviction) Chapter 54 – Landlord’s Liens Chapter 91 – Generally Applicable to Landlords & Tenants Chapter 92 – Residential Tenancies Chapter 93 – Commercial Tenancies The statutes are summarized in this chapter! 2 Landlord and Tenant Relationships • The existence of a landlord and tenant relationship creates a nonfreehold estate, called a leasehold estate referred to as a tenancy. • Tenancy is more than use of the premises, it includes occupancy and possession of the premises superior to the rights of anyone else. • Even the landlord’s rights are limited, both by statute and by case law. • At common law, the landlord was given very high priority in determining rights between the landlord and tenant. • Statutes, however, have given much greater effect to the rights of the tenant in possession of the property. • This chapter will discuss the statutory law and case law relating to landlord and tenant relationships. 3 Tenancies 1. An estate for years. An estate for years has a definite termination date (it may be less than a year in length) and almost necessarily implies the existence of a lease. It has an definite duration. 2. An estate from period to period. Normally includes an estate from month to month, or an estate from year to year, renewable at the option of the parties. It has an indefinite duration. 3. An estate at will. An estate at will is an estate that is terminable at the will of either the lessor or the lessee. It has an indefinite duration. 4. An estate at sufferance. An estate at sufferance is an estate that exists when a person wrongfully continues possession of the land after the termination of his right to possession. 4 Chapter 91 Provisions Generally Applicable to Landlords and Tenants §91.001. Notice for Terminating Certain Tenancies • If there is not a written lease a month-to-month may be terminated by the tenant or landlord giving notice to the other party. • If the rental payments are less than a month apart, the lease terminates once the number of days in the rental payment period have passed after the date notice is given, unless the notice specifies a later date. • If terminated in the middle of a period, the tenant pays pro-rated rent. • This statute does not apply when there is a breach of contract or when the written lease specifies different notice requirements. §91.004. Landlord’s Breach of Lease; Lien • When a tenant is not in default and the landlord “fails to comply in any respect” with the lease, the landlord is liable for any resulting damages. • In seeking recovery, the tenant holds a lien on the rent due under the lease, as well as on the landlord’s nonexempt property. §91.005. Subletting Prohibited • A tenant must obtain the consent of the landlord before renting the leased property to another person. 5 Chapter 92 – Residential Tenancies §92.001. Definitions Here you will find definitions of the following terms: dwelling, landlord , lease, normal wear and tear, premises, and tenant. §92.003. Landlord’s Agent for Service of Process • If the tenant is provided with written notice of the name and address of the company managing the dwelling, then the management company is the landlord’s agent for service. • Otherwise, proper service of process is made directly upon the owner, if the tenant is provided written notice of the owner’s name and business street address. • When the tenant has not received written notice of such names and addresses, then proper agents for service of process include the owner’s management company, the on-site manager, and the rent collector serving the dwelling. §92.005. Attorney’s Fees • The prevailing party may recover court costs and reasonable attorney’s fees from the opposing party; unless for claims relating to property damage, personal injury, or criminal acts. 6 Chapter 92 – Residential Tenancies §92.006. Waiver or Expansion of Duties and Remedies • Certain landlord duties may not be waived by the tenant. • Certain landlord duties may be waived only in limited circumstances. • Certain landlord duties may be enlarged only by written agreement. §92.008. Interruption of Utilities • A tenant’s water, wastewater, and gas service may not be interrupted by the landlord (regardless of which party pays for the services) except in cases of emergency or when required to complete bona fide repairs or construction. • Similarly, a landlord may not interrupt a tenant’s electrical service If the tenant directly pays the utility company for services (except in cases of emergency, repairs, or construction). • However, if a landlord pays for the tenant’s electrical utilities, the landlord may interrupt the tenant’s electrical service under conditions specified by this statute (but service must be restored within two hours once the tenant pays the delinquent electric bill or overdue rent). 7 Chapter 92 – Residential Tenancies §92.0081. Removal of Property and Exclusion of Residential Tenant • A landlord may only remove a door, window, lock, doorknob, and landlord provided furniture and appliances in order to promptly provide bona fide repair or replacement of the property. • The landlord must use formal eviction to prevent a tenant from entering the leased premises, unless such exclusion results from bona fide repairs, construction, or emergency, from removing the abandoned contents of a tenant, or from changing the locks of a tenant delinquent in paying rent (this latter remedy requires compliance with the lease and statutory notice prior to the lockout, as well as specific written notice posted on the tenant’s front door). • The landlord may not change the locks on a dwelling more than once per rental payment period, nor while an occupant is present. • A locked-out tenant must be provided with a key to the changed lock on the dwelling whether or not the delinquent rent is paid. 8 Chapter 92 – Residential Tenancies §92.009. Residential Tenant’s Right of Reentry After Unlawful Lockout • A tenant may recover possession after an illegal lockout by filing a sworn complaint with the justice court, stating the facts under oath. • The court may issue a writ of reentry entitling the tenant to immediate, temporary possession prior to a final hearing. • Landlord must request a hearing within seven days after the date of service; otherwise, the landlord pays the court costs. • Failure to comply with the writ subjects the landlord to contempt of court charges, with potential jail sentencing without bail. §92.010. Occupancy Limits • Except as required by fair housing laws or under temporary (less than one month) waiver for sanctuary from family violence, the maximum number of adults occupying a leasehold is three times the number of bedrooms of the dwelling. §92.011. Cash Rental Payments • Unless a written lease provides that a tenant must pay by check, money order, or other negotiable instrument, a landlord must accept cash. • Landlord must provide tenant a written receipt, with date and amount recorded in a book maintained by the landlord. 9 Chapter 92 – Residential Tenancies §92.016(a). Right to Vacate and Avoid Liability Following Family Violence • A tenant may terminate a lease if a court order is issued to protect the tenant from violence committed by another cotenant or occupant. §92.017. Right to Vacate and Avoid Liability Following Certain Decisions Related to Military Service • A tenant who is a service member or a service member’s dependent may terminate a lease without liability to the landlord if the lease was executed by or on behalf of a person who enlists in the military or receives orders for a permanent change of station (or to deploy with a military unit for a period of 90 days or more). • The tenant must provide written notice of termination and a copy of the relevant military documents. • Termination of the lease becomes effective after approximately one month. • The landlord is required to refund any payments made in advance that cover any rental period after the effective date of the termination. 10 Chapter 92 – Residential Tenancies §92.052. Landlord’s Duty to Repair or Remedy • Diligent efforts to repair or remedy conditions that materially affect the physical health or safety of an ordinary tenant are required of the landlord if the tenant provides notice of the specific condition and the tenant is not delinquent in rent payments. • The tenant’s notice must be written only if the lease is also in writing and specifically requires written notice. • However, the landlord does not have such a duty if the condition (other than normal wear and tear) was caused by: the tenant, a lawful occupant, a member of the tenant’s family, or tenant’s guest. §92.053. Burden of Proof • The tenant holds the burden of proof. • However, if the tenant makes a demand for explanation for delays in making required repairs, and the landlord does not respond with a written explanation by the fifth day of receiving the demand, then the burden of proof switches to the landlord. 11 Chapter 92 – Residential Tenancies §92.054. Casualty Loss • Repair period begins when landlord receives insurance proceeds. • If a casualty loss results in a totally unusable dwelling, and the loss was not due to the negligence or fault of the tenant, either the landlord or tenant may terminate the lease. • If such a casualty loss results in partial damage to the dwelling, the tenant is entitled to a reduction in rent proportionate in amount to the extent of damage, which must be determined by a court. §92.055. Closing the Rental Premises • A landlord may close a premises (either for destruction or to convert the premises to a use other than residential) by giving proper notice. • Closing one rental until does not require closing other units. • Reletting the premises is restricted (reoccupancy and reconnection of utilities may not occur within 6 months of closure by the landlord). 12 Chapter 92 – Residential Tenancies §92.056. Landlord Liability and Tenant Remedies; Notice & Time for Repair • A landlord is liable to a tenant: (1) tenant gives notice of condition that materially affects physical health or safety of an ordinary tenant. (2) the landlord has had a reasonable time to remedy or repair. (3) the landlord has not made a diligent effort to repair or remedy. (4) the tenant is current in making rental payments. • Seven days is presumed to be a reasonable time (may be rebutted). §92.0561. Tenant’s Repair and Deduct Remedies • If a landlord is liable for failure to repair or remedy under Section 92.056 then a tenant may employ a professionally advertised repairman. • The tenant may then deduct the costs from subsequent rent payments, and may be made as often as necessary, so long as the cost in any one month do not exceed the greater of one month’s rent or $500. • Work contracted by tenant must comply with building codes & permits. • No materialmen’s liens allowed, and all costs must be substantiated. 13 Chapter 92 – Residential Tenancies §92.0562. Landlord Affidavit for Delay • If the landlord properly delivers an affidavit to a tenant in good faith, the tenant must delay contracting for repairs. • The affidavit must summarize the reasons for delay with specific facts. • There are only two legal grounds supporting an affidavit for delay: (1) a delay in obtaining necessary parts, which is not the fault of the landlord (allows 15 day delay imposed on tenant repairs). (2) a general shortage of labor or materials following natural disaster (allows for 30 day delay). §92.0563. Tenant’s Judicial Remedies • Judicial remedies of the tenant include obtaining: (1) an order directing the landlord to repair and remedy impermissible conditions (available only in county and district court). (2) an order reducing the tenant’s rent in proportion to the reduced rental value due to the condition while it persists. (3) a judgment against the landlord of one month’s rent plus $500. (4) a judgment against the landlord for tenant’s actual damages; and (5) court costs and attorney’s fees. 14 Chapter 92 – Residential Tenancies §92.058. Landlord Remedy for Tenant Violation • A landlord may recover actual damages from the tenant if the tenant makes repairs and deductions in violation of this subchapter. • The tenant will owe one month’s rent plus $500 and attorney’s fees if the tenant illegally withholds rent or makes repairs in bad faith. §92.331. Retaliation by Landlord • A landlord is barred from taking specific actions deemed to be retaliatory against a tenant (such as eviction, lockout, reduction in service, increasing rent, terminating the lease, and bad faith interference with other tenant’s rights) because the tenant: (1) pursues a right or remedy due to the tenant under the lease, by ordinance, or statute. (2) gives notice to repair or exercises a remedy under this chapter. (3) reports violations or complaints to a government enforcement agency, a public utility, or a non-profit or civic agency. §92.332. Nonretaliation • A landlord is not liable for retaliation if the landlord proves that actions taken against a tenant were not for retaliation. 15 Chapter 92 – Residential Tenancies §92.333. Tenant Remedies for Retaliation • A tenant may recover one month’s rent plus $500, actual damages, court costs, and attorney’s fees, property damages, moving costs, actual expenses, and declaratory or injunctive relief. §92.334. Invalid Complaints • If a tenant reports conditions to a government entity, utility, or agency and the inspector determines in writing that a violation does not exist, then there is a rebuttable presumption of bad faith by the tenant. • The landlord may recover possession of the leasehold premises, as well as one month’s rent plus $500, court costs, and attorney’s fees. §92.335. Eviction Suits • Claiming retaliation by a landlord is a defense to an eviction suit, and a rent deduction lawfully made by a tenant is a defense for nonpayment of rent, as allowed under this chapter. 16 Chapter 92 – Residential Tenancies §92.102. Security Deposit • A payment which is intended to secure performance of a lease. §92.103. Obligation to Refund • Within 30 days after the tenant surrenders the premises. • Advance notice may be required but must be underlined or in bold print in the lease. §92.1031. Conditions for Retention of Security Deposit/Rent Prepayment • Landlord is not obligated to refund if the tenant fails to occupy (or the tenant or landlord fails to obtain a satisfactory replacement tenant to occupy) the premises by the commencement date of the lease. • Landlord may subtract a cancellation fee or actual expenses incurred for securing another tenant when landlord finds a replacement tenant. §92.104. Retention of Security Deposit; Accounting • Landlord may deduct charges for damages, breaches of the lease, or other costs for which the tenant is liable before refunding the balance. • Acceptable charges do not include repairing “normal wear and tear.” • Providing an itemized, written description of deductions is required, unless the tenant still owes rent and there is no dispute as to the amount of rent remaining due. 17 Chapter 92 – Residential Tenancies §92.1041. Presumption of Refund for Accounting • Presumed if postmarked within 30 days of surrender of unit. §92.105. Cessation of Owner’s Interest • Former & new owner is liable for security deposits (except foreclosure), until tenant receives a signed statement from new owner giving notice that responsibility has shifted (specifying the exact dollar amount held). §92.106. Records • Keeping accurate records of security deposits is required of landlord. §92.107. Tenant’s Forwarding Address • Landlord’s obligation to refund a security deposit or give an accounting is waived until the tenant provides a written forwarding address. §92.108. Liability for Withholding Last Month’s Rent • Tenant may not withhold last month’s rent because of deposit held. • Tenant who does so is liable for three times the amount withheld, as well as the landlord’s attorney’s fees. §92.109. Liability of Landlord • A landlord who wrongfully retains a security deposit is liable for three times the portion wrongfully withheld, reasonable attorney’s fees and $100. 18 Chapter 92 – Residential Tenancies Subchapter D. Security Devices §92.151. Definitions • This section defines very specific terms including: “Doorknob lock,” “Door viewer,” “Exterior door,” “French doors”, “Keyed dead bolt,” “Keyless bolting device”, “Multi unit complex,” “Rekey,” “Security device,” “Sliding door handle latch,” “Sliding pin lock,” “Sliding door security bar,” “Window latch,” and several other specific terms. §92.152. Application of Subchapter • With certain specified exceptions, the requirements for security devices apply to mobile homes, single family dwellings, apartment, condominium, and other cooperative living projects, and some dormitory rooms (other than for accredited educational facilities). §92.153. Security Devices Required Without Necessity of Tenant Request • Certain security devices are required without being requested by the tenant (with some exceptions noted): window latches on exterior windows; doorknob locks or keyed dead bolt on exterior doors; sliding door pin lock on each exterior sliding glass door; etc. • Remedies are provided for landlord violations of these provisions. 19 Chapter 92 – Residential Tenancies §92.154. Height, Strike Plate, and Throw Requirements—Keyed Dead Bolt or Keyless Bolting Device • Requirements for installing keyed dead bolt or keyless bolting devices. §92.155. Height Requirements—Sliding Door Security Devices • Requirements for a sliding door pin lock or sliding door security bar. §92.156. Rekeying or Change of Security Devices • Landlord shall rekey within 7 days after each tenant turnover date at landlord’s expense. • Landlord shall rekey an unlimited number of times at tenant’s request but at tenant’s expense. §92.157. Security Devices Requested by Tenant • Additional security devices (as specified) may be requested by the tenant, and the landlord shall install these at the tenant’s expense. §92.158. Landlord’s Duty to Repair or Replace Security Device • Repair or replacement of inoperable or faulty security devices is required of the landlord upon request or notice by the tenant. §92.159. When Tenant’s Request or Notice Must Be in Writing • Verbal notice or requests are sufficient, unless a written lease states otherwise in bold or underlined print. 20 Chapter 92 – Residential Tenancies §92.160. Type, Brand, and Manner of Installation • Landlord may generally select the type, brand, & manner of installation. §92.161. Compliance with Tenant Request Required in Reasonable Time • With some exceptions, seven days is deemed a reasonable time. §92.162. Payment of Charges; Limits on Amount Charged • A landlord may not require the tenant to pay for repair or replacement of security devices which is required due to normal wear and tear; however, other circumstances result in a tenant’s liability for paying repair and replacement costs, as specified in detail by this section. §92.163. Removal or Alteration of Security Device by Tenant • Security devices may not be removed, rekeyed, replaced, etc. by the tenant unless by permission of the landlord (certain exceptions). §92.164. Tenant Remedies for Landlord’s Failure to Install or Rekey • A tenant may resort to self-help installation, filing suit against the landlord, obtaining damages and penalties, or terminating the lease, if the landlord does not comply with the requirements of this section. §92.1641. Landlord’s Defenses • If the tenant has not paid all rent due or other specified costs. 21 Chapter 92 – Residential Tenancies §92.165. Tenant Remedies for Other Landlord Violations • Other damages (similar to those in Section 94.164) are available if the landlord does not comply with certain other tenant requests for rekeying, changing, repairing, replacing security devices. §92.166. Notice of Tenant’s Deduction of Repair Costs from Rent • A tenant withholding rent for costs of repairing/replacing a security device (after landlord’s failure to comply with this subchapter), must provide the landlord notice at the time rent is withheld. • If the landlord requests a duplicate key the tenant must provide one within a reasonable time, unless the written lease specifies otherwise. §92.167. Landlord’s Defenses • Including that the tenant has not paid certain costs due. §92.168. Tenant’s Remedy on Notice from Management Company • Tenant may terminate the lease after receiving written notice landlord will not provide funds to repair or install a security device as required. §92.169. Agent for Delivery of Notice • A managing agent or agent to whom rent is regularly paid. §92.170. Effect on Other Landlord Duties and Tenant Remedies • Code imposes duties on a landlord regardless of other law. 22 Chapter 92 – Residential Tenancies §92.201. Disclosure of Ownership and Management • A landlord is required to disclose the name and address of the holder of record title and of the management company if this contact information is requested by the tenant or government official. • Disclosure of this contact information is required within seven days after the date the request is received by the landlord. §92.202. Landlord’s Failure to Disclose Information • A landlord is liable for not providing this information before the eighth day after a written request by a government official or a tenant. §92.203. Landlord’s Failure to Correct Information • A landlord is liable for remedies for failing to provide corrected ownership or management contact information within seven days of a tenant providing written notice that the tenant will exercise such remedies if a correction is not provided within seven days. §92.204. Bad Faith Violation • If a landlord willfully discloses incorrect ownership or management contact information or fails to correct such information that the landlord knows is incorrect, the landlord acts in bad faith and is liable under this subchapter. 23 Chapter 92 – Residential Tenancies §92.205. Remedies • Including: a court order directing disclosure, a unilateral termination of the lease, money judgments for reimbursement of actual costs paid by the tenant to discover the information, one month’s rent plus $100, attorney’s fees and court costs. §92.206. Landlord’s Defense • If the tenant owes rent on the date contact information is requested. §92.207. Agents for Delivery of Notice • A managing or leasing agent is the agent for the landlord under this subchapter and for government notices relating to violations of health, safety, sanitation, and nuisance laws existing at a leased dwelling. • The person who collects the rent from a tenant is the landlord’s authorized agent for these same purposes if the landlord’s name and business address have not been provided in writing. §92.208. Additional Enforcement by Local Ordinance • The landlord’s duties and tenant’s remedies under this subchapter are in lieu of the common law, other statutory law, and local ordinances. 24 Chapter 92 – Residential Tenancies Subchapter F. Smoke Detectors §92.251. Definition • “Dwelling unit” means a home, mobile home, or unit in a duplex, apartment, condominium, or dwelling in a multiunit structure. §92.252. Application of Other Law; Municipal Regulation • The landlord’s duties and tenant’s remedies under this subchapter are in lieu of the common law, other statutory law, and local ordinances. • Local ordinances may not require the replacement of battery-powered smoke detectors with AC powered detectors in a dwelling built before 9-1-87, unless upgrades, repairs, or other specific circumstances exist. §92.253. Exemption • This subchapter does not apply to a dwelling unit: (1) occupied by the owner (rather than by a tenant). (2) in a five or more story building in which smoke detectors a required or regulated by local ordinance. (3) a nursing or convalescent home licensed by the state. 25 Chapter 92 – Residential Tenancies §92.254. Smoke Detector • Requirements for a smoke detector include being in good working order, as well as being designed with: detection of both visible and invisible combustion products; an audible alarm in bedrooms; battery, AC or other power source as required by local ordinance; and professional testing and listing. §92.255. Installation and Location in New Construction • The landlord is required to install at least one smoke detector outside (but near) each separate bedroom before the first tenant takes possession of the unit, with certain modifications specified for efficiency units and other units with particular layouts. §92.256. Installation in Units Constructed or Occupied on or Before September 1, 1981 • All older units must now have smoke detectors installed. A tenant may remove a battery-powered detector that the tenant installed (if it was installed before September 1, 1984). 26 Chapter 92 – Residential Tenancies §92.257. Installation Procedure • According to the manufacturer’s, and must be installed on a ceiling or wall (no closer than 6” to a wall and no farther than 12” from ceiling), unless local ordinance or a fire marshal approves otherwise. §92.2571. Alternative Compliance • Compliance is met if the landlord installs smoke detection units in accordance with specified provisions of the Insurance Code or the Health and Safety Code (with special detectors provided for the deaf). §92.258. Inspection and Repair • The landlord is required to inspect and repair a smoke detector: (1) determine by testing that the detector is in good working order at the beginning of the tenant’s possession. (2) inspect and repair a detector within a reasonable time if a tenant gives notice of a malfunction or requests such service. • A detector is presumed to be in good working order if tested at the beginning of the tenant’s possession until the tenant requests repair. • A landlord is not obligated to provide batteries if the detector was in good working order when the tenant took possession. 27 Chapter 92 – Residential Tenancies §92.259. Landlord’s Failure to Install, Inspect, or Repair • A landlord is liable under this subchapter if a smoke detector was not installed at the time of initial occupancy, or if the detector is not installed, inspected, or repaired within 7 days after the tenant gives written notice that the tenant may exercise remedies provided under this subchapter if the landlord does not comply within 7 days. §92.260. Tenant Remedies • Liability under this subchapter subjects the landlord to the following: (1) court order directing compliance with the tenant’s request. (2) unilateral termination of the lease if the landlord does not properly respond to a tenant’s request. (3) money judgments for damages realized by the tenant due to the landlord’s violation, civil penalty of one month’s rent plus $100 for not properly responding to a tenant’s request, attorney’s fees (for particular suits), and court costs. 28 Chapter 92 – Residential Tenancies §92.261. Landlord’s Defenses • The landlord has a defense to liability if: (1) the tenant has not paid all rent due on the date the tenant gave notice. (2) the tenant has not fully paid costs requested by the landlord and authorized by Section 92.258 on the date the tenant terminates the lease or files suit. §92.2611. Tenant’s Disabling of a Smoke Detector • A tenant is liable under this subchapter for removing batteries from a smoke detector without immediately replacing them with a working battery or for knowingly disconnecting or intentionally damaging a smoke detector and causing it to malfunction. §92.262. Agents for Delivery of Notice • A managing or leasing agent is the agent of the landlord for purposes of notice under this subchapter. 29 Chapter 92 – Residential Tenancies §92.301. Landlord Liability to Tenant for Utility Cutoff • If a lease requires the landlord to furnish and pay for water, gas, or electric utilities to the tenant’s dwelling, then the landlord is liable to the tenant if the utility company cuts off services to the dwelling or gives notice to the tenant that such service is about to be cut off due to the landlord’s nonpayment of the utility bill. • The tenant has various remedies in such circumstances, including paying the utility company money to reconnect or avert the cutoff, termination of the lease under certain circumstances, deduction of costs from rent, deduction of the tenant’s security deposit from the tenant’s rent (if lease is terminated by the tenant), recovery of actual damages, court costs, and attorney’s fees. 30 Chapter 92 – Residential Tenancies Rental Applications • At the time of rental application, the landlord shall make available to the applicant printed notice of the landlord’s tenant selection criteria and the grounds for which the rental application may be denied. • If the landlord makes the notice available, the applicant shall sign an acknowledgement indicating the notice was made available. • If the acknowledgement is not signed, there is a rebuttable presumption that the notice was not made available to the applicant. • The acknowledgement must include a statement substantively equivalent to the following: “Signing this acknowledgment indicates that you have had the opportunity to review the landlord’s tenant selection criteria. The tenant section criteria may include facts such as criminal history, credit history, current income, and rental history. If you do not meet the selection criteria, or if you provide inaccurate or incomplete information, your application may be rejected and your application fee will not be refunded.” 31 Chapter 93 – Commercial Tenancies §93.002. Interruption of Utilities, Removal of Property, and Exclusion of Commercial Tenant • A commercial lease supersedes this section to the extent of any conflict; however, where the lease does not address these issues: • A landlord may not interrupt utility services paid for directly by a tenant unless due to bona fide repairs, construction, or emergency. • A landlord may not remove a door, window, lock, etc., remove furniture, fixtures, or appliances furnished by the landlord unless such items are removed for a bona fide and promptly performed repair or replacement. • A landlord may not intentionally prevent a tenant from entering the leased premises except by judicial process unless due to: (1) bona fide repairs, construction, or emergency; (2) removing the contents of the premises abandoned by a tenant; or (3) changing the door locks of a tenant delinquent in paying rent. • A landlord may remove, store, and (within 60 days) dispose of abandoned and unclaimed property. • The landlord may lockout a tenant who is delinquent in paying rent, and a new key must be provided only during if the tenant pays the delinquent rent. 32 Chapter 93 – Commercial Tenancies §93.003. Commercial Tenant’s Right of Reentry After Unlawful Lockout • Basically the same as the residential provision. §93.004. Security Deposit • Defining the security deposit as any advance of money (other than application deposit or advance rent payment) that is primarily intended to secure performance of a commercial lease. §93.005. Obligation to Refund Security Deposit • The landlord must refund the security deposit within 60 days after the tenant surrenders the premises and provides a forwarding address. §93.006. Retention of Security Deposit; Accounting • The landlord may not retain any portion of the deposit to cover “normal wear and tear” (deterioration that results from the intended use of the commercial premises). • The landlord owes the tenant the balance of the security deposit, if any, along with a written description and accounting of any deductions (unless the tenant owes an undisputed amount of rent when the tenant surrenders possession of the premises). 33 Chapter 54 – Landlord’s Liens Subchapter B. Building Landlord’s Lien §54.021. Lien • A nonresidential building landlord has a preference lien on the property of a tenant in the building for rent that is due and that is to become due in the current 12-month period following the beginning of the lease. §54.022. Commercial Building • On rent that is more than six months past due the landlord must file a proper lien statement with the county clerk. §54.023. Exemption • This does not affect statutes exempting property from forced sale. §54.024. Duration of Lien • The lien exists until one month after the tenant abandons the building. §54.025. Distress Warrant • If the tenant owes rent, is about to abandon the building, or is about to remove the tenant’s property from the building, the person to whom rent is payable under a building lease may obtain a distress warrant from a justice of the peace. 34 Chapter 54 – Landlord’s Liens Subchapter C. Residential Landlord’s Lien §54.041. Lien • A landlord holds a lien on nonexempt property that is in the residence or in the tenant’s storage room for unpaid rent that is due. §54.042. Exemptions • A residential landlord’s lien does not attach to the following: clothing; tools, apparatus, and books of a trade or profession; schoolbooks; family library, portraits, and pictures; one couch, two living room chairs, and a dining table and chairs; beds and bedding; kitchen furniture and utensils; food; medicine and supplies; one automobile and one truck; agricultural implements; children’s toys not commonly used by adults; goods that the landlord knows are owned by someone other than the tenant or an occupant of the residence; and goods that the landlord knows are subject to a recorded chattel mortgage or financing agreement. §54.043. Enforceability of Contractual Provisions • A contractual landlord’s lien must be underlined or printed in conspicuous bold print in the lease to be enforceable. 35 Chapter 54 – Landlord’s Liens §54.044. Seizure of Property • The landlord may not seize exempt property. • Nonexempt property may be seized only if it is authorized in a written lease and can be accomplished without a breach of the peace. • Written notice of entry and an itemized listing of items seized must be provided immediately by the landlord. • The notice and list must be left in a conspicuous place inside the dwelling, and the notice must state the amount of delinquent rent, along with the name, address, and telephone number of the person the tenant may contact regarding the amount owed. • The landlord may remove the contents of a leased premises if the tenant has abandoned the property. §54.045. Sale of Property • Authorization must be provided in a written lease. • Proper notice must be provided to the tenant prior the sale. • Tenant’s has right to redeem the property at any time prior to the sale by paying all delinquent rents (and other costs, if allowed for in the written lease) to the landlord. 36 Chapter 54 – Landlord’s Liens §54.046. Violation by Landlord • If a landlord willfully violates this subchapter, the tenant is entitled to: actual damages, return of any property seized that has not been sold, proceeds of any sale of seized property, and the greater of one month’s rent or $500, and attorney’s fees. §54.047. Other Rights Not Affected • No other rights or obligations arising under common law or any statute are affected or diminished by this subchapter. §54.048. Tenant May Replevy • Anytime before a judgment in a suit for unpaid rent, the tenant may replevy any seized property (which has not been claimed or sold) by posting bond in an amount set by the court and payable to the landlord. 37 New Federal Landlord and Tenant Law! • Effective May 20, 2009, which affects all foreclosures from that date through December of 2012. • A bona fide tenant who is leasing premises that are foreclosed upon, may continue occupancy during the full term of the lease unless the new owner intends to use the property as his primary residence. • In this case, the new owner must still give tenant 90 days to vacate. • In virtually every other circumstance, the tenant is entitled to a 90-day notice to vacate. • It applies not only to a federally regulated mortgage loan, but also to any dwelling or residential real property. • What is a bona fide tenant? It can’t be the mortgagor, the mortgagor’s child, spouse, or parent, it must have been an arm’s length transaction and for a substantially fair market value. 38 Other Provisions Right to Vacate for Sex Offenses • Tenant may terminate and vacate and avoid liability for future rent and any other sums due under the lease if the tenant is the victim of sexual assault or a parent or guardian of a victim of sexual assault, aggravated sexual assault, or sexual abuse of a child that takes on the premises. • In order to avoid liability, this tenant must provide the landlord or the landlord’s agent a copy of the assault or abuse of the victim from a licensed health care services provider who examined the victim, documentation of the assault or abuse of the victim from the licensed mental health services provider, or documentation of a protective order. Hearing Impaired Tenants • If a request by a tenant, a smoke detector must be installed by the landlord that is capable of alerting a hearing-impaired person in the bedroom it serves. Repairs • A justice court may order the repair in the tenant’s premises in an amount not to exceed $10,000, excluding interest and costs of court. 39 Lease Agreements • A lease is a grant of an estate in land for a limited term with conditions attached. • Leases are also contracts involving the transfer of interest of real property. • The provisions of the Statute of Frauds are applicable for any lease in excess of one year. • Most leases have become so detailed that it is necessary to secure the services of a lawyer to make sure that a party is adequately protected. • The rules governing the interpretation of contracts are the same when applied to leases and the intervention of equity seldom applies. 40 Lease Requirements • No particular form is necessary to create a lease. • The requirements of a lease are very similar to those of other contracts for real estate: 1. The lease must be in writing and must be signed by the party to be charged if the term is longer than one year. 2. It must include a specific, identifiable landlord and tenant. 3. It must contain the intent of the landlord to grant to the tenant the right to enter and possess the designated premises for a fixed consideration. 4. It must include an adequate description of the leasehold premises. 5. It must give a specific period of time of occupancy. 6. It must have been delivered and accepted. 41 Types of Leases • Gross Lease. Most often used for a fixed term and for a fixed sum of money. Typically, the landlord pays all costs for utilities, insurance, and maintenance. Commonly used for office space and apartments. • Percentage Lease. A percentage lease is most often used for lessees in retail premises. The lease normally provides that the lessee will occupy the space at a relatively low base rent. The remainder of the lessee’s lease payments are contingent upon a percentage of the gross sales. • Net Lease. A net lease is generally one in which, in addition to rent, the lessee pays all of the expenses of operation. This may include real estate taxes, insurance, repairs, and maintenance. • Ground Lease. A ground lease is normally a long-term lease in which the tenant is leasing the land alone and constructing improvements thereon. 42 Assignment and Subletting • Although Texas has a statutory provision prohibiting the right of a lessee to assign or sublet the premises without the lessor’s prior written consent, most lessors do not unreasonably withhold consent. • In the sublease situation, there is still a direct contractual relationship between the lessor and the lessee. There is also a privity of contract between the lessee (sublessor) and the sublessee. • In the assignment situation, all rights, title, and interest of the original lessee (assignor) are assigned to the assignee, who then has a direct privity of contract with the original lessor. The original lessee, however, is not released from liability unless the landlord so agrees. 43 Special Provisions • A lease can have as many special provisions as one can possibly imagine. • The scope of these lease provisions has become so large in recent years that one finds typical office leases or retail leases bound in book form, rather than stapled together as a short-form document. • Because of the variety of applicable special provisions in any given situation, we will not discuss any of these special provisions in detail. • There are some recent case decisions, however, which have a bearing on certain lease provisions and deserve discussion. 44 Special Provisions • Options to Purchase. It has been held that when the option to purchase has been exercised, the relationship of landlord and tenant ceases and that of a vendor and purchaser begins. No rent is then payable, as the purchase and sale agreement becomes controlling. The tenant then has the right to enforce specific performance of his purchase contract. • Noncompetition. This type of clause typically prohibits a lessor from leasing to tenants in competition with each other. This allows a tenant to fully develop his own market share in the shopping center and provides for a more complementary tenant mix, which operates in the best interest of both the landlord and the tenant. There has been some concern that these violate federal and state antitrust laws as a restraint of trade. • Late Charges. Another item of conflict that has frequently arisen is whether or not an agreed late charge in a lease agreement constitutes “interest” under Texas statutes. It is generally held that such a late charge is not a charge for the forbearance of money as defined by Texas statute and, therefore, is not a loan transaction that falls within the jurisdiction of Texas usury laws. 45 Duties of Landlord to Tenant • Quiet Enjoyment. Unless there is language in the lease to the contrary, the tenant will have an implied covenant of quiet enjoyment. • Repair. There is no specific provision in Texas law to repair the premises, other than the statute already discussed. It should be noted, however, that the statute only applies to residential units and not to commercial units. • Habitability and Suitability. Texas recognizes an implied warranty of habitability, which arises as a consequence of the landlord–tenant relationship. • No Retaliatory Eviction. Any tenant who exercises his rights under the law is protected from landlord retaliation. • Landlord’s Duty to Mitigate. In a landmark decision, the Texas Supreme Court held that the Texas landlord does have duty to mitigate damages and to use objectively reasonable efforts to fill the premises when a tenant breaches the lease. 46 Tenant’s Duties to Landlord • Payment of Rent. Tenant has an obligation to pay rent independent of the landlord’s covenant to repair. Failure of the landlord to repair never justifies rent withholding. • Covenant Not to Damage. Tenant is under implied duty to prevent waste of the premises. Waste includes injury resulting from failure to exercise reasonable care by the tenant or any other party who is rightfully in possession. 47 Remedies of Landlord • Suit for Damages. In the event the tenant has committed waste of the premises or destroyed same, the landlord has a technical remedy of being able to sue the tenant for damages. • Specific Performance. The landlord has the equitable remedy of specific performance. • Landlord’s Lien. Statutorily, a landlord has a lien on all nonexempt property of the tenant. • Eviction. The landlord always has the duty to terminate the tenant’s rights to occupy the premises. He must resort to due process to do this, however, and forcible entry and detainer proceedings are discussed in depth later in this chapter. 48 Remedies of Tenant • Damages. The tenant has the right to sue for damages for retaliatory eviction. There is another cause of action for damages for what is termed constructive eviction. Constructive eviction occurs when the landlord intends that the tenant should no longer enjoy the premises so the landlord performs some act that substantially interferes with the use and enjoyment of the premises. • Tenant’s Lien. The tenant has a judicial lien on all nonexempt property of the landlord as well as on all rent due the landlord for rental of the premises for any failure of the landlord to comply with the contract. • Move Out. The tenant always has the remedy of moving out of the premises. Known as the “doctrine of surrender,” this was statutorily enabled with the addition of Section 92.056(b) of the Property Code. 49 Forcible Entry and Detainer and Forcible Detainer (Eviction) • Prior to bringing an action for eviction, the lessor must give the lessee a minimum of three days written notice to vacate such premises, unless a landlord and a tenant contract otherwise in a written or an oral lease. • The notice may be given by mail at the leased premises or in person. • These proceedings can be handled by the owner or the owner’s authorized agent 50 Procedural Rules • Original jurisdiction is in the justice of the peace in the precinct of the county in which the premises are located. • When the suit has been filed, the justice is required to issue a citation to the defendants to appear not less than 6 days or more than 10 days after service of citation. • Citation can be left with anybody at the premises above the age of 16. • Upon request, and affidavit, the trial may be postponed by either party showing good cause, for a period not to exceed six days. • The only issue that may be argued at the justice of the peace court is possession of the premises. • If judgment is awarded to the plaintiff (lessor), a writ of possession will be issued to give the plaintiff possession. The writ cannot be issued until the sixth day after the judgment is entered. • If one of the parties appeals, tenant must post a bond the decision may be appealed to the county court where the issue is tried once again. • The second trial is not considered a true appeal process since the issue is tried once again as if the first trial had never happened. 51 Post-Trial Procedures • The writ of possession orders the officer executing the writ to instruct the tenant to: (1) leave the premises. (2) remove, or allow the landlord or other person acting under the officer’s supervision to remove, all personal property from the unit. (3) place, or have an authorized person place, the removed personal property outside the rental unit at a nearby location, but not blocking a public sidewalk, passageway, or street and not while it is raining, sleeting, or snowing. • At the officer’s discretion, he may post a written warning on the exterior of the front door notifying the tenant that the writ has been issued and can engage the services of a bonded or insured warehouseman to remove and store all of the property at no cost to the landlord or the officer executing the writ. • This statute does not impose a duty on the landlord or its agent to stand guard over the property until it is retrieved by the owner. The officer taking control over the property becomes state action, and he is not liable for damages as a result. 52 Warehouseman’s Lien • Provided when the tenant’s property is stored in a bonded or insured public warehouse. • The warehouseman is given a lien on the property for reasonable moving and storage charges incurred by the warehouseman. • The lien does not attach until the property has been stored. • The officer executing the writ shall, at the time of the execution, deliver in person to the tenant or by first-class mail to the tenant’s last known address a written notice stating the complete address and telephone number of the location at which the property may be redeemed. • The notice says that the tenant’s property is to be removed, and that he can redeem the property without paying any moving or storage charges during the time the warehouseman is removing the property. • After the property has been stored, the tenant may redeem the property after paying moving and storing charges. • The warehouseman has the right to sell the property to satisfy the reasonable charges after the 30-day requirement. 53 Case Studies for Discussion 1. A landlord leased the premises in a shopping center to a tenant for its use as a veterinary clinic. Tenant subsequently abandoned the premises and landlord was unable to relet the premises because they would have to be completely renovated. Landlord says he is entitled to the full rental value of all future rental installments due under the lease, together with attorney’s fees, as agreed to in the lease. Tenant alleges that full rental value for the remainder of the lease was unjust enrichment. What legal ramifications do you foresee? 54 Case Studies for Discussion 2. Landlord leased a ranch to tenant for cattle grazing purposes only. After the tenant took possession, the landlord discovered that the tenant was cutting and removing timber from the property. The lease granted the landlord the right to retake possession of the premises along with a landlord’s lien upon all personal property of tenant in the event of default. However, the lease was not very clear as to performance under the lease nor how the landlord’s lien would be enforced. Upon the tenant’s subsequent default, the landlord retook possession of the premises as well as all the personal property of the tenant. Landlord alleges that he had the right to do so under the terms of his lease. Tenant alleges that this violates his rights to due process and the landlord is not entitled to his lien on personal property. What legal ramifications do you foresee? 55 Questions for Discussion 1. Name and briefly explain the four nonfreehold (also known as leasehold) estates. 2. How may a residential landlord change the locks on a residential tenant who is delinquent in rent? 3. Summarize a residential landlord’s duty to repair or remedy a condition. 4. Discuss the obligation of a residential landlord to return a tenant’s security deposit. 5. What are the basic steps of an eviction (forcible detainer)proceeding? 56